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Physics

Costin Bontas ’03

Vice President, Goldman Sachs

My first year at Princeton was one of relative exploration. I had been rather focused in high school on the study of physics; however, I set foot on campus intent on thoroughly exploring the opportunities offered by a top-tier liberal arts college. I enrolled in a German philosophy course and spent many afternoons in Firestone Library poring over arcane tomes. I spent two months in the summer after my freshman year traveling through Spain and attending history and literature classes at a local university through Princeton in Spain. I took introductory microeconomics and finance. In my free time I worked for a physics professor estimating the impact of micrometeorite collisions with NASA satellites.

This exploration led to two apparently contradictory conclusions. First, I realized I would likely not seek to become a physics professor or researcher. Second, and fully cognizant of the contradiction, I chose to major in physics. I felt that physics would provide me with a powerful conceptual framework that I could apply to virtually any problem, even outside a laboratory or library. Furthermore, I realized that I was for the first time truly free to pursue my personal intellectual interests, unencumbered by any practical concerns, and empowered through direct access to cutting-edge research groups, ample funding, and excellent laboratories and specialized libraries. I concluded that I was unwilling to sacrifice my formative years in order for my résumé to fit neatly in an employer’s inbox.

Applying fundamental skills

Upon graduation, I started out at a large and well-established hedge fund focusing on interest rate markets in North America. Shortly thereafter I shifted gears to U.S. agency mortgage backed securities (MBS). Agency MBS are some of the more complex financial products out there, and they present a rather unique modeling and trading challenge by overlaying high-credit-quality borrowers’ refinancing behavior and interest-rate fluctuations. I focused on the hedging strategy design and execution for a large agency MBS derivative portfolio. A few years later, as markets started to focus more on borrower credit risk profile, I once again changed focus to non-agency MBS. This involved, among other responsibilities, helping design models to predict consumer credit and prepayment behavior, understanding the trading implications of those models, and executing the relevant trades. 

More recently, I have spent about one year helping design an innovative electronic trading platform for corporate credit in the United States. There are thousands of U.S. corporate bonds that trade with varying degrees of frequency—robust automated pricing algorithms are not trivial and presently not a well-researched topic. Currently I am working once again on an entirely different problem, having joined a restructuring team that works with many large banks and insurance companies, helping design tailored solutions to their risk management and regulatory objectives, which has resulted in a number of high-profile portfolio transactions.

Formally speaking, the physics that I have spent years studying has yet to be used a single time in my work. However, not a day goes by that I do not indirectly take advantage of the fundamental skills painstakingly acquired in Jadwin Hall over the course of four years. I had the luxury of graduating from college with a full appreciation of the fact that I did not actually know anything about my job, and that I had to learn, and do it quickly. As it turns out, constant learning is a fact of life in financial markets.

Bontas-Costin