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Department: Operations Research and Financial Engineering

Bruce Operations Research and Financial Engineering

Kenneth M. Bruce ’83

Portfolio Manager, The Bruce Group

An affinity for programming

It has been many years since I graduated from Princeton and even longer since I decided upon my major.

I selected Princeton because it was one of the few universities that offered a top-tier engineering program, while also offering the opportunity to play Division I football (before Division I AA) and compete at a very high level in Division I track. My parents were very supportive of my academic decisions, though they were concerned that I would be overly taxed studying engineering while pursuing my athletic interests. Despite my enthusiasm, I initially found the preparatory engineering sequence very challenging as a year-round athlete. Balancing the two became a bit easier after selecting a major that piqued my interests and offered enjoyable courses.

While taking a lower-level engineering course my sophomore year, I had my first exposure to a computer as part of a class project. I was intrigued and followed with several programming courses. I realized that I had an interest and an affinity for using and developing computer software. I combined this with my curiosity about finance and selected a major that effectively blended the two—the engineering systems program in the Department of Civil Engineering and Operations Research (a program now in the Department of Operations Research and Financial Engineering).

During my last Princeton summer, I designed a software package for an independent equity options trader on the Philadelphia Stock Exchange. I developed an understanding of the trading business to properly develop the software. And it was this experience that led me to a career trading derivatives. This also influenced my senior thesis project—developing an algorithm that maximized after-tax returns for index funds.

Creating financial applications

After Princeton, I began my career as part of a Merrill Lynch securities training program, which moved a little more slowly than I had hoped and was very structured. After six months, I left for an opportunity with a small derivatives trading group, O’Connor & Associates, which was established by a small group of MIT engineers. I felt at home there in a very collegial and academic atmosphere. We continually redeveloped statistical arbitrage trading models that we applied throughout the derivative trading universe. I found myself applying and expanding upon some of my Princeton courses, including discrete and stochastic systems analysis, regression analysis, and the statistics and math courses. O’Connor developed a trading agreement with another bank where we combined our trading systems. I was one of the few O’Connor employees who had a working knowledge of the programming language used by the bank’s trading system. This minor coincidence proved very helpful in creating a career opportunity. After I led the successful software integration, I was assigned the responsibility of managing the remnant nontransferable derivative portfolio. This opportunity led to many others. In 1990, I created a small partnership that trades and manages a portfolio of listed derivatives, with a focus on the energy complex.

Princeton taught me the benefit of hard work, perseverance, strength during adversity, and the ability to multi-task. I find that I continue to use my management systems engineering skills and reference lessons learned on campus. In hindsight, my major selection as well as my course selection significantly contributed to career opportunities. And years after graduation, I actually occasionally refer to my old textbooks when stumped by a challenging derivative valuation.

I continue my Princeton education as an active alumni volunteer, selecting activities and committees that expand my knowledge base, increase my professional and social network, and help me develop comfort in committee settings.

“In hindsight, my major selection as well as my course selection significantly contributed to career opportunities. And years after graduation, I actually occasionally refer to my old textbooks when stumped by a challenging derivative valuation.…”