Hedge Funds in a recession

Dec 16, 2018 22 Comments

With all this talk of a recession in the near future, is it safe to join a quantitative hedge fund like Two Sigma as a SWE? On the one hand, the volatility could be an opportunity for them to make more money, but seems like it could go bad too with clients pulling out their invested funds.

Is there a significant enough risk of layoffs at quant hedge funds that I should stick to FANG? I imagine being a SWE at a hedge fund might be even more risky since they're generally seen as less important than the quant researchers.

Is FANG that much safer? FB and Google make most of their money from ads, but there'd probably be a lot less businesses paying for those ads in a recession.

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TOP 22 Comments
  • Apple
    ijyA68

    Go to company page Apple

    ijyA68
    In theory, hedge funds should make money regardless of whether the market goes up or down, just as long as it is moving. Depends on the skills of the people picking investments.
    Dec 16, 2018 1
    • New
      newew

      New

      newew
      IN THEORY.
      Dec 16, 2018
  • Lol, used to work in investments. I saw a few quant hedge blowing up in my days. Honestly, if they pay you then go, but don’t expect staying forever. Nobody has a crystal ball in this industry, one year you make money next year you lose money.
    Dec 16, 2018 0
  • Chase
    tjPE83

    Go to company page Chase

    tjPE83
    Two sigma has teams doing market making and other strategies which benefit from high vol. so they should be ok. On the other hand if the hedge fund is a long only hf, then it’s a no no
    Dec 16, 2018 0
  • New / Eng
    RhpJ71

    New Eng

    RhpJ71
    Is there any difference between buying a stock Vs shorting it? You can make or loose money both ways. In either case, you are betting.
    Dec 16, 2018 3
    • New / Eng
      RhpJ71

      New Eng

      RhpJ71
      Is this the scenario that you are talking about: if a stock is worth $10 and I buy it, I could loose up to $10. If I short it and it rises up to $30, I loose $20.

      In the above scenario, sure the upside is theoretically unbounded. But practically speaking, if I run a hedge fund, I would: 1) sell/unshort when my effective loss crosses a threshold, 2) in a down market, your stocks are more likely to go down than not. So how are they different from a practical perspective?
      Dec 16, 2018
    • Varian Medical / Product
      NzLh55

      Go to company page Varian Medical Product

      PRE
      Apple
      NzLh55
      You don’t “sell/unshort” - you have to buy to cover. And you will get margin called when the value increases enough.

      From a practical perspective you want to buy the put option, it is in the money when the stock decreases, can be sold, and your total risk is capped.

      Please learn to spell “lose” before starting a hedge fund.
      Dec 17, 2018
  • Amazon / Eng
    jNeo42

    Go to company page Amazon Eng

    jNeo42
    Do you have an offer with 2S? If not, then this thread is a waste of time. I rode with a hedge fund from $10b to $16b and eventually down to zero. Over 7 years of my career. And it was the best damn job I will ever have.
    Dec 16, 2018 1