Intellectualism of Hedge Funds?

I've been reading around about several hedge fund managers, and besides George Soros, who actually did want to be a philosopher, many hedge fund managers seem to analyze the economy and its trends from a philosophical or at least very abstract viewpoint. (Jim Chanos and Paul Singer were a few others I read about)

I had never really considered hedge funds as a career before except due to the possibility of becoming very wealthy, but this really caught my interest.

Is the hedge fund industry and success in it largely based on intellectual and even philosophical analyses (obviously, with a fair amount of financial mechanics, too) or have I just read about a few who seem to follow this path?

Also, on a somewhat unrelated not, a while back I read a study that found between 30-60% of HFs self-reportedly engaged in illegal behavior like insider trading. Is it possible to ETHICALLY succeed in HF?

 

the term insider trading is kind of a gray area....most algo/hft shops are front runners

i think Bridgewater Assosciates has been producing alpha for quite sometime, being 100% legit..but i also heard most of their investments are overseas (macro) so take it for what it's worth

alpha currency trader wanna-be
 

People like you piss me off.

[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]
 
magnate:

Also, on a somewhat unrelated not, a while back I read a study that found between 30-60% of HFs self-reportedly engaged in illegal behavior like insider trading. Is it possible to ETHICALLY succeed in HF?

Think about it. I've read there are about 2,500 hedge funds that have at least 100m AUM. Of those, 30% would be 750 and 60% 1500. If the Feds could take down SAC (one of the largest hedge funds) what makes you think they can't take down a less sophisicated one?

You may say it's hard to prove in court if they are undertaking insider trading but if so, why would these hedge funds be counted as part of 30%-60% then?

Take everything you read with a grain of salt, especially with a limited amount information being publicly available.

And self-reportedly??? What the hell does that even mean? They are telling on themselves?

 

Carl Icahn was a Philosophy major at Princeton. Although he does not manage HFs anymore.

"It's very easy to have too many goals and be overwhelmed by them... The trick is to find the one thing you can focus on that represents every other single thing you want in life." -- @"Edmundo Braverman"
 

ur gonna do a lot of bs work before you get to the level of intellectualism ur thinking about. unless ur at bridgewater, ur dad is a pm, or u take this illegal drug that heightens ur senses and brain power including the ability to recall any info from the shadows in ur memory.

 
BlackHat:

I doubt that study is accurate, and what I mean by doubt is... it's not accurate.

And why are people using Bridgewater as an example of an intellectual hedge fund?

I guess your lesser preftigious ''value'' fund must be so much more intellectual.

[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]
 
SonnyZH:

People like you piss me off.

Please explain yourself.

I think it's quite obvious I'm not decrying the hedge fund industry, considering the entire post is an expression of my interest in it. I don't know very much about it, so I just wanted to make sure it was ethical. I understand HFs get needlessly dogged all the time in the media, so I understand why you (and several other commenters) interpreted my post as a threatening accusation and turned foolishly defensive while ignoring the bulk of my post.

To those who correctly read the tone of the post, about how long does it take to get in a position to work intellectually in a hedge fund? What positions are those?

 
magnate:
SonnyZH:

People like you piss me off.

Please explain yourself.

I think it's quite obvious I'm not decrying the hedge fund industry, considering the entire post is an expression of my interest in it. I don't know very much about it, so I just wanted to make sure it was ethical. I understand HFs get needlessly dogged all the time in the media, so I understand why you (and several other commenters) interpreted my post as a threatening accusation and turned foolishly defensive while ignoring the bulk of my post.

To those who correctly read the tone of the post, about how long does it take to get in a position to work intellectually in a hedge fund? What positions are those?

SonnyZH believes that interracial marriages are fundamentally wrong, so I wouldn't worry about any of his intellectual positions. He's an idiot. (yes, Sonny, I have a long memory with regards to your 'stick to your own' comment in support of Abdel who was spouting pure racist bullshit)
 

I have my gripes with Bridgewater, but I think it's hard to deny that it's an intellectual place.

I will say though, it's definitely been fun to watch their funds bite the dust this year as gold has tanked. Not that it matters, all my friends who work there will still make multiples of what I do, but it's still nice to be able to indulge my schadenfreude every now and then.

 
xqtrack:

I have my gripes with Bridgewater, but I think it's hard to deny that it's an intellectual place.

I will say though, it's definitely been fun to watch their funds bite the dust this year as gold has tanked. Not that it matters, all my friends who work there will still make multiples of what I do, but it's still nice to be able to indulge my schadenfreude every now and then.

My feeling on Bridgewater from this standpoint of being "intellectual" is probably that I'm using a different definition. They're more of a formulaic firm than one with a bunch of deep thinkers sitting around taking really abstract views on securities and investing on the wholly qualitative and non-methodical factors. You could say intellectual means having the brainpower to manage as much money as they do and still have very intelligent strategies, but I think more of the Chanos or something when I think of a fund that has a deeply intellectual approach to investing.

I hate victims who respect their executioners
 
madmoney15:
magnate:

Also, on a somewhat unrelated not, a while back I read a study that found between 30-60% of HFs self-reportedly engaged in illegal behavior like insider trading. Is it possible to ETHICALLY succeed in HF?

Think about it. I've read there are about 2,500 hedge funds that have at least 100m AUM. Of those, 30% would be 750 and 60% 1500. If the Feds could take down SAC (one of the largest hedge funds) what makes you think they can't take down a less sophisicated one?

You may say it's hard to prove in court if they are undertaking insider trading but if so, why would these hedge funds be counted as part of 30%-60% then?

Take everything you read with a grain of salt, especially with a limited amount information being publicly available.

And self-reportedly??? What the hell does that even mean? They are telling on themselves?

I don't think any self-reporting statistics about crime can be relied upon.

On a side note... I wouldn't really call the SEC's handling of the SAC investigation a win for the government. A multi-billion dollar fortune and no prison time for Cohen makes him bi-winning.

Competition is a sin. -John D. Rockefeller
 
SirTradesaLot:
magnate:
SonnyZH:

People like you piss me off.

Please explain yourself.

I think it's quite obvious I'm not decrying the hedge fund industry, considering the entire post is an expression of my interest in it. I don't know very much about it, so I just wanted to make sure it was ethical. I understand HFs get needlessly dogged all the time in the media, so I understand why you (and several other commenters) interpreted my post as a threatening accusation and turned foolishly defensive while ignoring the bulk of my post.

To those who correctly read the tone of the post, about how long does it take to get in a position to work intellectually in a hedge fund? What positions are those?

SonnyZH believes that interracial marriages are fundamentally wrong, so I wouldn't worry about any of his intellectual positions. He's an idiot. (yes, Sonny, I have a long memory with regards to your 'stick to your own' comment in support of Abdel who was spouting pure racist bullshit)

You seem impotent brother, and your logic is flawed. It's hilarious you already reached such a conclusion on my racial preference based on a mocking comment.

[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]
 
SonnyZH:
It's hilarious you already reached such a conclusion on my racial preference based on a mocking comment.
yeah, I'm weird like that. When people say racist bullshit, I assume they're racist.
 
HarvardOrBust:

Intellectualism can be found in any place, doesn't matter what kind of place. It's all about the process IMO. Willing to be contrarian, willing to admit you're wrong, analyzing multiple viewpoints, etc.

I presume you refer to any place within the hf space?

Id agree with the notion that hfs in general are one of the most intellectual areas within finance

I can reassure you that there is no intellectualism anywhere in banking (and a decent amt of PE for that matter).

 

you should focus your time and energy on learning how the markets operate, and how to trade intraday. This will be the most valuable use of your time.

I am a proprietary Govt Bond Trader...i post my comments on the mkt intraday at twitter...and longer articles on my blog. I've accumulated a lot of educational info in these blogs..so i highly recommend checking them out http://govttrader.blogspot.com
 

Soros borrowed heavily from Karl Popper - his stuff will blow your mind or leave your head spinning, depending on what metal buzz your seeking...

Falsifiability - the belief that for any hypothesis to have credence, it must be inherently disprovable before it can become accepted as a scientific hypothesis or theory.

Nassim Nicholas Taleb's fooled by randomness and black swan are good, but the guy is a complete twat

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake son.
 
Vagabond85:

If you have to ask these questions, you don't have a prayer of working in the industry unless you're a college sophmore or younger. Too many smart, hardworking folks willing to work in the industry that have done their own legwork.

Don't worry, I just graduated high school and am trying to figure out where to focus.

I'll definitely look at the theory of reflexivity and probably a lot of other stuff Soros has wrote (Possibly Alchemy of Finance, among others). I've read/been told even by people that don't like him that he's an investing genius and his writing is pure gold. Is that accurate?

Also, is Dalio's "Principles" worth reading?

 
Best Response

I think that the people who are the best buyside traders/PMs do often come at the World in a different way then your average finance person and do often have a mentality that is more philosophical in nature...I was an economics major but i think of my job as a creative pursuit and i consider people who think differently to be major assets. Most PMs I know who are very good are quirky people also...in fact i'd almost say all of them are. Basically the right mentality is that if everyone thinks something then it must be wrong and if everyone says im crazy when i say something then i just might be onto something...its easy to say that but it takes the right type of person to actually engage markets that way and generally they have to be a bit crazy.

The problem is that the menial, junior level work that it requires to cut ones teeth in the industry is generally better handled by linear thinkers who majored in stuff like finance, engineering, accounting etc. So basically to be great you have to be an artist, but to get access to the job you need a boring background...so its a bit tricky.

 

There's little doubt, to me at least, that those with backgrounds in economics have a fundamentally different approach towards investing and a fundamentally different understanding of markets (though their views are definitely heterogeneous).

“Elections are a futures market for stolen property”
 

Yes, the super investors of our time have a certain philosophy when approaching investing.

It isn't just about completing a comprehensive valuation with a lot of numbers, but understanding the interconnected nature of them and how our economy functions beyond what you are taught in school.

Either way, you are not going to stand out by touting what you learned from school by some failed businessman (face it, if he was successful he would be out there making it rain with the rest of them).

Learning how to invest is simple, but becoming a >true

 

Every superstar HF manager has their own style and special set of skills / talents that helps them to succeed. Some are traders with social instincts that can catch feelings from the atmosphere on a trading floor, others are mathematical geniuses and others have more of the philosopher style you mentioned... The first book you should read if you're interested in this type of thing is Hedge Hogging. The second is When Genius Failed.

 
watersign:

the term insider trading is kind of a gray area....most algo/hft shops are front runners

i think Bridgewater Assosciates has been producing alpha for quite sometime, being 100% legit..but i also heard most of their investments are overseas (macro) so take it for what it's worth

please cite or give evidence and expound upon 'most algo/hft' shops are front runners?

If the glove don't fit, you must acquit!
 
couchy:

ur gonna do a lot of bs work before you get to the level of intellectualism ur thinking about. unless ur at bridgewater, ur dad is a pm, or u take this illegal drug that heightens ur senses and brain power including the ability to recall any info from the shadows in ur memory.

are you retarded?

If the glove don't fit, you must acquit!
 
justin88:
magnate:

Also, on a somewhat unrelated not, a while back I read a study that found between 30-60% of HFs self-reportedly engaged in illegal behavior like insider trading. Is it possible to ETHICALLY succeed in HF?

This is abject nonsense.

Go away.

how long you been waiting to use that one webster? next time try using that thesaurus to elaborate or reason so op may benefit from reading your post instead of using a simple childish retort...or at least be amusing

If the glove don't fit, you must acquit!
 
WalMartShopper:
couchy:

ur gonna do a lot of bs work before you get to the level of intellectualism ur thinking about. unless ur at bridgewater, ur dad is a pm, or u take this illegal drug that heightens ur senses and brain power including the ability to recall any info from the shadows in ur memory.

are you retarded?

guess u never watched limitless

 
WalMartShopper:
watersign:

the term insider trading is kind of a gray area....most algo/hft shops are front runners

i think Bridgewater Assosciates has been producing alpha for quite sometime, being 100% legit..but i also heard most of their investments are overseas (macro) so take it for what it's worth

please cite or give evidence and expound upon 'most algo/hft' shops are front runners?

Have you ever read about how HFT works?? They often send out 'fake' orders to the market to see what others are doing. IT's front running, albeit electronically.

alpha currency trader wanna-be
 
WildColonialBoy:

Soros borrowed heavily from Karl Popper - his stuff will blow your mind or leave your head spinning, depending on what metal buzz your seeking...

Falsifiability - the belief that for any hypothesis to have credence, it must be inherently disprovable before it can become accepted as a scientific hypothesis or theory.

Nassim Nicholas Taleb's fooled by randomness and black swan are good, but the guy is a complete twat

I now trust your opinion more than 99% of WSO's because I fucking hate Taleb so much... so much that I'm going to go out and buy everything related to Karl Popper and trust you with my wife and children if/when possible.

I hate victims who respect their executioners
 
BlackHat:
WildColonialBoy:

Soros borrowed heavily from Karl Popper - his stuff will blow your mind or leave your head spinning, depending on what metal buzz your seeking...

Falsifiability - the belief that for any hypothesis to have credence, it must be inherently disprovable before it can become accepted as a scientific hypothesis or theory.

Nassim Nicholas Taleb's fooled by randomness and black swan are good, but the guy is a complete twat

I now trust your opinion more than 99% of WSO's because I fucking hate Taleb so much... so much that I'm going to go out and buy everything related to Karl Popper and trust you with my wife and children if/when possible.

but, but... he can dead lift 330 pounds!

 
BlackHat:
WildColonialBoy:

Soros borrowed heavily from Karl Popper - his stuff will blow your mind or leave your head spinning, depending on what metal buzz your seeking...

Falsifiability - the belief that for any hypothesis to have credence, it must be inherently disprovable before it can become accepted as a scientific hypothesis or theory.

Nassim Nicholas Taleb's fooled by randomness and black swan are good, but the guy is a complete twat

I now trust your opinion more than 99% of WSO's because I fucking hate Taleb so much... so much that I'm going to go out and buy everything related to Karl Popper and trust you with my wife and children if/when possible.

Taleb borrows from Popper quite a bit. Taleb's works are thought-provoking, but he is such a smarmy douche he's almost unreadable.

Also, Baupost is quite intellectual, from what I've heard. The best analysts/PMs are intellectually curious and want to understand how things work. The fund I interned at prior to getting my full-time role had a very intellectually stimulating environment.

 

So refreshing to know that I'm not the only one that thinks Taleb is an arrogant and intellectually dishonest.

"My dear, descended from the apes! Let us hope it is not true, but if it is, let us pray that it will not become generally known."
 

Taleb, while interesting, is inherently self-contradictory when he talks about unknown uknowns, as this is not really something you can talk about intelligently except to say what we know is not all that is and lots of people have been saying that in one form or another for hundreds, if not thousands of years. He benefitted from being on the lucky side of a trade that, while potentially predictable if people cared to look, did not suggest some deeper insight into the universe.

 

Taleb, while interesting, is inherently self-contradictory when he talks about unknown uknowns, as this is not really something you can talk about intelligently except to say what we know is not all that is and lots of people have been saying that in one form or another for hundreds, if not thousands of years. He benefitted from being on the lucky side of a trade that, while potentially predictable if people cared to look, did not suggest some deeper insight into the universe.

 
BlackHat:
Gray Fox:

Also, I love how his books are an extended hit piece on BSM and three months before LTCM blew up he wrote an article in a trade magazine praising how great it is...

http://www.nickdunbar.net/wp-content/uploads/2012/...

Oh, how I've missed you.

I've been busy doing unpreftigous and un-intellectual things like reading 10k/10q's, calling management teams, reading about industries, identifying high quality, recurring FCF, etc

 

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I hate victims who respect their executioners
 

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There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 

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[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]

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