I only started my first buy-side job in January and I am very new to my current firm. My PM (very senior, smart guy) seems to think that value will outperform this year because of the reopening trade whereas I believe that you will see growth outperform (especially in the 2H) because consensus is already there on the re-opening trade.
I want to push back against him, but I recognize that I can be wrong (and ultimately he is the one who makes final decisions on compensation etc) - how hard can anyone really push back this early in the job? and do senior PMs get offended when you don't agree with them?
Depends a lot on the personality you are working with. Can you speak to someone else in the team or an ex-employee who was in your position to understand how the PM handles push back?
I also suspect the tale of the tape is going to favour him.
Group think is dangerous in am but you have to know how to communicate and understand that 1. You don’t know growth is going to out perform and 2. They have the experience
I think you should recognize that your PM did not get to where he is by being an idiot and is likely aware of the value vs growth narrative. Similarly, you should recognize that you are, comparatively, still very green in the industry. When you say you started your first buy side job in January...do you mean this past month? Whether this month or last year, you have no where near the amount of experience, or business for that matter, to start second guessing your PM. You don't even know what you don't know yet. Your job right now is to observe, learn, and help take stress away from your PM. You are free to have a diverging view, but your job is not to start second guessing your PMs thematic views.
Yah- I'd say in general leave Macro opinions/view largely to the PM for all the reasons stated above. Find ideas that fit within his framework- I'm sure it's a little more nuanced than "Value because of reopening"
If he changed his entire portfolio view at someone who started last month's urging, wouldn't you be more concerned?
Agree with everyone above, but will add another point as a LO PM. I, as well as almost all of my colleagues, love to be challenged by juniors or other PMs. I know there's much more I don't know about the markets and stocks than I do know (as weird as that statement is), even though I've had a strong information ratio in each of the past 3 years. In fact, when I talk to sell side analysts, I prefer to meet the ones that have opposing views to my positions.
So if he's a smart, humble-ish person, he'll welcome the challenge. What you need to do is probably more work on your view. "consensus is already there on the re-opening trade" is quite simplistic, and in my view anyway does not mean growth>value over this year. How will rates impact growth stocks (inflation expectations, real yields)? What is the valuation gap in your market and will that widen/narrow (you can have a good overall year in growth, but several value rotation events during the year can really hurt any growth outperformance)? Analyst/market consensus does not equal price movement (eg. look at earnings where some companies are expected to beat consensus, so meeting consensus leads to price fall). Also, value defensive and cyclicals will act very different in the reopening trade.
So if you've considered many of the above and still reach that conclusion, it's likely your PM will welcome your views. Frame it as a debate/devil's advocate through, rather than a clear disagreement.
By the way, I run a global growth and quality portfolio, and I'm getting ready for a year where my factor exposure will likely underperform. I'm aiming to ensure my stock selection counters that.
Agree with SReaper. Not a PM right now, but as an analyst I have been well received in providing well researched counter points to my PM's ideas. A good PM or investment professional wants to know where they could be wrong or where the risk is to a thesis or fund performance lies. The key is about approach. If you present a well thought out and researched case framing potential risks to value outperformance backed by data, I am sure it will be received favorably. Saying "Here are some of the risks to your view to think about" is much different than saying "You are wrong and I don't agree with you". I think a PM wants an analyst that challenges him and pushes him to make best investment decisions, but SReaper would know better than I.
It also depends how much experience you have in the finance industry prior to the job. If you are fresh out of school, probably best to talk less unless you have extremely high conviction.
Being wrong/right from the portfolio’s standards will have a much bigger impact on your PM’s job and bonus then it will on yours. I was told early on to ALWAYS write in your notes/journal when you disagree with a superior on stuff like this. Reviewing those differences in opinions and how those decisions played out will be really helpful for learning and even talking about those disagreements in future interviews.
If you just started your first buy side job last month I strongly suggest you spend the next 6-24 months listening rather than offering opinions. Nobody is going to be impressed when the new guy/girl with a few weeks of experience under their belt tries to correct the boss with decades of experience.
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