4/11/12

For instance:

You're 25, have an Economics B.A. from a ho-hum state school, good math/stats/coding aptitude (but no formal training) and are working in NYC for a prop shop doing accounting and operations. No certifications/exams of any kind passed. You have no seed money right now/minimal connections.

You want to be the major partner in a hedge fund with a strategy of your design with $100 million+ (in today's dollars) AUM by 35. You would also settle for $5-$8 million liquid cash (once again in today's dollars) for yourself by 35 as well.

How do you do it?

If you haven't figured it out by now, "You" = "I".

Do your worst.

Comments (86)

4/11/12
TheWizeNut:

"You" = "I"

bro you totally M Night Shyamalaned me there

The WSO Advantage - Hedge Funds

Financial Modeling Training

IB Templates, M&A, LBO, Valuation.

Hedge Fund Interview Questions

10+ webinars & actual pitches.

Resume Help from HF Pros

Land More Interviews.

Find Your HF Mentor

Realistic HF Mock Interviews.

4/11/12
swagon:
TheWizeNut:

"You" = "I"

bro you totally M Night Shyamalaned me there

+1 laughed out loud.

Money Never Sleeps? More like Money Never SUCKS amirite?!?!?!?

4/13/12
swagon:
TheWizeNut:

"You" = "I"

bro you totally M Night Shyamalaned me there

Comedy.

4/11/12

"... am working in NYC for ...."
the correct conjugation here is "are."

4/11/12

Noted.

4/11/12

Get high as fuarkkk, lie in bed, and dream brother.

4/11/12

Seriously dude. If you're not trolling, be more specific and realistic.

4/11/12

I know it's shooting absurdly high. But let's assume for a minute you think it's viable. Where should I start?

I know it's insane, believe me, I know.

4/11/12

take your savings and start playing.

4/11/12
xqtrack:

take your savings and start playing.

I pulled 20-25% my first year trading 2010 (poor tracking/memory) my own measly account and 46% last year. I think I have the knack to trade, which is why the 5-8 million in liquid cash would make me damn near as happy. Trading my measly account size vs trading a million plus I would think is a whole different ballgame.

4/11/12

What's even more insane is that I would be fine with/think it's possible to get the 5-8 million by 30.

But, once again, let's assume it's reasonable.

4/11/12

Next step would be quant developer at a quant fund/bank. Polish up your maths/stats/coding.

4/11/12

I have no plan for you, but I always tell people there are hundreds of very wealthy people that came from way lesser circumstances than you're in now. My favorite example is Bill Bartmanm, http://en.wikipedia.org/wiki/Bill_Bartmann , dude sounded like a total fuckup, but he got it done.

4/11/12
Cane0180:

I have no plan for you, but I always tell people there are hundreds of very wealthy people that came from way lesser circumstances than you're in now. My favorite example is Bill Bartmanm, http://en.wikipedia.org/wiki/Bill_Bartmann , dude sounded like a total fuckup, but he got it done.

Interesting that you mention him. I grew up in a broke ass house with bill collectors calling a lot, I also got septic hip when I was a kid and couldn't use my legs for a week.

Unfortunately, I never had the distinction of falling down the stairs drunk...YET.

4/12/12
Cane0180:

I have no plan for you, but I always tell people there are hundreds of very wealthy people that came from way lesser circumstances than you're in now. My favorite example is Bill Bartmanm, http://en.wikipedia.org/wiki/Bill_Bartmann , dude sounded like a total fuckup, but he got it done.

This dude's my new hero!!!!!!!!

4/11/12

That "Personal Life" section on Bill Bartmann is out of this world.

Best Response
4/11/12

Let's start with the basics.

1. Nothing is impossible.

2. Hope is not a strategy. At some point, the probability for a given event is low enough that you should consider it impossible. For example, I could tell you to go win the lottery which would give you the funds to start running an investment strategy.

Those are not the odds you're contending with, but given the fund raising/hiring environment for folks with solid credentials and applicable experience...they aren't far off.

Let me reiterate. If you were a third year analyst at Baupost with a Harvard degree, your odds of running a $100M hedge fund by age 35 would be pretty slim. Slim as in 1 in 100. Maybe. If you're lucky. Given your late start, the difficulty is magnified by a thousand fold.

The reason why folks come into this business is not because they want to be a hedge fund manager, though that's the end goal for many of us.

You only survive and advance in this business because you love the day to day of your work. For me, that love is understanding how companies work, finding undervalued and underappreciated ones and investing in them. For others, it is understanding the structure of economies, spiderweb of currencies and macro events that create trading opportunities. For still others, it is understanding the order of operations on a workout and selecting a specific tier of debt security because it gives them the maximum payout under the largest range of outcomes.

In the real world, these are considered idiosyncracies and personality flaws. In our profession, they are the obsessions and fixations that create investment outperformance.

No one succeeds because they "desperately want to be a hedge fund manager." Very few succeed because they "have a knack" for it because the investment world is wide and there are a ton of specialists out there who pore over all the runty little areas of the financial markets you're dabbling in.

I'll give you the same advice I gave the last guy who came by asking for advice on how to be a hedge fund manager. Sit down and learn about the business first. Read a ton of books, ask a ton of intelligent questions. Figure out why you want to go into this business and figure out WHERE you want to play in this business.

Do you have a security in mind? A strategy? A philosophical bent? If so, then go apprentice yourself to someone who is managing money in the area that you want to learn. Work cheap if you need to.

The money and positions will come after, if you're good at what you do. If you're awesome and make your bosses money, they come faster.

But targeting an age and an accomplishment is a mistake in my mind. It obfuscates the really important goal, absorbing as much knowledge about your chosen area as you possibly can. My view is that's the only way to make money over the long term.

4/11/12
PennTeller:

Let's start with the basics.

1. Nothing is impossible.

2. Hope is not a strategy. At some point, the probability for a given event is low enough that you should consider it impossible. For example, I could tell you to go win the lottery which would give you the funds to start running an investment strategy.

Those are not the odds you're contending with, but given the fund raising/hiring environment for folks with solid credentials and applicable experience...they aren't far off.

Let me reiterate. If you were a third year analyst at Baupost with a Harvard degree, your odds of running a $100M hedge fund by age 35 would be pretty slim. Slim as in 1 in 100. Maybe. If you're lucky. Given your late start, the difficulty is magnified by a thousand fold.

The reason why folks come into this business is not because they want to be a hedge fund manager, though that's the end goal for many of us.

You only survive and advance in this business because you love the day to day of your work. For me, that love is understanding how companies work, finding undervalued and underappreciated ones and investing in them. For others, it is understanding the structure of economies, spiderweb of currencies and macro events that create trading opportunities. For still others, it is understanding the order of operations on a workout and selecting a specific tier of debt security because it gives them the maximum payout under the largest range of outcomes.

In the real world, these are considered idiosyncracies and personality flaws. In our profession, they are the obsessions and fixations that create investment outperformance.

No one succeeds because they "desperately want to be a hedge fund manager." Very few succeed because they "have a knack" for it because the investment world is wide and there are a ton of specialists out there who pore over all the runty little areas of the financial markets you're dabbling in.

I'll give you the same advice I gave the last guy who came by asking for advice on how to be a hedge fund manager. Sit down and learn about the business first. Read a ton of books, ask a ton of intelligent questions. Figure out why you want to go into this business and figure out WHERE you want to play in this business.

Do you have a security in mind? A strategy? A philosophical bent? If so, then go apprentice yourself to someone who is managing money in the area that you want to learn. Work cheap if you need to.

The money and positions will come after, if you're good at what you do. If you're awesome and make your bosses money, they come faster.

But targeting an age and an accomplishment is a mistake in my mind. It obfuscates the really important goal, absorbing as much knowledge about your chosen area as you possibly can. My view is that's the only way to make money over the long term.

This is a great post. What you want to do is not impossible, but you will need to be very entrepreneurial to make it happen and work EXTREMELY hard. Maybe harder than you have ever imagined working. I went to a state school (better than the one you went to but nothing to brag about) and didn't take any finance courses as an undergrad. I got interested in the market in my last semester in school and decided to drop my plan to go into engineering, talked my way into an entry level ER job at a shitty regional firm, passed the CFA 3/3 in 18 months, read another 20-30 books on the side about investing, and then (amazingly) landed a job at one of the premier small cap funds in the country. After two years of killing it seven days a week, I moved up to Director of Research.

Anything is possible, but you have to be willing to sacrifice pretty much everything. It's tough for people that have been on "the path" since a young age, and it's practically impossible for those not even close to the path such as yourself. The first thing you should do is drop your arbitrary time and financial goals and just get in somewhere. Nobody cares if it's millions by 35 or whatever -- just get in. There is no advice that anyone can give you on how to do that, but if you want it badly enough, you will make it happen eventually.

12/14/15

Wise f****** words

4/11/12
PennTeller:

Let's start with the basics.

1. Nothing is impossible.

2. Hope is not a strategy. At some point, the probability for a given event is low enough that you should consider it impossible. For example, I could tell you to go win the lottery which would give you the funds to start running an investment strategy.

Those are not the odds you're contending with, but given the fund raising/hiring environment for folks with solid credentials and applicable experience...they aren't far off.

Let me reiterate. If you were a third year analyst at Baupost with a Harvard degree, your odds of running a $100M hedge fund by age 35 would be pretty slim. Slim as in 1 in 100. Maybe. If you're lucky. Given your late start, the difficulty is magnified by a thousand fold.

The reason why folks come into this business is not because they want to be a hedge fund manager, though that's the end goal for many of us.

You only survive and advance in this business because you love the day to day of your work. For me, that love is understanding how companies work, finding undervalued and underappreciated ones and investing in them. For others, it is understanding the structure of economies, spiderweb of currencies and macro events that create trading opportunities. For still others, it is understanding the order of operations on a workout and selecting a specific tier of debt security because it gives them the maximum payout under the largest range of outcomes.

In the real world, these are considered idiosyncracies and personality flaws. In our profession, they are the obsessions and fixations that create investment outperformance.

No one succeeds because they "desperately want to be a hedge fund manager." Very few succeed because they "have a knack" for it because the investment world is wide and there are a ton of specialists out there who pore over all the runty little areas of the financial markets you're dabbling in.

I'll give you the same advice I gave the last guy who came by asking for advice on how to be a hedge fund manager. Sit down and learn about the business first. Read a ton of books, ask a ton of intelligent questions. Figure out why you want to go into this business and figure out WHERE you want to play in this business.

Do you have a security in mind? A strategy? A philosophical bent? If so, then go apprentice yourself to someone who is managing money in the area that you want to learn. Work cheap if you need to.

The money and positions will come after, if you're good at what you do. If you're awesome and make your bosses money, they come faster.

But targeting an age and an accomplishment is a mistake in my mind. It obfuscates the really important goal, absorbing as much knowledge about your chosen area as you possibly can. My view is that's the only way to make money over the long term.

Christ, this might be the best post in WSO history.

4/12/12
PennTeller:

Let's start with the basics.

1. Nothing is impossible.

2. Hope is not a strategy. At some point, the probability for a given event is low enough that you should consider it impossible. For example, I could tell you to go win the lottery which would give you the funds to start running an investment strategy.

Those are not the odds you're contending with, but given the fund raising/hiring environment for folks with solid credentials and applicable experience...they aren't far off.

Let me reiterate. If you were a third year analyst at Baupost with a Harvard degree, your odds of running a $100M hedge fund by age 35 would be pretty slim. Slim as in 1 in 100. Maybe. If you're lucky. Given your late start, the difficulty is magnified by a thousand fold.

The reason why folks come into this business is not because they want to be a hedge fund manager, though that's the end goal for many of us.

You only survive and advance in this business because you love the day to day of your work. For me, that love is understanding how companies work, finding undervalued and underappreciated ones and investing in them. For others, it is understanding the structure of economies, spiderweb of currencies and macro events that create trading opportunities. For still others, it is understanding the order of operations on a workout and selecting a specific tier of debt security because it gives them the maximum payout under the largest range of outcomes.

In the real world, these are considered idiosyncracies and personality flaws. In our profession, they are the obsessions and fixations that create investment outperformance.

No one succeeds because they "desperately want to be a hedge fund manager." Very few succeed because they "have a knack" for it because the investment world is wide and there are a ton of specialists out there who pore over all the runty little areas of the financial markets you're dabbling in.

I'll give you the same advice I gave the last guy who came by asking for advice on how to be a hedge fund manager. Sit down and learn about the business first. Read a ton of books, ask a ton of intelligent questions. Figure out why you want to go into this business and figure out WHERE you want to play in this business.

Do you have a security in mind? A strategy? A philosophical bent? If so, then go apprentice yourself to someone who is managing money in the area that you want to learn. Work cheap if you need to.

The money and positions will come after, if you're good at what you do. If you're awesome and make your bosses money, they come faster.

But targeting an age and an accomplishment is a mistake in my mind. It obfuscates the really important goal, absorbing as much knowledge about your chosen area as you possibly can. My view is that's the only way to make money over the long term.

I have not been on WSO for a long time, but this is without doubt the best post I have read so far.

5/8/13

PennTeller:

Let's start with the basics.

1. Nothing is impossible.

2. Hope is not a strategy. At some point, the probability for a given event is low enough that you should consider it impossible. For example, I could tell you to go win the lottery which would give you the funds to start running an investment strategy.

Those are not the odds you're contending with, but given the fund raising/hiring environment for folks with solid credentials and applicable experience...they aren't far off.

Let me reiterate. If you were a third year analyst at Baupost with a Harvard degree, your odds of running a $100M hedge fund by age 35 would be pretty slim. Slim as in 1 in 100. Maybe. If you're lucky. Given your late start, the difficulty is magnified by a thousand fold.

The reason why folks come into this business is not because they want to be a hedge fund manager, though that's the end goal for many of us.

You only survive and advance in this business because you love the day to day of your work. For me, that love is understanding how companies work, finding undervalued and underappreciated ones and investing in them. For others, it is understanding the structure of economies, spiderweb of currencies and macro events that create trading opportunities. For still others, it is understanding the order of operations on a workout and selecting a specific tier of debt security because it gives them the maximum payout under the largest range of outcomes.

In the real world, these are considered idiosyncracies and personality flaws. In our profession, they are the obsessions and fixations that create investment outperformance.

No one succeeds because they "desperately want to be a hedge fund manager." Very few succeed because they "have a knack" for it because the investment world is wide and there are a ton of specialists out there who pore over all the runty little areas of the financial markets you're dabbling in.

I'll give you the same advice I gave the last guy who came by asking for advice on how to be a hedge fund manager. Sit down and learn about the business first. Read a ton of books, ask a ton of intelligent questions. Figure out why you want to go into this business and figure out WHERE you want to play in this business.

Do you have a security in mind? A strategy? A philosophical bent? If so, then go apprentice yourself to someone who is managing money in the area that you want to learn. Work cheap if you need to.

The money and positions will come after, if you're good at what you do. If you're awesome and make your bosses money, they come faster.

But targeting an age and an accomplishment is a mistake in my mind. It obfuscates the really important goal, absorbing as much knowledge about your chosen area as you possibly can. My view is that's the only way to make money over the long term.


Wow.... so glad I came across this comment. It makes me feel better about the fact that I am far older than many who have just entered the field.

- wonderbread

4/11/12

^Amazing post.

4/11/12

Ravenous, I didn't figure out I wanted to be in finance until I was 24 (was in the military out of high school then went back to school at 21).

I'm 26 next month. Your post essentially told me to quit wasting time.

Thanks.

4/11/12

I got in a couple of months before I turned 24 also -- I took a gap year to raise money for college. Don't worry about your age. Just do what you need to do. There are a million reasons why something won't happen in life, but really you only need one reason to make it happen.

The WSO Advantage - Hedge Funds

Financial Modeling Training

IB Templates, M&A, LBO, Valuation.

Hedge Fund Interview Questions

10+ webinars & actual pitches.

Resume Help from HF Pros

Land More Interviews.

Find Your HF Mentor

Realistic HF Mock Interviews.

4/11/12

Ravenous and PennTeller, you guys truly are awesome in more ways than you can imagine. SB'd both.

This thread should be added to the HF FAQs.

4/11/12

+1, could not have said it better

4/11/12
PennTeller:

....In the real world, these are considered idiosyncracies and personality flaws. In our profession, they are the obsessions and fixations that create investment outperformance.

My favorite part. Awesome posts. Almost everyone I've ever met and respect in the buy side community has something that fits this category.

4/11/12

"Hope is not a strategy"

Something I still need to fully accept

4/11/12

PennTeller and Ravenous, this is the reason people come to WSO. I'm relieved to see these gems of advice in a desert of trolling.

Talent is hitting a target no one can hit.
Genius is hitting a target no one can see.

4/11/12

Do what excites you.

Work as hard as you can.

Don't accept failure.

Let the rest take care of itself.

4/11/12

Everyone aspires to do something similar, really. Few will get it done by 35.

Best bet?

Traditional. NO need to over-think this.

Pass CFA level 1 and 2 by 27
Network throughout
Get HF Analyst job ASAP
Prove your skills for 6 years

-----> At some point to achieve this you will, in fact, have to prove an ability to make money.

Assuming you prove skills, at 35, raise $100M with a partner (aim to makes friends with those older than you) and launch your fund

Just know you are not the only one chasing this. Proving your ability to make money will always separate the winners from losers.

You would also settle for $5-$8 million liquid cash (once again in today's dollars) for yourself by 35 as well.

---> Entrepreneur. Have you thought of any business ideas? Angel money is growing on trees these days.....

4/12/12
sk8247365:

You would also settle for $5-$8 million liquid cash (once again in today's dollars) for yourself by 35 as well.

---> Entrepreneur. Have you thought of any business ideas? Angel money is growing on trees these days.....

While it may not have seemed so much from my post, I am just as open to this as well.

I have played with different ideas for a while. Got some thinking to do. The input has been fantastic.

4/12/12

Why would your goal to be running a $100mm fund? After 2/20, employees, fees, and overhead, that isn't a whole lot of money--certainly a lot less than you seem to believe (on 20% returns after fees, your fund would be taking in $6mm, which isn't very much when you haven't paid any of the bills yet. You might take home $1-2mm pre-tax after all that). You also have to have a scalable strategy that has a reasonable Sharpe, something that likely is non-existent in whatever retail trading you're doing right now (I'm basically telling you your current experience is worthless for where you're trying to end up).

I would start off by actually learning about some markets you may be interested in and, I don't know, getting into a trading or research role so you could get exposure to something that's going to be relevant. I think you need to go there and see what it takes to attain any level of success before you can create some arbitrary goals that you believe define success. That would be my first step and it isn't going to be easy.

4/12/12

I have a close friend that is 31 and just received a summer analyst offer for a top tier bulge bracket investment bank. Never too late if you plan to live to be 90+.

4/12/12
No <a href=http://www.wallstreetoasis.com/finance-dictionary/... rel=nofollow>BS</a> Banker:

I have a close friend that is 31 and just received a summer analyst offer for a top tier bulge bracket investment bank. Never too late if you plan to live to be 90+.

holy shart

4/12/12
No <a href=http://www.wallstreetoasis.com/finance-dictionary/... rel=nofollow>BS</a> Banker:

I have a close friend that is 31 and just received a summer analyst offer for a top tier bulge bracket investment bank. Never too late if you plan to live to be 90+.

Same story here except in the UK - one of my close friends was a former professional (international level) rugby player and had to retire due to injury. SA at 30, FT offer for credit trading at a BB in London by 31. It is never too late to prove yourself

4/12/12

I had to SB the OP for mind fucking me. Well played.

4/12/12

I've thought of trying to make seed money for my own business from earnings made on the buy-side. I have a sincere desire to understand the markets and how to be a truly prudent investor, but I don't want to be a wage slave my entire life or make another guy rich from my efforts without getting a huge cut.

4/12/12

Uh, wow. 12 SBs and a Certified User tag from one comment. I'm torn on whether to have a Sally Field moment ("You like me, you really like me!") or whether to figure out if that's some sort of WSO record. Thanks guys. It's nice knowing that my rambling posts are appreciated.

TheWizeNut:

I've thought of trying to make seed money for my own business from earnings made on the buy-side. I have a sincere desire to understand the markets and how to be a truly prudent investor, but I don't want to be a wage slave my entire life or make another guy rich from my efforts without getting a huge cut.

This attitude is dangerous.

The first thing you need to realize about investing is that you learn by doing and learn by watching. This is an apprenticeship business. To a great degree, you are paid to learn, (ideally from a great investor). That's a ridiculously good deal.

The second thing you need to realize is that you are doing no one a favor by accepting a job in this world. They are doing you a favor by offering it.

The third thing you need to realize is that the only way you're going to get rich in this business is by making other people rich. I'm pretty underpaid compared to the value I generate. I'd wager Ravenous is criminally underpaid. Most people in sub-PM roles at a fund are going to be underpaid vs. their value generation. That's simply the price of entry.

The fourth thing you need to realize is that your worth to a fund manager today is optimistically zero, probably negative. That's okay , every single one of us, on entering the business, added absolutely no value to their bosses and probably detracted from it. Working at a fund is fundamentally different from any other job in finance because the focus is not transactional.

When a banker completes an M&A deal, it doesn't matter whether or not it's the right deal to make. He gets paid regardless. When I buy and own a stock, everything rides on whether or not it's the right buy to make. It's a constant cycle of investment thesis development, validation and invalidation that you get no where else in this industry.

I talk to MBA students every so often from Wharton and Harvard and Columbia and the topic of where they would come into the business from a hierarchical level always comes up. The hardest thing from them to accept is the fact that despite their years of banking or consulting experience and expensive educations...they come in at the bottom because the don't add any value for the first year or two they join.

Get into the business, prove yourself a money maker, a great trader, a top stock picker, whatever. This process will take years. When you get that credibility, then you can talk the big money commitments to a fund. There will be people willing to give you capital to do it.

But until then, it's just empty talk. Decide which side you want to be on.

EDIT: Wow, I sound like a dick in this, don't I? Sorry about that, not my intention. But this is the harsh reality of trying to enter the hedge fund world. Better to have your eyes wide open right?

4/12/12
PennTeller:

EDIT: Wow, I sound like a dick in this, don't I? Sorry about that, not my intention. But this is the harsh reality of trying to enter the hedge fund world. Better to have your eyes wide open right?

I'd much rather have a productive kick in the gut than a useless pandering to. Plus, I've gotten MUCH worse on this site. Part of it is because I spent 5 years in the army "proving" myself and decided it wasn't for me (I really only did it because I had no idea what else to do and no money).

So the idea of pandering to a bunch of men I don't necessarily ( I may end up respecting them) respect past their money making potential bothers me. The Army was Scumbag Central.

4/12/12
PennTeller:

Uh, wow. 12 SBs and a Certified User tag from one comment. I'm torn on whether to have a Sally Field moment ("You like me, you really like me!") or whether to figure out if that's some sort of WSO record. Thanks guys. It's nice knowing that my rambling posts are appreciated.

TheWizeNut:

I've thought of trying to make seed money for my own business from earnings made on the buy-side. I have a sincere desire to understand the markets and how to be a truly prudent investor, but I don't want to be a wage slave my entire life or make another guy rich from my efforts without getting a huge cut.

This attitude is dangerous.

The first thing you need to realize about investing is that you learn by doing and learn by watching. This is an apprenticeship business. To a great degree, you are paid to learn, (ideally from a great investor). That's a ridiculously good deal.

The second thing you need to realize is that you are doing no one a favor by accepting a job in this world. They are doing you a favor by offering it.

The third thing you need to realize is that the only way you're going to get rich in this business is by making other people rich. I'm pretty underpaid compared to the value I generate. I'd wager Ravenous is criminally underpaid. Most people in sub-PM roles at a fund are going to be underpaid vs. their value generation. That's simply the price of entry.

The fourth thing you need to realize is that your worth to a fund manager today is optimistically zero, probably negative. That's okay , every single one of us, on entering the business, added absolutely no value to their bosses and probably detracted from it. Working at a fund is fundamentally different from any other job in finance because the focus is not transactional.

When a banker completes an M&A deal, it doesn't matter whether or not it's the right deal to make. He gets paid regardless. When I buy and own a stock, everything rides on whether or not it's the right buy to make. It's a constant cycle of investment thesis development, validation and invalidation that you get no where else in this industry.

I talk to MBA students every so often from Wharton and Harvard and Columbia and the topic of where they would come into the business from a hierarchical level always comes up. The hardest thing from them to accept is the fact that despite their years of banking or consulting experience and expensive educations...they come in at the bottom because the don't add any value for the first year or two they join.

Get into the business, prove yourself a money maker, a great trader, a top stock picker, whatever. This process will take years. When you get that credibility, then you can talk the big money commitments to a fund. There will be people willing to give you capital to do it.

But until then, it's just empty talk. Decide which side you want to be on.

EDIT: Wow, I sound like a dick in this, don't I? Sorry about that, not my intention. But this is the harsh reality of trying to enter the hedge fund world. Better to have your eyes wide open right?

+1

This is another fantastic post. All prospecive monkeys should read and internalize this, because this is exactly how it is. I agree with everything in here. Hedge funds are an apprenticeship business. I don't know what the number is, but there may be 100 people in the US who are really good investors. Maybe it's higher than that, but it's not 500. There are thousands of funds of course, but most of them aren't any good. At the fund I work for, I don't know of any analysts that have survived the first year and not made at least $5 million by the time they were in their mid-30s at this shop or somewhere else. Most of them now run multi-hundred million dollar hedge funds or are partners at larger funds. Every one of them that I have talked to attribute their success to having worked here -- and it's no surprise, because the fund is in the top 1% of returns worldwide over a decade plus period.

That being said, it is brutal. Really, really brutal. The first year failure rate is around 80%. Second year is close to 50%. You add nothing in your first year here and can only hope not to detract too much. The best strategy is to come in, shut up, sit down, and do whatever you are told while trying not to screw anything up. If you're not working 7 days a week, you are doing it wrong. I don't care where anyone went to school, that's just the way it is. I've seen people with near perfect SAT scores and elite, prestigious backgrounds flame out in less than three months. And getting a job here is nearly impossible. HYPS + GS M&A + elite hedge fund? You might get an interview, but probably won't get in. I have seen people with some of the sickest backgrounds you can imagine get shown the door after 30 minutes in the hot seat -- usually not because of skill, but because of the attitude of entitlement ("I have to make X, come in at Y, and be promoted based on Z schedule or I'm not taking the job").

To me it has always been a net present value proposition. If this is the trade I want to learn (and make no mistake about it, it is a trade, not a job) and there are only 100 people in the country I could learn it well from, then what is that worth to me? I have no idea, but the answer is a lot -- I don't know how to calculate something specific, but even though I am criminally underpaid, I must be making at least a million dollars a year in deferred "knowledge compensation" that can be monetized at a later date. A lot of people don't really understand that. I made an offer to this kid out of an elite group at a BB and he passed to take a job paying twice as much at a mega fund PE shop where he would be 8th man on the deal team. I understand his decision, but I'm glad he did not take the job, because he obviously doesn't understand NPV -- we were literally trying to put him on the PM track within 12 months (mainly because of language skills we needed, not his investment skill, which was zero). He had the chance to work directly with a very skilled PM and he passed based on short-term earnings. It could prove to be one of the most expensive decisions he's ever made.

The way to succeed is to make your boss successful no matter what. Get a call at 8pm Saturday night because your boss needs something for the Asia market open the next day? You're on it. Need to pull three all nighters in a row because it's Russell rebalancing week and there a million ideas to look at? You're on it. Two month non-stop road trip across the country to meet dozens of companies? Better get on it. Road trip across Asia where you don't speak any of the languages? Make it happen. There's a block up for sale on a name you've never heard of and you need to give the PM an answer in under an hour (including getting the CFO on the phone to answer questions)? Don't fuck it up. If you want to move up, never say no and kill whatever is put in front of you.

Buffett has said you need an IQ of 120 to do this work and anything above that is wasted. That's probably true. What separates people in this business is 1) acquiring good training, and 2) wanting it more than anyone else. It's not a job, it's a lifestyle. If your goal is to make as much money as possible as fast as possible, this is not the place for you. It takes probably a decade of really, really hard work before you get anywhere close to "hedge fund money" (millions a year). As Penn noted above -- you have to have a personality defect to really want to do this. I don't mean that in the most negative sense of the word, but you have to willingly shut everything else out and just work. You have to be obsessive.

My advice to anyone wanting to break in echoes Penn's. It's pretty simple: Be humble, be smart, and work as hard as you can imagine. If you do that and get a couple of lucky breaks, you might have a shot.

4/12/12
Ravenous:
PennTeller:

Uh, wow. 12 SBs and a Certified User tag from one comment. I'm torn on whether to have a Sally Field moment ("You like me, you really like me!") or whether to figure out if that's some sort of WSO record. Thanks guys. It's nice knowing that my rambling posts are appreciated.

TheWizeNut:

I've thought of trying to make seed money for my own business from earnings made on the buy-side. I have a sincere desire to understand the markets and how to be a truly prudent investor, but I don't want to be a wage slave my entire life or make another guy rich from my efforts without getting a huge cut.

This attitude is dangerous.

The first thing you need to realize about investing is that you learn by doing and learn by watching. This is an apprenticeship business. To a great degree, you are paid to learn, (ideally from a great investor). That's a ridiculously good deal.

The second thing you need to realize is that you are doing no one a favor by accepting a job in this world. They are doing you a favor by offering it.

The third thing you need to realize is that the only way you're going to get rich in this business is by making other people rich. I'm pretty underpaid compared to the value I generate. I'd wager Ravenous is criminally underpaid. Most people in sub-PM roles at a fund are going to be underpaid vs. their value generation. That's simply the price of entry.

The fourth thing you need to realize is that your worth to a fund manager today is optimistically zero, probably negative. That's okay , every single one of us, on entering the business, added absolutely no value to their bosses and probably detracted from it. Working at a fund is fundamentally different from any other job in finance because the focus is not transactional.

When a banker completes an M&A deal, it doesn't matter whether or not it's the right deal to make. He gets paid regardless. When I buy and own a stock, everything rides on whether or not it's the right buy to make. It's a constant cycle of investment thesis development, validation and invalidation that you get no where else in this industry.

I talk to MBA students every so often from Wharton and Harvard and Columbia and the topic of where they would come into the business from a hierarchical level always comes up. The hardest thing from them to accept is the fact that despite their years of banking or consulting experience and expensive educations...they come in at the bottom because the don't add any value for the first year or two they join.

Get into the business, prove yourself a money maker, a great trader, a top stock picker, whatever. This process will take years. When you get that credibility, then you can talk the big money commitments to a fund. There will be people willing to give you capital to do it.

But until then, it's just empty talk. Decide which side you want to be on.

EDIT: Wow, I sound like a dick in this, don't I? Sorry about that, not my intention. But this is the harsh reality of trying to enter the hedge fund world. Better to have your eyes wide open right?

+1

This is another fantastic post. All prospecive monkeys should read and internalize this, because this is exactly how it is. I agree with everything in here. Hedge funds are an apprenticeship business. I don't know what the number is, but there may be 100 people in the US who are really good investors. Maybe it's higher than that, but it's not 500. There are thousands of funds of course, but most of them aren't any good. At the fund I work for, I don't know of any analysts that have survived the first year and not made at least $5 million by the time they were in their mid-30s at this shop or somewhere else. Most of them now run multi-hundred million dollar hedge funds or are partners at larger funds. Every one of them that I have talked to attribute their success to having worked here -- and it's no surprise, because the fund is in the top 1% of returns worldwide over a decade plus period.

That being said, it is brutal. Really, really brutal. The first year failure rate is around 80%. Second year is close to 50%. You add nothing in your first year here and can only hope not to detract too much. The best strategy is to come in, shut up, sit down, and do whatever you are told while trying not to screw anything up. If you're not working 7 days a week, you are doing it wrong. I don't care where anyone went to school, that's just the way it is. I've seen people with near perfect SAT scores and elite, prestigious backgrounds flame out in less than three months. And getting a job here is nearly impossible. HYPS + GS M&A + elite hedge fund? You might get an interview, but probably won't get in. I have seen people with some of the sickest backgrounds you can imagine get shown the door after 30 minutes in the hot seat -- usually not because of skill, but because of the attitude of entitlement ("I have to make X, come in at Y, and be promoted based on Z schedule or I'm not taking the job").

To me it has always been a net present value proposition. If this is the trade I want to learn (and make no mistake about it, it is a trade, not a job) and there are only 100 people in the country I could learn it well from, then what is that worth to me? I have no idea, but the answer is a lot -- I don't know how to calculate something specific, but even though I am criminally underpaid, I must be making at least a million dollars a year in deferred "knowledge compensation" that can be monetized at a later date. A lot of people don't really understand that. I made an offer to this kid out of an elite group at a BB and he passed to take a job paying twice as much at a mega fund PE shop where he would be 8th man on the deal team. I understand his decision, but I'm glad he did not take the job, because he obviously doesn't understand NPV -- we were literally trying to put him on the PM track within 12 months (mainly because of language skills we needed, not his investment skill, which was zero). He had the chance to work directly with a very skilled PM and he passed based on short-term earnings. It could prove to be one of the most expensive decisions he's ever made.

The way to succeed is to make your boss successful no matter what. Get a call at 8pm Saturday night because your boss needs something for the Asia market open the next day? You're on it. Need to pull three all nighters in a row because it's Russell rebalancing week and there a million ideas to look at? You're on it. Two month non-stop road trip across the country to meet dozens of companies? Better get on it. Road trip across Asia where you don't speak any of the languages? Make it happen. There's a block up for sale on a name you've never heard of and you need to give the PM an answer in under an hour (including getting the CFO on the phone to answer questions)? Don't fuck it up. If you want to move up, never say no and kill whatever is put in front of you.

Buffett has said you need an IQ of 120 to do this work and anything above that is wasted. That's probably true. What separates people in this business is 1) acquiring good training, and 2) wanting it more than anyone else. It's not a job, it's a lifestyle. If your goal is to make as much money as possible as fast as possible, this is not the place for you. It takes probably a decade of really, really hard work before you get anywhere close to "hedge fund money" (millions a year). As Penn noted above -- you have to have a personality defect to really want to do this. I don't mean that in the most negative sense of the word, but you have to willingly shut everything else out and just work. You have to be obsessive.

My advice to anyone wanting to break in echoes Penn's. It's pretty simple: Be humble, be smart, and work as hard as you can imagine. If you do that and get a couple of lucky breaks, you might have a shot.

This is a fantastic post and should be a must read for any person looking to break into a hedge fund. Prior to my career in VC, I spent time at a mega HF and can confirm all of this is some of the best advice you will find anywhere. Nicely done, Ravenous and Penn

"Jesus, he's like a gremlin; comes with instructions and shit"

4/12/12
Ravenous:

To me it has always been a net present value proposition. If this is the trade I want to learn (and make no mistake about it, it is a trade, not a job) and there are only 100 people in the country I could learn it well from, then what is that worth to me? I have no idea, but the answer is a lot -- I don't know how to calculate something specific, but even though I am criminally underpaid, I must be making at least a million dollars a year in deferred "knowledge compensation" that can be monetized at a later date. A lot of people don't really understand that. I made an offer to this kid out of an elite group at a BB and he passed to take a job paying twice as much at a mega fund PE shop where he would be 8th man on the deal team. I understand his decision, but I'm glad he did not take the job, because he obviously doesn't understand NPV -- we were literally trying to put him on the PM track within 12 months (mainly because of language skills we needed, not his investment skill, which was zero). He had the chance to work directly with a very skilled PM and he passed based on short-term earnings. It could prove to be one of the most expensive decisions he's ever made.

Because the preftigious track is a safer one brother. If your fund is a preftigious one and you were looking to hire someone on a fast-track to PM, I'm shocked you weren't paying more than a megafund brother. Every hedge fund manager thinks they're brilliant and hence, the value they place on someone getting to train to them is waaay too inflated. Looks like you're drinking your own cool aid too brother. The "kid" was wise to see that.

4/13/12
Ravenous:

The way to succeed is to make your boss successful no matter what. Get a call at 8pm Saturday night because your boss needs something for the Asia market open the next day? You're on it. Need to pull three all nighters in a row because it's Russell rebalancing week and there a million ideas to look at? You're on it. Two month non-stop road trip across the country to meet dozens of companies? Better get on it. Road trip across Asia where you don't speak any of the languages? Make it happen. There's a block up for sale on a name you've never heard of and you need to give the PM an answer in under an hour (including getting the CFO on the phone to answer questions)? Don't fuck it up. If you want to move up, never say no and kill whatever is put in front of you.

I echo the earlier comments about this being one of the best threads I've ever seen here. But just one thought for any prospective HF analysts who might be a bit put off by the above. Yes, you need to have a real passion for investing to succeed in this industry. Yes, you have to be humble and willing to work hard. Yes, being willing to go the extra mile can translate directly into making money (both for your firm and for yourself). That said, it's important to know that not every strategy requires the lifestyle extremes Ravenous mentioned. There are lots of ways to make money. Are you a thoughtful type who loves reading through financial statements, thinking deeply about business models and industries, and making long-term investments? There's a fund for you, too. There are plenty of successful funds that would never respond to an index reshuffle or try to make a decision in an hour on something they hadn't researched. Not trying to knock Ravenous' experience, but if this is something that interests you, know that you can do well in this industry and still be free at 8:00 on a Saturday night.

4/13/12
tempaccount:
Ravenous:

The way to succeed is to make your boss successful no matter what. Get a call at 8pm Saturday night because your boss needs something for the Asia market open the next day? You're on it. Need to pull three all nighters in a row because it's Russell rebalancing week and there a million ideas to look at? You're on it. Two month non-stop road trip across the country to meet dozens of companies? Better get on it. Road trip across Asia where you don't speak any of the languages? Make it happen. There's a block up for sale on a name you've never heard of and you need to give the PM an answer in under an hour (including getting the CFO on the phone to answer questions)? Don't fuck it up. If you want to move up, never say no and kill whatever is put in front of you.

I echo the earlier comments about this being one of the best threads I've ever seen here. But just one thought for any prospective HF analysts who might be a bit put off by the above. Yes, you need to have a real passion for investing to succeed in this industry. Yes, you have to be humble and willing to work hard. Yes, being willing to go the extra mile can translate directly into making money (both for your firm and for yourself). That said, it's important to know that not every strategy requires the lifestyle extremes Ravenous mentioned. There are lots of ways to make money. Are you a thoughtful type who loves reading through financial statements, thinking deeply about business models and industries, and making long-term investments? There's a fund for you, too. There are plenty of successful funds that would never respond to an index reshuffle or try to make a decision in an hour on something they hadn't researched. Not trying to knock Ravenous' experience, but if this is something that interests you, know that you can do well in this industry and still be free at 8:00 on a Saturday night.

This is encouraging (both comments). Working tons of hours doesn't bother me but I can be completely honest with myself and say that I don't want to sacrifice absolutely positively everything for personal wealth. The only things I am concerned with maintaining are my health, relationships (non business) and intellectual curiosity in things non finance (although philosophy, history, a desire to learn Spanish and French and my other intellectual interests all in some way relate to wealth building, except music). So I guess being realistic and making the correct compromises equates to the most long term happiness and freedom.

4/13/12
tempaccount:
Ravenous:

The way to succeed is to make your boss successful no matter what. Get a call at 8pm Saturday night because your boss needs something for the Asia market open the next day? You're on it. Need to pull three all nighters in a row because it's Russell rebalancing week and there a million ideas to look at? You're on it. Two month non-stop road trip across the country to meet dozens of companies? Better get on it. Road trip across Asia where you don't speak any of the languages? Make it happen. There's a block up for sale on a name you've never heard of and you need to give the PM an answer in under an hour (including getting the CFO on the phone to answer questions)? Don't fuck it up. If you want to move up, never say no and kill whatever is put in front of you.

I echo the earlier comments about this being one of the best threads I've ever seen here. But just one thought for any prospective HF analysts who might be a bit put off by the above. Yes, you need to have a real passion for investing to succeed in this industry. Yes, you have to be humble and willing to work hard. Yes, being willing to go the extra mile can translate directly into making money (both for your firm and for yourself). That said, it's important to know that not every strategy requires the lifestyle extremes Ravenous mentioned. There are lots of ways to make money. Are you a thoughtful type who loves reading through financial statements, thinking deeply about business models and industries, and making long-term investments? There's a fund for you, too. There are plenty of successful funds that would never respond to an index reshuffle or try to make a decision in an hour on something they hadn't researched. Not trying to knock Ravenous' experience, but if this is something that interests you, know that you can do well in this industry and still be free at 8:00 on a Saturday night.

You're right, it really depends on the fund and your personal goals. I love what I do and am hoping to start my own fund before 30 (might just squeak in, fingers crossed). When the mega millions frenzy was going, I realized that if I won, I would just keep doing what I am doing, which is a good sign.

There are lots of different fund strategies as well. The fund I work for is pretty extreme. The returns are epic. We have very defined competitive advantages and know exactly what we are looking for, but it is hard to find and requires scouring the globe. We move fast and hit hard -- speed kills in this business and opportunities in the capital markets don't stick around for long. It's not for everyone, but if you love the work, it's pretty exciting. There are "slower paced" funds (I don't mean that in the perjorative sense) with different strategies, and people can do very well there too.

Just to be clear though, we are pretty damn thoughtful about industry dynamics and business models, we just have it boiled down to a science in the sectors we follow (which is most everything). The problem with a lot of investment research is that people spend way too much time focusing on content that has deminishing marginal returns. Most companies, and therefore stocks, have 2 to 5 fundamental drivers. The 12th most important thing is not really going to move the needle. All you need to do is get a bead on those 2 to 5 things and be directionally correct at a reasonable valuation with some margin of safety based the fundamentals and the quality of the business. What constantly amazes me about the business is that I can read 50 page sell side initiation reports where it's pretty obvious that the team working on it spent weeks or months and still doesn't really "get it." They miss the magic behind the stock (the 2 to 5 drivers) and are focusing on all sorts of irrelevant stuff that, while interesting, isn't really going to matter that much to the company's performance. In other cases, the companies themselves don't even know what really drives their business (that's rare but it's pretty funny when you spot it).

I equate our strategy to speed dating (not that I've ever done that, but I can imagine). You can make the first cut very fast based on looks (in stocks, that's quantitative metrics). Next cut would be to meet the women and weed any out that have obvious defects -- personality, annoying laugh, whatever (that's the business description and rough cut industry fundamentals -- if it seems crappy right away, cut it from the list). Next maybe you're on a date with one of these lovely women, and you're looking for compatability (does this fit the model of what I know is a good company at a good price moving in the right direction?). By this time, there are very few contenders left from your screen, so all you need to do is double check that she doesn't have really bad credit or AIDS and you're good to go (no deal breakers in the corporate ownership structure, weird litigation, whatever).

I don't need to have the most detailed earnings model where I out smart the Street by a penny or use a 15x multiple instead of a 16x multiple -- that's a waste of time. I want to get involved with serious winners that are going to double or triple in value over a 3 - 5 year period (or faster, hopefully). To find those takes a lot of work and you have to be fast. You can't spend a week trying to figure something out. I look at hundreds of ideas a year, and every year the firm finds stuff that goes up 5x, 10x or 20x on the long side (although getting harder these days) and stuff that goes to zero on the short side. The ideas are out there. If you follow one industry and cover six stocks, you are going to spend most of your time looking at stuff that is efficiently priced leaving you with nothing to do.

4/12/12

If you're at a preftigious shop, you will definitely add value from year one. If you don't, then the shop is too bloated with staff.

PennTeller:

Let me reiterate. If you were a third year analyst at Baupost with a Harvard degree, your odds of running a $100M hedge fund by age 35 would be pretty slim. Slim as in 1 in 100. Maybe. If you're lucky. Given your late start, the difficulty is magnified by a thousand fold.

Wow hyperbole much? Raising $100mm isn't that difficult (i.e. more like 1 in 20) if you were trained at a preftigious shop. In most cases, your old PMs will back you and even contribute seed money. You don't work at a preftigious fund do you breh? Coz it sounds like you dunno how the bizness works up here brother.

And lol at all the unpreftigious brehs putting another unpreftigious breh up on a pedestal. Lol at the golden star sign of unpreftigiousness granted onto you brother. Just lol.

4/12/12

Why would we pay more? I gave him an analytical test of three companies and he failed all three. He worked at GS for three years, graduated at the top of his class from one of the best schools in the world, and was a national chess champion (i.e., very smart guy with a lot of potential) but knew nothing about investing. There's no reason to pay for that. We were offering him the chance to ramp quickly and contribute some rare language skills for a market that we wanted to enter. He would be paid for performance at a PM level after 12 months if he could pull it off. The opportunity was better for him than for us -- we found someone else the next week, he did not find an equivalent opportunity. His loss.

I know you are a troll, so I am not trying to convince you, but I bothered to write that for anyone else bright enough to run some basic math in their head. In other words, fuck your prestige.

4/13/12
Ravenous:

Why would we pay more? I gave him an analytical test of three companies and he failed all three. He worked at GS for three years, graduated at the top of his class from one of the best schools in the world, and was a national chess champion (i.e., very smart guy with a lot of potential) but knew nothing about investing. There's no reason to pay for that. We were offering him the chance to ramp quickly and contribute some rare language skills for a market that we wanted to enter. He would be paid for performance at a PM level after 12 months if he could pull it off. The opportunity was better for him than for us -- we found someone else the next week, he did not find an equivalent opportunity. His loss.

I know you are a troll, so I am not trying to convince you, but I bothered to write that for anyone else bright enough to run some basic math in their head. In other words, fuck your prestige.

Oh really? It was a better opportunity for him than a megafund job? REALLY? You guys were just looking to hire a translator, and were paying pittance for it ... pleease.

The dumbest thing an analyst can do is to join a firm on the buyside with a verbal "promise" for something greater. If he failed the tests and sucked that bad, then clearly he wasn't cut out for the job, and even more clearly, the fact that you still offered him the job means you were just after a translator, not a real future PM. I don't see what his credentials had to do with anything ... my fund rejects dozens of guys like that a year.

Just coz every unpreftigious bro in this thread is drinking your cool aid doesn't mean I will brother.

This thread should be called "Guide to unpreftigious HFs from unpreftigious HF analysts"

4/13/12
NewGuy:
Ravenous:

Why would we pay more? I gave him an analytical test of three companies and he failed all three. He worked at GS for three years, graduated at the top of his class from one of the best schools in the world, and was a national chess champion (i.e., very smart guy with a lot of potential) but knew nothing about investing. There's no reason to pay for that. We were offering him the chance to ramp quickly and contribute some rare language skills for a market that we wanted to enter. He would be paid for performance at a PM level after 12 months if he could pull it off. The opportunity was better for him than for us -- we found someone else the next week, he did not find an equivalent opportunity. His loss.

I know you are a troll, so I am not trying to convince you, but I bothered to write that for anyone else bright enough to run some basic math in their head. In other words, fuck your prestige.

Oh really? It was a better opportunity for him than a megafund job? REALLY? You guys were just looking to hire a translator, and were paying pittance for it ... pleease.

The dumbest thing an analyst can do is to join a firm on the buyside with a verbal "promise" for something greater. If he failed the tests and sucked that bad, then clearly he wasn't cut out for the job, and even more clearly, the fact that you still offered him the job means you were just after a translator, not a real future PM. I don't see what his credentials had to do with anything ... my fund rejects dozens of guys like that a year.

Just coz every unpreftigious bro in this thread is drinking your cool aid doesn't mean I will brother.

This thread should be called "Guide to unpreftigious HFs from unpreftigious HF analysts"

NewGuy do you ever contribute anything positive to these discussions? I haven't been on these forums for long but I can't help noticing that you only ever write aggressive and unhelpful comments.

What's with the kindergarden language too? If you really were such a "preftigious bro" at a "preftigious fund" I'm pretty damn sure you wouldn't be spending your day posting on WSO. My recommendation would be to learn English, tone down your trolling/absurd arrogance and shut up unless you have something helpful to add.

4/13/12
englandwales:
NewGuy:
Ravenous:

Why would we pay more? I gave him an analytical test of three companies and he failed all three. He worked at GS for three years, graduated at the top of his class from one of the best schools in the world, and was a national chess champion (i.e., very smart guy with a lot of potential) but knew nothing about investing. There's no reason to pay for that. We were offering him the chance to ramp quickly and contribute some rare language skills for a market that we wanted to enter. He would be paid for performance at a PM level after 12 months if he could pull it off. The opportunity was better for him than for us -- we found someone else the next week, he did not find an equivalent opportunity. His loss.

I know you are a troll, so I am not trying to convince you, but I bothered to write that for anyone else bright enough to run some basic math in their head. In other words, fuck your prestige.

Oh really? It was a better opportunity for him than a megafund job? REALLY? You guys were just looking to hire a translator, and were paying pittance for it ... pleease.

The dumbest thing an analyst can do is to join a firm on the buyside with a verbal "promise" for something greater. If he failed the tests and sucked that bad, then clearly he wasn't cut out for the job, and even more clearly, the fact that you still offered him the job means you were just after a translator, not a real future PM. I don't see what his credentials had to do with anything ... my fund rejects dozens of guys like that a year.

Just coz every unpreftigious bro in this thread is drinking your cool aid doesn't mean I will brother.

This thread should be called "Guide to unpreftigious HFs from unpreftigious HF analysts"

NewGuy do you ever contribute anything positive to these discussions? I haven't been on these forums for long but I can't help noticing that you only ever write aggressive and unhelpful comments.

What's with the kindergarden language too? If you really were such a "preftigious bro" at a "preftigious fund" I'm pretty damn sure you wouldn't be spending your day posting on WSO. My recommendation would be to learn English, tone down your trolling/absurd arrogance and shut up unless you have something helpful to add.

Don't respond to him and he will go away...hence why he doesn't get much MS for all the bullshit he posts.. trolls are fueled by the attention.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

1/28/14

NewGuy:

Ravenous:

Why would we pay more? I gave him an analytical test of three companies and he failed all three. He worked at GS for three years, graduated at the top of his class from one of the best schools in the world, and was a national chess champion (i.e., very smart guy with a lot of potential) but knew nothing about investing. There's no reason to pay for that. We were offering him the chance to ramp quickly and contribute some rare language skills for a market that we wanted to enter. He would be paid for performance at a PM level after 12 months if he could pull it off. The opportunity was better for him than for us -- we found someone else the next week, he did not find an equivalent opportunity. His loss.

I know you are a troll, so I am not trying to convince you, but I bothered to write that for anyone else bright enough to run some basic math in their head. In other words, fuck your prestige.

Oh really? It was a better opportunity for him than a megafund job? REALLY? You guys were just looking to hire a translator, and were paying pittance for it ... pleease.

The dumbest thing an analyst can do is to join a firm on the buyside with a verbal "promise" for something greater. If he failed the tests and sucked that bad, then clearly he wasn't cut out for the job, and even more clearly, the fact that you still offered him the job means you were just after a translator, not a real future PM. I don't see what his credentials had to do with anything ... my fund rejects dozens of guys like that a year.

Just coz every unpreftigious bro in this thread is drinking your cool aid doesn't mean I will brother.

This thread should be called "Guide to unpreftigious HFs from unpreftigious HF analysts"


The more people you meet in this game and just hear their personal stories their adventures in this crazy journey of life. I'd swear I know who this guy is that didn't get hired and he is currently running his own HF.
4/12/12

these posts are the most valuable WSO has ever seen or will ever seen, I am uploading monies right now to give you some bananas.

Thank you for this, this is fkin brilliant.

4/12/12

The opinions really have been incredibly helpful. A much needed reality check.

4/12/12

And incredible posts by the way.

4/12/12

Wow great post, Ravenous and Penn. Quick question. I am pretty much in the same shoes as the OP. I am 26/27 years old working at a Big 4 firm and graduated from a non-target. I am not learning shit from my current job and feel that I am wasting my life. I tried cold calls, cold e-mails, and going to networking events, but I can't even get an assistant ER analyst position. I don't care how much I get paid right now, but I just want break into the industry. While your posts are extremely insightful, but I still need to break into the industry. Could you please share some light on how to break into the industry? Thank you very much!

4/12/12

As usual on the hedge fund threads, Ravenous and Penn have done a great job. I'll try to offer my minor contribution. I can sympathize with the "Ho-Hum to hedge fund" as I went to a school most people on this thread have never heard of and work for a fund most have heard of.

People here are quick to knock on the CFA as a pedagogical derelict of the long-only space and a beacon of false hope for those not already in the business, but it does present opportunities. The job board is much better than efinancialcareers and the tests show a basic dedication to the industry. Many funds post opportunities there. The big funds are obsessed with pedigree, so its hard to break in at Third Point/York/SAC type of funds without an ivy league degree and two years of banking experience. If you are coming from a different background, take the CFA exams, read obsessively, and run your PA. Try to find a list of all the funds you think are good and figure out if you connections there. If you can really offer something, a lot of smaller funds (<2bn AUM) will be more willing to take a chance on you.

Its probably easier to get your foot in the door at a long/short fund than a global macro fund, risk arb, or quant. Guys at global macro funds come from prop desks at the banks (now defunct) or have PhD's. Guys at risk arb funds all did two year M&A stints. The quant funds are loathe to touch finance types and hire physics, math, and stats Phd's. If you have a solid handle on accounting, are willing to do work in your free time, and can detach yourself from emotions, sell side research, and the main stream media you can be a decent equity analyst. The skills it takes to be a good equity analyst are learned over time and don't require being a freak of nature genius. If you want to work of the Ren-Tech's or DE Shaw's of the world, you have to be an off the charts 99.9999% intelligence type of guy. I know I'm not one of those and have no trouble living with it.

Go to the websites of the best business school's (for equity funds this means Columbia, Harvard, and Wharton), download the syllabus for relevant courses, and read the books. Spend your weekends researching ideas. If you come across something great, make a list of 20 funds and send your write up to the PM. I wouldn't do this unless you had an amazing idea, but its always worth a shot. CapIQ and Bloomberg make it easy to find contact info.

In terms of starting your own fund, its a lot harder than landing a job in the industry. I know a few guys that launched at <35 and they had substantial seed capital. Many of the successful funds have programs. Greenlight Masters, Tiger Cubs (more informal), and many SAC alums make up a huge portion of new launches. As unfair as it may be, if you have really rich friends this could be a great help. Very average guys start funds because they have the capital but their returns really aren't much better than the market but that is a story for another time.

Best of luck. Take the CFA tests, read obsessively, crush the market in your PA. Network and figure out what type of fund you would click in.

4/16/12
Gray Fox:

As usual on the hedge fund threads, Ravenous and Penn have done a great job. I'll try to offer my minor contribution. I can sympathize with the "Ho-Hum to hedge fund" as I went to a school most people on this thread have never heard of and work for a fund most have heard of.

People here are quick to knock on the CFA as a pedagogical derelict of the long-only space and a beacon of false hope for those not already in the business, but it does present opportunities. The job board is much better than efinancialcareers and the tests show a basic dedication to the industry. Many funds post opportunities there. The big funds are obsessed with pedigree, so its hard to break in at Third Point/York/SAC type of funds without an ivy league degree and two years of banking experience. If you are coming from a different background, take the CFA exams, read obsessively, and run your PA. Try to find a list of all the funds you think are good and figure out if you connections there. If you can really offer something, a lot of smaller funds (<2bn AUM) will be more willing to take a chance on you.

Its probably easier to get your foot in the door at a long/short fund than a global macro fund, risk arb, or quant. Guys at global macro funds come from prop desks at the banks (now defunct) or have PhD's. Guys at risk arb funds all did two year M&A stints. The quant funds are loathe to touch finance types and hire physics, math, and stats Phd's. If you have a solid handle on accounting, are willing to do work in your free time, and can detach yourself from emotions, sell side research, and the main stream media you can be a decent equity analyst. The skills it takes to be a good equity analyst are learned over time and don't require being a freak of nature genius. If you want to work of the Ren-Tech's or DE Shaw's of the world, you have to be an off the charts 99.9999% intelligence type of guy. I know I'm not one of those and have no trouble living with it.

Go to the websites of the best business school's (for equity funds this means Columbia, Harvard, and Wharton), download the syllabus for relevant courses, and read the books. Spend your weekends researching ideas. If you come across something great, make a list of 20 funds and send your write up to the PM. I wouldn't do this unless you had an amazing idea, but its always worth a shot. CapIQ and Bloomberg make it easy to find contact info.

In terms of starting your own fund, its a lot harder than landing a job in the industry. I know a few guys that launched at <35 and they had substantial seed capital. Many of the successful funds have programs. Greenlight Masters, Tiger Cubs (more informal), and many SAC alums make up a huge portion of new launches. As unfair as it may be, if you have really rich friends this could be a great help. Very average guys start funds because they have the capital but their returns really aren't much better than the market but that is a story for another time.

Best of luck. Take the CFA tests, read obsessively, crush the market in your PA. Network and figure out what type of fund you would click in.

This post is so good that it got my juices flowing! Insightful! It is going straight to my mental archive for reference!

4/13/12

Awesome thread. In for further tracking.

My name is Nicky, but you can call me Dre.

4/13/12

Motion to ban NewGuy. If you're going to be a prestige troll, at least be funny. blumie is rolling over in his grave at this bush-leagueness.

4/13/12

What I find hilarious is that you guys get so caught up on the way I choose to convey my messages, that you miss the crucial points underlying them. I have nothing to gain from this forum, but I do enjoy helping people, believe it or not. If you look at my prior posts, you'll see plenty evidence of me educating unpreftigious folks with my preftigious knowledge.

The only way I can do that and gain any value from posting here is by entertaining myself by getting unpreftigious bros irate as fuarkkk. God knows I won't learn anything from the misinformation and broscience constantly perpetuated by TTT bros working at unpreftigious funds and middle market firms who you guys seem to hold in such high esteem. I recognize a message from someone working at an unpreftigious buyside firm when I see it, and I will always call them out on it. Ya'll can keep drinking their coolaid if you want.

Lol just lol at you guys whining coz a preftigious bro is being mean to you and not acknowledging your TTT accomplishments on the internet. Just lol.

4/14/12

Amazing posts Ravenous and PennTeller, as someone entering the industry in few months (incredibly excited after reading this thread) it's great to hear the perspective from further up the food chain.

NewGuy:

What I find hilarious is that you guys get so caught up on the way I choose to convey my messages, that you miss the crucial points underlying them. I have nothing to gain from this forum, but I do enjoy helping people, believe it or not. If you look at my prior posts, you'll see plenty evidence of me educating unpreftigious folks with my preftigious knowledge.

The only way I can do that and gain any value from posting here is by entertaining myself by getting unpreftigious bros irate as fuarkkk. God knows I won't learn anything from the misinformation and broscience constantly perpetuated by TTT bros working at unpreftigious funds and middle market firms who you guys seem to hold in such high esteem. I recognize a message from someone working at an unpreftigious buyside firm when I see it, and I will always call them out on it. Ya'll can keep drinking their coolaid if you want.

Lol just lol at you guys whining coz a preftigious bro is being mean to you and not acknowledging your TTT accomplishments on the internet. Just lol.

If you were really as intelligent as you claim, you would understand the basic idea that conveying your message in a certain way creates a different meaning. Although what your saying may be helpful, no one knows what the fuck your talking about. Please don't fool yourself, you don't add any value. I may not add value either, but it's incredibly clear that other posts do for most users on this forum.

Honestly, feel free to tell us all how it really is in your prestigious firm; what do you have to do to get ahead and how did you climb the ladder? I'd be interested to see how great my life could have been...

4/14/12
eriginal:

If you were really as intelligent as you claim, you would understand the basic idea that conveying your message in a certain way creates a different meaning. Although what your saying may be helpful, no one knows what the fuck your talking about. Please don't fool yourself, you don't add any value. I may not add value either, but it's incredibly clear that other posts do for most users on this forum.

Honestly, feel free to tell us all how it really is in your prestigious firm; what do you have to do to get ahead and how did you climb the ladder? I'd be interested to see how great my life could have been...

Dude, with NewGuy you have to sift through the crap to get to the good stuff.

e.g.:
http://www.wallstreetoasis.com/forums/levered-free...

http://www.wallstreetoasis.com/forums/modeling-int...

http://www.wallstreetoasis.com/forums/evfcff-multiple

"After you work on Wall Street it's a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side." - David Tepper

4/13/12

Could someone please give me some good advice on how to break into the industry? As I mentioned on my previous post. I went to non-target and currently working at Big 4 audit. I tried to cold call, cold e-mail, and go to events. Nothing is working out so far. Any advice would be appreciated. Thanks.

4/13/12
ieatbananaforlunch:

Could someone please give me some good advice on how to break into the industry? As I mentioned on my previous post. I went to non-target and currently working at Big 4 audit. I tried to cold call, cold e-mail, and go to events. Nothing is working out so far. Any advice would be appreciated. Thanks.

You can't be serious please read this post then try again. Also this type of not searching for something is the exact attitutde that the cert users are talking about wont succeed in this business.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

4/13/12

If it's very much an apprenticeship type job where the PM that you work for will basically shape your career, then for the people who don't have "preftigious" (wtf?) backgrounds and who might only have a shot at getting interviewed at non elite funds, can this be a dangerous move since you might be learning from someone who might not be the best? Or should you just assume that any PM who was able to raise a decent sized fund (500 million+?) is smart enough and worth your time to learn from?

I came from back office at a major institutional mutual fund, decided it wasn't for me and worked my butt off to get onto the research team, first as an intern and now as an associate who is also on a fast track to soon become analyst. I read every book out there and just started submitting investment ideas to the analyst I had befriended. I'd like to move over to a HF for many reasons (earnings potential being low on that list of reasons) and realize that with my background, I basically don't have a shot at interviewing at any of the elite funds. I don't come from a target school or have the CFA designation at the moment either.

How do I determine the worthwhile funds or managers to target and hopefully work for and learn from? Obviously after narrowing down the search to the investment style I fit, how do you know who's good? Seeing the way many people describe being a HF analyst, it seems job security isn't the greatest. You might burn out or the fund might close down. So it seems choosing the first HF you work for is a monumentally important task. Any ideas?

4/13/12
numnum:

If it's very much an apprenticeship type job where the PM that you work for will basically shape your career, then for the people who don't have "preftigious" (wtf?) backgrounds and who might only have a shot at getting interviewed at non elite funds, can this be a dangerous move since you might be learning from someone who might not be the best? Or should you just assume that any PM who was able to raise a decent sized fund (500 million+?) is smart enough and worth your time to learn from?

I came from back office at a major institutional mutual fund, decided it wasn't for me and worked my butt off to get onto the research team, first as an intern and now as an associate who is also on a fast track to soon become analyst. I read every book out there and just started submitting investment ideas to the analyst I had befriended. I'd like to move over to a HF for many reasons (earnings potential being low on that list of reasons) and realize that with my background, I basically don't have a shot at interviewing at any of the elite funds. I don't come from a target school or have the CFA designation at the moment either.

How do I determine the worthwhile funds or managers to target and hopefully work for and learn from? Obviously after narrowing down the search to the investment style I fit, how do you know who's good? Seeing the way many people describe being a HF analyst, it seems job security isn't the greatest. You might burn out or the fund might close down. So it seems choosing the first HF you work for is a monumentally important task. Any ideas?

It's more art than science. Consider it a blend of coaching tree, personality fit, and your own personal quirks with regards to your investment style. If they are US equity focused, taking a look at the 13-Fs can help you find them. Otherwise, a lot of it is talking to recruiters and getting references from people who have worked with the principals

If they're reasonably reputable, they shouldn't mind sharing with you some performance metrics (preferably with levered and unlevered performance) during the interview process. In most cases, you'll meet with a large portion of the investment team (and sometimes operations team) which can help form some opinions.

But ultimately it comes down to the philosophy behind the fund, the people who work there, and the style they use. It takes a lot of tries to get there and it's often a shot in the dark, but one worth taking.

4/13/12

Second the question about apprenticing yourself to a PM - does this hold true for other investment styles besides equity L/S, such as global macro?

For instance, the skillset in equity L/S seems to be the same at both the analyst and PM level: learning how to look at companies and evaluating if they're underpriced. In that investment style, it makes sense to "apprentice" yourself to a PM as soon as possible to pick up those skills.

However, if you join a global macro fund in a junior role - i.e. cranking out economic research and data - how likely is it that you'll learn the trade construction and risk management skills that strategists/PMs need to have? Would it be a better idea to start out in S&T, where you have a more direct path to managing risk, rather than apprenticing yourself to a global macro fund manager?

Thanks

4/14/12
dgvvvrt:

Second the question about apprenticing yourself to a PM - does this hold true for other investment styles besides equity L/S, such as global macro?

For instance, the skillset in equity L/S seems to be the same at both the analyst and PM level: learning how to look at companies and evaluating if they're underpriced. In that investment style, it makes sense to "apprentice" yourself to a PM as soon as possible to pick up those skills.

However, if you join a global macro fund in a junior role - i.e. cranking out economic research and data - how likely is it that you'll learn the trade construction and risk management skills that strategists/PMs need to have? Would it be a better idea to start out in S&T, where you have a more direct path to managing risk, rather than apprenticing yourself to a global macro fund manager?

Thanks

Where I work analyst is not often a path to PM for this very reason. The analysts are basically grinders who churn out research but they usually gain very little knowledge about the products we trade or how to manage risk and actually run a book. The analyst job is quite prestigious, but the math is pretty simple...if you have spent so many years of your life attaining the education neccesary to be an analyst at a top fund then you arent going to have the same market background as somebody who has sat on trading desks and worked in the business for that decade. This is the way it is in macro i cant speak to any other strategy.

4/15/12
Bondarb:
dgvvvrt:

Second the question about apprenticing yourself to a PM - does this hold true for other investment styles besides equity L/S, such as global macro?

For instance, the skillset in equity L/S seems to be the same at both the analyst and PM level: learning how to look at companies and evaluating if they're underpriced. In that investment style, it makes sense to "apprentice" yourself to a PM as soon as possible to pick up those skills.

However, if you join a global macro fund in a junior role - i.e. cranking out economic research and data - how likely is it that you'll learn the trade construction and risk management skills that strategists/PMs need to have? Would it be a better idea to start out in S&T, where you have a more direct path to managing risk, rather than apprenticing yourself to a global macro fund manager?

Thanks

Where I work analyst is not often a path to PM for this very reason. The analysts are basically grinders who churn out research but they usually gain very little knowledge about the products we trade or how to manage risk and actually run a book. The analyst job is quite prestigious, but the math is pretty simple...if you have spent so many years of your life attaining the education neccesary to be an analyst at a top fund then you arent going to have the same market background as somebody who has sat on trading desks and worked in the business for that decade. This is the way it is in macro i cant speak to any other strategy.

This has been a tremendous informative thread! Thanks guys.

So how does one become a PM?? Would it be better to start as junior PM instead of research?

4/19/12
Walkerr:
Bondarb:
dgvvvrt:

Second the question about apprenticing yourself to a PM - does this hold true for other investment styles besides equity L/S, such as global macro?

For instance, the skillset in equity L/S seems to be the same at both the analyst and PM level: learning how to look at companies and evaluating if they're underpriced. In that investment style, it makes sense to "apprentice" yourself to a PM as soon as possible to pick up those skills.

However, if you join a global macro fund in a junior role - i.e. cranking out economic research and data - how likely is it that you'll learn the trade construction and risk management skills that strategists/PMs need to have? Would it be a better idea to start out in S&T, where you have a more direct path to managing risk, rather than apprenticing yourself to a global macro fund manager?

Thanks

Where I work analyst is not often a path to PM for this very reason. The analysts are basically grinders who churn out research but they usually gain very little knowledge about the products we trade or how to manage risk and actually run a book. The analyst job is quite prestigious, but the math is pretty simple...if you have spent so many years of your life attaining the education neccesary to be an analyst at a top fund then you arent going to have the same market background as somebody who has sat on trading desks and worked in the business for that decade. This is the way it is in macro i cant speak to any other strategy.

This has been a tremendous informative thread! Thanks guys.

So how does one become a PM?? Would it be better to start as junior PM instead of research?

I have posted alot about this in the past but PMs in macro come from many many different backgrounds,,,there really isnt a peth to this job. I would say most common is sell-side trading but I came from a background of buyside ops and then buyside strategy...but I never worked purely as an analyst...ie i was never a guy who worked for a firm churning out research I always worked for specific PMs who I helped with trade ideas, position sizing, managing positions, even trading psychology... This is much closer to PM then a PhD that we hire to hire to run analysis but who wouldnt know where to start if u said "OK, good job, now run a a 500M macro interest rate book". I know other PMs who came from all different backgrounds and its one of the reasons i like my job...it is really a job that is for free-thinking people that are smart but also not neccesarily from the tried and true path.

4/20/12
Bondarb:
Walkerr:
Bondarb:
dgvvvrt:

Second the question about apprenticing yourself to a PM - does this hold true for other investment styles besides equity L/S, such as global macro?

For instance, the skillset in equity L/S seems to be the same at both the analyst and PM level: learning how to look at companies and evaluating if they're underpriced. In that investment style, it makes sense to "apprentice" yourself to a PM as soon as possible to pick up those skills.

However, if you join a global macro fund in a junior role - i.e. cranking out economic research and data - how likely is it that you'll learn the trade construction and risk management skills that strategists/PMs need to have? Would it be a better idea to start out in S&T, where you have a more direct path to managing risk, rather than apprenticing yourself to a global macro fund manager?

Thanks

Where I work analyst is not often a path to PM for this very reason. The analysts are basically grinders who churn out research but they usually gain very little knowledge about the products we trade or how to manage risk and actually run a book. The analyst job is quite prestigious, but the math is pretty simple...if you have spent so many years of your life attaining the education neccesary to be an analyst at a top fund then you arent going to have the same market background as somebody who has sat on trading desks and worked in the business for that decade. This is the way it is in macro i cant speak to any other strategy.

This has been a tremendous informative thread! Thanks guys.

So how does one become a PM?? Would it be better to start as junior PM instead of research?

I have posted alot about this in the past but PMs in macro come from many many different backgrounds,,,there really isnt a peth to this job. I would say most common is sell-side trading but I came from a background of buyside ops and then buyside strategy...but I never worked purely as an analyst...ie i was never a guy who worked for a firm churning out research I always worked for specific PMs who I helped with trade ideas, position sizing, managing positions, even trading psychology... This is much closer to PM then a PhD that we hire to hire to run analysis but who wouldnt know where to start if u said "OK, good job, now run a a 500M macro interest rate book". I know other PMs who came from all different backgrounds and its one of the reasons i like my job...it is really a job that is for free-thinking people that are smart but also not neccesarily from the tried and true path.

Thanks Bondarb... When you say buyside strategy do you mean HF or AM? Have you seen a good number of people transition from strategist/PM roles in AM over to HF?

5/18/13

dgvvvrt:

Bondarb:
Walkerr:
Bondarb:
dgvvvrt:

Second the question about apprenticing yourself to a PM - does this hold true for other investment styles besides equity L/S, such as global macro?

For instance, the skillset in equity L/S seems to be the same at both the analyst and PM level: learning how to look at companies and evaluating if they're underpriced. In that investment style, it makes sense to "apprentice" yourself to a PM as soon as possible to pick up those skills.

However, if you join a global macro fund in a junior role - i.e. cranking out economic research and data - how likely is it that you'll learn the trade construction and risk management skills that strategists/PMs need to have? Would it be a better idea to start out in S&T, where you have a more direct path to managing risk, rather than apprenticing yourself to a global macro fund manager?

Thanks

Where I work analyst is not often a path to PM for this very reason. The analysts are basically grinders who churn out research but they usually gain very little knowledge about the products we trade or how to manage risk and actually run a book. The analyst job is quite prestigious, but the math is pretty simple...if you have spent so many years of your life attaining the education neccesary to be an analyst at a top fund then you arent going to have the same market background as somebody who has sat on trading desks and worked in the business for that decade. This is the way it is in macro i cant speak to any other strategy.

This has been a tremendous informative thread! Thanks guys.

So how does one become a PM?? Would it be better to start as junior PM instead of research?

I have posted alot about this in the past but PMs in macro come from many many different backgrounds,,,there really isnt a peth to this job. I would say most common is sell-side trading but I came from a background of buyside ops and then buyside strategy...but I never worked purely as an analyst...ie i was never a guy who worked for a firm churning out research I always worked for specific PMs who I helped with trade ideas, position sizing, managing positions, even trading psychology... This is much closer to PM then a PhD that we hire to hire to run analysis but who wouldnt know where to start if u said "OK, good job, now run a a 500M macro interest rate book". I know other PMs who came from all different backgrounds and its one of the reasons i like my job...it is really a job that is for free-thinking people that are smart but also not neccesarily from the tried and true path.

Thanks Bondarb... When you say buyside strategy do you mean HF or AM? Have you seen a good number of people transition from strategist/PM roles in AM over to HF?

Hedge Fund (actually a prop desk at a dealer back when they wre basically hedge funds)...I mean i helped a PM manage his positions, size them, come up with ideas etc. In my mind an analyst is someone who you ask to run research on broad topics whereas a strategist is more someone whose job it is to suggest soecific trade ideas and help the PM manage his book. This job requires serious product knowledge especially in macro...think "we should buy XYZ part of the curve", "we need to be bigger in this trade" etc vs an analyst who does things like reseraching the canadian housing market and bigger picture things liek that.

4/13/12

Great thread. Thank you to everyone who contributed, something useful at least.

I only recently realized this is what I'd like to do, but my goal around 35 is running and managing my own start-up fund, about $15-$50 million (and I don't give a f*ck how unpreftigious that is). However, I'm on track to attend business school next fall. With scholarship and savings, it leaves me with little/no debt, but I'm still not sure if its a better use of my time than trying to break into the field directly (25 yrs old, unrelated degree/work experience).

Although it's a great school for finance, I don't think many people go into hedge funds after graduation (I'm still trying to get a clearer answer about this). And, rather than getting *any* hedge fund job, it's extremely important to me to work for someone whose style/philosophy I admire and want to emulate.

So, the next two years....

Say screw business school, take my savings to work on my PA, and hussle/network/lie/cheat/steal my way into a job? Or, go to business school, learn and earn something with my time, and go into the field after?

4/14/12
kariraisu:

Great thread. Thank you to everyone who contributed, something useful at least.

I only recently realized this is what I'd like to do, but my goal around 35 is running and managing my own start-up fund, about $15-$50 million (and I don't give a f*ck how unpreftigious that is). However, I'm on track to attend business school next fall. With scholarship and savings, it leaves me with little/no debt, but I'm still not sure if its a better use of my time than trying to break into the field directly (25 yrs old, unrelated degree/work experience).

Although it's a great school for finance, I don't think many people go into hedge funds after graduation (I'm still trying to get a clearer answer about this). And, rather than getting *any* hedge fund job, it's extremely important to me to work for someone whose style/philosophy I admire and want to emulate.

So, the next two years....

Say screw business school, take my savings to work on my PA, and hussle/network/lie/cheat/steal my way into a job? Or, go to business school, learn and earn something with my time, and go into the field after?

I personally think you're going about this about as wrong of a way as you could. Having the goal to 'have your own fund' of some arbitrary size when you have no industry experience is probably not what you should be doing. Do you know what it is like to work in the industry? Do you have any idea what type of strategy or fund you would even want to be a part of? Why are you going to b-school instead of getting an MFE/MSF, working as an IBD analyst, as a TA at a prop shop/HF, in ER at a bank, or a million other things? Not to say 1 is better/worse than any another, but I would hope that these are things you've thought about and planned out because they will be much more important than putting nebulous, unsubstantiated goals into your head. btw unless it is entirely your own capital, a $15mm fund is going to result in everybody getting paid dirt, if that.

4/14/12
Jerome Marrow:

I personally think you're going about this about as wrong of a way as you could. Having the goal to 'have your own fund' of some arbitrary size when you have no industry experience is probably not what you should be doing. Do you know what it is like to work in the industry? Do you have any idea what type of strategy or fund you would even want to be a part of? Why are you going to b-school instead of getting an MFE/MSF, working as an IBD analyst, as a TA at a prop shop/HF, in ER at a bank, or a million other things? Not to say 1 is better/worse than any another, but I would hope that these are things you've thought about and planned out because they will be much more important than putting nebulous, unsubstantiated goals into your head. btw unless it is entirely your own capital, a $15mm fund is going to result in everybody getting paid dirt, if that.

Worked in industry - no
Style - Contrarian/Value
BSchool - my goals were different when I applied. Hence, why I'm reevaluating.
Fund size - Understood. The point would be to have a very small opperation or something run entirely by myself. Again, this is 10 years out, and I figured my situation didn't sound radically different than the OP. I recognize building a track record is key, so would the prestige/knowledge/contacts of a degree outweigh what I could build in two years as an apprentice, earning a CFA, etc. Just trying to answer that before classes start.

4/14/12
kariraisu:

Worked in industry - no
Style - Contrarian/Value
BSchool - my goals were different when I applied. Hence, why I'm reevaluating.
Fund size - Understood. The point would be to have a very small opperation or something run entirely by myself. Again, this is 10 years out, and I figured my situation didn't sound radically different than the OP. I recognize building a track record is key, so would the prestige/knowledge/contacts of a degree outweigh what I could build in two years as an apprentice, earning a CFA, etc. Just trying to answer that before classes start.

This post was originally meant as half hypothetical/half what I really want but yeah, I think "have a small operation or something I run entirely by myself" sounds like the life to me. After the military, I found a serious personal dislike for another person completely controlling my day to day.

It doesn't have to be managing a large fund necessarily either. I have thought about a combination of prudent real estate investing and trading mine and a few other people's money as well. One thing I worry about is having tunnel vision when it comes to wealth creation. I love looking at small business deals (I think absentee laundromats can have excellent return relative to time commitment) & real estate as well. Trading is just something I have been especially good at lately and have lots of confidence in my ability to succeed.

I trade mainly numbers and volatility rather than value/growth, yet I see people make money in both. I don't believe you need to get caught up in the minutae of a very specific set of investment banking analyst skills to become wealthy, although that is without a doubt one route.

Then there is being good at tax avoidance, another piece to the wealth puzzle IMO.

4/14/12
TheWizeNut:
kariraisu:

Worked in industry - no
Style - Contrarian/Value
BSchool - my goals were different when I applied. Hence, why I'm reevaluating.
Fund size - Understood. The point would be to have a very small opperation or something run entirely by myself. Again, this is 10 years out, and I figured my situation didn't sound radically different than the OP. I recognize building a track record is key, so would the prestige/knowledge/contacts of a degree outweigh what I could build in two years as an apprentice, earning a CFA, etc. Just trying to answer that before classes start.

This post was originally meant as half hypothetical/half what I really want but yeah, I think "have a small operation or something I run entirely by myself" sounds like the life to me. After the military, I found a serious personal dislike for another person completely controlling my day to day.

It doesn't have to be managing a large fund necessarily either. I have thought about a combination of prudent real estate investing and trading mine and a few other people's money as well. One thing I worry about is having tunnel vision when it comes to wealth creation. I love looking at small business deals (I think absentee laundromats can have excellent return relative to time commitment) & real estate as well. Trading is just something I have been especially good at lately and have lots of confidence in my ability to succeed.

I trade mainly numbers and volatility rather than value/growth, yet I see people make money in both. I don't believe you need to get caught up in the minutae of a very specific set of investment banking analyst skills to become wealthy, although that is without a doubt one route.

Then there is being good at tax avoidance, another piece to the wealth puzzle IMO.

Do you realize that you're going to be dealing with clients if you run a hedge fund? You are not going to be just doing your own thing without having someone to respond to. Believe it or not, that is a pretty significant portion of the business when you're managing somebody else's money!

Seriously, I don't get you guys at all. Do you research this stuff at all or talk to any people involved in the industry?

4/14/12

[/quote]

Do you realize that you're going to be dealing with clients if you run a hedge fund? You are not going to be just doing your own thing without having someone to respond to. Believe it or not, that is a pretty significant portion of the business when you're managing somebody else's money!

Seriously, I don't get you guys at all. Do you research this stuff at all or talk to any people involved in the industry?[/quote]

I understand the idea of clients. Of course. I have read books on hedge funds, read online a bit and talked to hedge fund traders/analysts, their brokers and others in the biz. But if you have a steady income anyhow & are waiting for the right opportunity, why not be selective with clients? Who says all your income is derived from managing other people's money (and who says it has to be more than a handful of people at first) in the equity, currency, bond, commodity, etc markets. You could also own managed properties that build wealth (equity) plus provide cash flow in addition to trading. If you set these all up right from an entity standpoint you insulate yourself from legal risk as well.

But, now this is going in a different direction from running a hedge fund and looking at wealth building as a whole.

4/14/12

In terms of making it to the top of the HF world all the previous posters have excellent advice, but you do not need to follow that route to hit your net worth target. My advice:

1) Be humble and save (this includes leaving NYC unless you are following one of the more traditional routes to a HF)

2) Beat the market consistently

3) Be a hell of a salesman or have a partner who is

Competition is a sin.

-John D. Rockefeller

4/19/12
1/24/13
1/24/13
5/11/13
5/14/13

"When you stop striving for perfection, you might as well be dead."

Add a Comment
WallStreet Prep Master Financial Modeling