The Frieds Interview: PART TWO

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DrPeterVenkman presents: An interesting interview with Frieds. Questions came from myself and other WSO contributing authors. This interview will be a little different because being the social guy that he is, Frieds wished to videochat through Skype.

Frieds is one of the top WSO users and contributing authors: //
He has worked in Asset Management. I will let you find out more about the man after the click:

On What He Learned In AM
Frieds learned most from the traders. He enjoyed figuring out an idea, whether it works, making sure to not lose too much money if you're wrong. The traders taught him to always "Have one idea a day." This way, he would always have one idea to pitch to both prospective and current clients whether its good or bad. He stressed being able to back up the idea with good sound logic and reason behind why he would make the trade.

A Typical Day

  • Frieds wakes early and is at the office by 7:30 (maybe 8:30 if summer) and catches tail end of traders call.
  • He reads through emails, makes a couple calls in morning, and chats to a couple of clients for pre-morning brief. Other clients were given a general update of the markets. Some clients were only spoken to on a weekly basis or after the markets closed just for a brief recap.
  • He would routinely speak with clients that were either experienced equity or options traders during the 30-45 minutes before the open to get an idea of what they wanted to do and discuss pre-market trading conditions.
  • Once the market opens Frieds is trading equities, options, currencies, and bonds.
  • In addition to this he is running numbers for portfolios, doing grunt work, running a valuation and doing research.
  • He describes AM as a "jack of all trades field." He said that you need to have a handle on how to do everything when you're on the sell-side in Asset Management because you never know what a client is going to ask for.
  • The clients needs are put first. One client wanted to explore opportunities in the semiconductor field, so Frieds researched whole industry to discuss possible trade ideas. Another client wanted to come up with a fairly safe, low volatility, portfolio with a small high risk component, so Frieds put together a number of possible portfolios with different time horizons that suited the client's needs for the client and MD to decide from.
  • Most days Frieds is out of office by 6 - 6:30, and rarely leaves after 7.

The company Frieds worked for assigned him a mentor that he shared few interests with. He was given a mentor in an entirely unrelated area in the firm and found that he wasn't able to learn anything from his assigned mentor. Frieds solved this by bouncing questions off colleagues, particularly the trading desk, as much as possible in order to learn as much as he could. The traders he spoke with regularly stressed to him how important it is to "look at the big picture outlook but see things on the small scale." Learning how to read situations and react to them is incredibly important. The same holds true for being able to gauge people's reactions to things, so be sure to watch how your colleagues act and react.

Low Point
This one was an easy question for Frieds. His definite low point was working during the financial crisis. "Everything hit the fan" and it was not fun to work; there was a lot of uncertainty. "Liquidity stalled. No one had clue what was really happening." March: Bear Stearns goes, Lehman goes "many thought 'everyone is going to go.' It was a giant shitshow and every day was an excuse to drink." An example of the pain: Frieds knows a guy who lost a client $20 mil on bad options calls.

There were two strategies: Stay safe or trade through it. The strategy depended on client. Some clients wanted to trade through it, some wanted to sit on their money. He also discussed that not every client was as simple as following instructions. One of the biggest issues in Asset Management is making sure you are following the client's mandate if there is one. The client may be bound by certain investment guidelines that need to be followed. You have a fiduciary duty to follow that mandate, if there is one, and work within it. The mandate could be as simple as following a client's instructions like "find me undervalued stocks, stocks that will survive" and "move all our money to bonds." to far more complex investment mandates where every detail of what could and could not be done is guided by legal documents.

High Point
Frieds hasn't found something that truly stands out. "That's a good thing because it pushes me to look for something new to do and to stay focused. There is always a new bar you have to achieve. Being on phone for 4 hours and cursing each other for hours trading options I've learned a lot from it." Frieds says the only way you get to your "high point" is to reach pinnacle of your profession. "Strive to be the best."

Frieds Thoughts On The MBA
Frieds believes the MBA is for the most part "worthless" because it "teaches you the same groupthink mentality that everyone else as learned." He cites the curriculum and philosophy having not changed in a long time for most MBA programs. The MBA is more focused on short term rather than long term thinking. He has experience with MBA classes and working with MBA graduates and he says that many in the field that he has spoken to agree with his feelings on the MBA.

He says you should get one if you truly need one or if you need access to the network that an MBA provides, but "you don't need an advanced degree to progress." Everyone is getting an MBA nowadays so there is not that much differentiation.

New Jersey
Frieds thinks New Jersey is a good place to live. There is direct access to Manhattan, Brooklyn, Queens, Westchester, and many other great areas. Despite the great public transportation it is important to have an alternate route to work just in case something happens. Hoboken is a "city of bros" with cheaper rent, a good nightlife, and a good PATH ride in. Jersey City is "much quieter" and has nice places and not-so-nice places. It's important to get used to the Jersey attitude and way of driving. Overall, Frieds says its important to explore and not just go to the city or Jersey Shore. There are many things to do in this area that are also easily accessible (including outdoors activities like hiking, camping, etc.)

Stay tuned for Part Three: Frieds opinions on politics and his future.

Part One Here

Comments (2)

Sep 6, 2012

Thanks for the insight. I liked the "jack of all trades" reference, as it does seem that you have to be quite multifarious in your investing abilities. Trading equities, fixed income, and derivates all in the same day is something not many people can/will do. Realizing that it's totally client driven, what's your favorite type of financial instrument to trade? Also, what sort of training do you think was most useful to you, considering your dislike for MBAs? Thanks man.

Best Response
Sep 6, 2012