Q&A Interview with SirTradesaLot, Part 1/2

Andy note: BIG thanks to SirTradesaLot for doing a Q&A with me and offering up his advice for the WSO community - "One of my greatest joys is helping young, ambitious people." He has worked in the finance industry for almost 15 years in a variety of roles at global investment banks and asset managers. A few years ago, he left a senior management position in the equities division of a large asset manager to start a hedge fund/asset management firm with former colleagues.

My background
When I was in college, I had no idea I would end up in the financial field. I grew up in the middle of nowhere and one of my parents was a high school graduate, the other was a high school dropout. To say that I had no idea what finance was about would have been an enormous understatement. Coming out of college, I took a job in finance and was lucky that it was something that I truly enjoyed and I wanted to learn as much as I could about it. To be fair, if I had ended up in another field, maybe I would have enjoyed it just as much anyway. My first post-college job was not in high finance, but nonetheless it piqued my interest in the field.

So, I took my Series 7 and probably couldn't have told you the difference between a stock and a bond at the time. There is good news and bad news for the college kids today. You have significantly better access to information about Wall Street because of resources like WSO and the internet in general. The bad news is that people have higher expectations of you than people who started when I did. The kids today are leaps and bounds more prepared than when I left college in the 1990's.

First of all, let me start by saying that I definitely don't have all the answers and the path I have taken has been pretty unconventional in that it was not linear all the time and was not the well worn path. I never really considered exit opportunities when looking at my next move because I always felt like I could create my own. That being said, here are some of my (random) thoughts for those looking to break in to this business. I'm going to attempt to keep my douche level to a minimum, but there's only so much I can do...I've been in the game since some of you were in diapers.

At one point during my career, I was heavily involved in recruiting for a global investment bank for the asset management division, which was one of my favorite parts of the job. I wanted to share some of my thoughts for some of you looking to break into the field and for those looking to move up who are relatively new to the field.

Importance of your first job after college:
If you don't find the exact job you are looking for, life can still turn out just fine. Even if you end up with the exact job you desired, it will likely not be what you imagined. No matter which job you end up with, I would try to take on as many side projects as possible to maximize your knowledge base. If you decide you want to specialize, you can always do so later. Usually, you don't have to choose a highly specialized path within your first year or two out of college. My angle was to maintain my generalist status for as long as possible and I think I am still in that position.

Meritocracy is not dead yet:
Wall Street is a more meritocratic place than most. If you are a young person and you have good ideas, people will often listen to them, if you are in the right role. Certain jobs on Wall Street take a more factory like approach to junior roles, of course, and those are the ones that I would avoid like the plague. If it all possible, try to determine if the role you are applying for respects the ideas of junior people or expects them to solely be a cog in the machine. Don't get me wrong, you will have to eat shit sandwiches no matter where you start, but it will taste better if your ideas are respected.

Relatively early in my career, I was working on a side project and uncovered some interesting insights about our portfolios. About the time I was working on this, we got a new head of our group who was very senior and didn't care if you were 25 or 65 as long as you had good ideas and worked hard. I was able to share some of my research with the new boss, which the boss loved. I was able to build a strong rapport with this person and had earned the respect of the boss through creativity and work ethic. Shortly thereafter, people who were significantly more senior than me (at the time) started getting blown out because the new boss did not think highly of them, which allowed me to take on a significantly larger scope of responsibilities.

The point of this rambling story is to let you know that if you have the opportunity to prove yourself, you need to seize the moment, regardless of your age. Also, if you can find a mentor/boss that can move your career forward, you should take advantage of that. I stuck with this boss for a number of years before the boss retired. This person continues to be very helpful in my current business as well. By the way, for those of you getting ready to say that I should change my name to SirKissesAssaLot, I can tell you that a lot of people did kiss this person's ass and this person saw right through it and had no respect for sycophants.

Intellectual curiosity/passion:
Let's assume you start off with two people who have equal capabilities: person A has an actual interest in the investment business and person B is just collecting a paycheck. When you roll the clock forward 5 years, the differences in their competency level will be enormous because the person with passion will devote a lot of their time to learning and experimenting with new aspects of the markets. The compounding of this effect will overwhelm the fact that each person started with the same capability.

The point is this: if you don't have passion for this business, your peers will blow you away and you will likely be unemployed soon.

Building an investment case:
When you are developing investment strategies or a case for a particular investment, it is important to look for evidence of why it will NOT work. The bias in human nature is to come up with what seems like a good idea and look for evidence to support your thesis. You must try to counteract that tendency. Unfortunately, you can't get investment decisions down to a science and you will be wrong sometimes, but if you don't look for reasons you could be wrong, you will be open to getting blindsided.

You need to be creative if you want to succeed. Analyzing the same criteria as everyone else dooms you to mediocrity, in my opinion. There are just way too many smart people to try to out-analyze them head to head and get significantly better results. You need to see things from different perspectives. I can't tell you how to do this, by definition that would not be creative.

keep an eye out next week where we will post part 2

Comments (72)

 
Sep 12, 2012 - 11:42am

ladubs111:
Out of curiosity what did you do anyways? Were you the execution guy as your name indicates or doing more fund managing now.

Haha, no, my name is misleading. Trading is one of the few things I don't do at my current firm and I would say we trade relatively little. I'm more involved with developing our strategies (which I love) and meeting with our clients (which I don't), as well the other things needed to run the business.

 
Sep 12, 2012 - 12:56pm

SirTradesaLot:

Haha, no, my name is misleading. Trading is one of the few things I don't do at my current firm and I would say we trade relatively little. I'm more involved with developing our strategies (which I love) and meeting with our clients (which I don't), as well the other things needed to run the business.

What's the part about meeting clients you don't like? Is it that they require too much information on your ideas before they will commit?

 
Sep 12, 2012 - 1:01pm

So, I took my Series 7 and probably couldn't have told you the difference between a stock and a bond at the time

Anybody with half a brain can pass Series 7 (Gen. Securities lic.) and 63. As long as you've got a at least C average in College, it is a breeze.

Nowadays, a lot of employers want a CFA candidate/if not a Charterholder. CFA level I and level II are a piece of cake, where it gets more involved with portfolio management theory is Level III

Winners bring a bigger bag than you do. I have a degree in meritocracy.
 
Sep 12, 2012 - 2:56pm

Financier4Hire:
So, I took my Series 7 and probably couldn't have told you the difference between a stock and a bond at the time

Anybody with half a brain can pass Series 7 (Gen. Securities lic.) and 63. As long as you've got a at least C average in College, it is a breeze.


@ SirTradesAlot: how important is GPA as time passes? I was a C-student and somehow weaseled my way in but I really want to move around after this year passes....what are your thoughts on this? It seems like there's a whole lot more beaurocracy around this business than when you cut your teeth, do you have any comment on that?

Get busy living
 
Sep 12, 2012 - 3:22pm

UFOinsider:
SirTradesAlot: how important is GPA as time passes? I was a C-student and somehow weaseled my way in but I really want to move around after this year passes....what are your thoughts on this? It seems like there's a whole lot more beaurocracy around this business than when you cut your teeth, do you have any comment on that?

I can only speak for me, but you just made me realize I have not the foggiest idea of the GPA of anyone at my firm. I have hired a fair number of people with experience and I have never asked them their GPA in college. If they're getting their job done, who cares? I don't think many care about GPA for experienced hires, maybe someone else has a viewpoint on this?

 
Sep 12, 2012 - 8:45pm

Financier4Hire:
Nowadays, a lot of employers want a CFA candidate/if not a Charterholder. CFA level I and level II are a piece of cake, where it gets more involved with portfolio management theory is Level III

The CFA is a get-a-little-bit-of-everything type of exam. It lacks depth. Passing CFA only means (1) someone has lots of time, or (2) someone's disciplined, or both. It's not that important comparing to years of experience.

The Auto Show
 
Sep 13, 2012 - 2:48pm

huanleshalemei:
Financier4Hire:
Nowadays, a lot of employers want a CFA candidate/if not a Charterholder. CFA level I and level II are a piece of cake, where it gets more involved with portfolio management theory is Level III

The CFA is a get-a-little-bit-of-everything type of exam. It lacks depth. Passing CFA only means (1) someone has lots of time, or (2) someone's disciplined, or both. It's not that important comparing to years of experience.


My 2 cents: it seems to me that the CFA is pretty popular in equity research and long-only equity portfolio management. It's really not popular for what I do. One guy at my firm has a CFA. He's a guy who has been trading derivatives for over 15 years. He did it just to learn what else is out there, not because of any expectation about advancing his career with it.

 
Sep 12, 2012 - 1:09pm

Certain jobs on Wall Street take a more factory like approach to junior roles, of course, and those are the ones that I would avoid like the plague. If it all possible, try to determine if the role you are applying for respects the ideas of junior people or expects them to solely be a cog in the machine

Sorry folks. You cannot avoid that if you could. "Analyst" at MS or GS actually means being a secretary, an appointment setter, filling/CRM and that kind of stuff. You don't get to see a model until your 2nd year if you are lucky. You are the cog in the machine. You are the bottom-feeder.

Winners bring a bigger bag than you do. I have a degree in meritocracy.
 
Sep 12, 2012 - 1:43pm

Financier4Hire:
Certain jobs on Wall Street take a more factory like approach to junior roles, of course, and those are the ones that I would avoid like the plague. If it all possible, try to determine if the role you are applying for respects the ideas of junior people or expects them to solely be a cog in the machine

Sorry folks. You cannot avoid that if you could. "Analyst" at MS or GS actually means being a secretary, an appointment setter, filling/CRM and that kind of stuff. You don't get to see a model until your 2nd year if you are lucky. You are the cog in the machine. You are the bottom-feeder.


I think the fact that you see the range of opportunities as "Analyst at MS or GS" (and most likely in IBD) is the source of the problem.

 
Sep 12, 2012 - 1:52pm

SirTradesaLot:
I think the fact that you see the range of opportunities as "Analyst at MS or GS" (and most likely in IBD) is the source of the problem.

That's not what Bankerella's posts suggest. How is a monkey to know what's right when there is so much conflicting information? Are you right? Is Bankerella right?

 
Sep 12, 2012 - 1:12pm

Unfortunately, you can't get investment decisions down to a science and you will be wrong sometimes, but if you don't look for reasons you could be wrong, you will be open to getting blindsided.

I've always said investment is more of an art than a science, especially in what I do which is event-driven, distressed and special situations.

Winners bring a bigger bag than you do. I have a degree in meritocracy.
 
Sep 12, 2012 - 2:57pm

Ganderlord:
This is great, thanks! How did your previous experience in IB and asset management firms prepare you to for starting your own firm?

For me, there were many things.  The obvious is that you learn about your aspect of the market and you can lean on super technical people at banks to learn as much as possible.  By the way, while I worked at an investment bank, I was not in IBD.  What I would guess is less obvious, is that by the time you are my age, you should have developed an extensive network of people that can help you in various ways, not the least of which is money:  Either them having it, or more likely, them controlling it for other people.  I think starting a business in this industry without those connections would be a big mistake.  Raising assets is the hardest thing to do (especially in this environment), even when you have a team with significant experience.

Another thing I learned a lot about is how clients think about investments.  You don't want to create an offering that nobody wants to invest in.  So, we could develop products that were at the intersection of what we were good at and what clients wanted.  Also, understanding how clients think of your offerings allows you to tailor your message in terms that they respond to.

Part 2 will refer more to some of my other experiences as a manager of people and businesses.  That experience is invaluable because running a hedge fund/Asset Management firm is more than just the investments you are running for clients, it is also an actual business.  My sense is that many people new to the industry don't think too much about the business side compared to the investment side because it's not as 'sexy'.  When you run those businesses, you get a real strong sense of what activities give your firm the highest multiple. So, everything we have done at my current firm is to maximize the value of the firm, in case we ever want to sell it.

One thing I did not learn is how to write well (as you can tell).

 
Sep 12, 2012 - 4:20pm

Asatar:
Vectors225:
Just out of curiosity, is it monkey or a black dude in the thumbnail picture? And does either portray SirTradesALot?

You genuinely can't tell? Oh dear.... How is the weather in the deep south this time of year?

Genuinely can't tell...lol
The deep south can vary depending on the reference point, so what area are you asking, and why?

 
Sep 12, 2012 - 5:40pm

Thanks for the interview, I'm here to support the male version of me.

--Money can't buy happiness. it can only buy orgasms. --Who the hell says I want happiness? Orgasms all I need.
 
Sep 13, 2012 - 12:07am

Risk should scream louder than reward in an investment.

There is life and death. I'm going to bust my ass to make an impact 'til the latter comes.
 
Sep 13, 2012 - 8:37am

Thanks a lot for doing this interview!

You came from equities Asset Management into a Hedge Fund. From what you've posted , I'm guessing you also have guys that came in from IBD , and some who were straight up options traders at BBs. So - how do you feel these different types stack up against each other when it comes to the HF space? Relative strengths? Weaknesses?

 
Sep 13, 2012 - 8:54am

<span><a href=/company/goldman-sachs rel=nofollow>GS</a></span>:
Thanks a lot for doing this interview!

You came from equities Asset Management into a Hedge Fund. From what you've posted , I'm guessing you also have guys that came in from IBD , and some who were straight up options traders at BBs. So - how do you feel these different types stack up against each other when it comes to the HF space? Relative strengths? Weaknesses?


Sure thing. We actually don't have anyone with a background in IBD at my current firm. We generally would look for one of a few things, depending on what role we were looking to fill:
1. Capital markets experience
2. Programming experience
3. Significant relationships with potential investors
4. Trade settlement/ops experience

These aren't things you find in IBD very often. In previous jobs, I've hired people with IBD backgrounds. I would say the results were no better or worse than anywhere else we hired from.

 
Sep 14, 2012 - 9:24am

SirTradesaLot:
depending on what role we were looking to fill:
1. ***


  1. Trade settlement/ops experience

Can't help but ask: what is the mobility within your firm of people you hire for ops?

Theoretical situation: person starts in ops, quickly moves to sales, get licensed, realizes they just don't want to do sales as a career. If this person takes an ops job at a HF, what are the chances they'll get to trade or do other non-ops work at the HF? Or is it like banks where it's a function of extreme persistence and luck to get out of the ops role?

Get busy living
 
Sep 13, 2012 - 11:47pm

Could you clarify on what you mean by capital markets experience and by programming experience? Like specific duties/responsibilities that would you view as a plus for each category?

And thanks for doing this interview!

 
Sep 14, 2012 - 7:01am

Vyraal:
Could you clarify on what you mean by capital markets experience and by programming experience? Like specific duties/responsibilities that would you view as a plus for each category?

And thanks for doing this interview!


I'm mostly talking about trading or structuring of derivatives for capital markets. So, someone who has done that before. We would just be looking for someone hat had he ability to test and automate strategies on the programming side.

Does that make sense?

 
Sep 14, 2012 - 11:23am

SirTradesaLot:

I'm mostly talking about trading or structuring of derivatives for capital markets. So, someone who has done that before. We would just be looking for someone hat had he ability to test and automate strategies on the programming side.

Does that make sense?

Yeah clears it up a bit, I thought it was closer to a DCM or ECM type of gig rather than structuring derivatives.

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