Absolute Competence vs. Signaling When Breaking in
I'm a top ranked associate at GS in London. I've been relatively risk averse so far in my career due to a number of personal reasons (e.g. paying siblings through school, getting my permanent residence here) and never found much interest to PE. With the aforementioned responsibilities behind me, I am empowered to pursue a 'riskier' career path and would like to move to a hedge fund, though have minimal interest in a pod-seat due to the style of investing but also what I'd suspect to be less mentorship than at a small SM. I'm considering two paths:
1. Stay at GS and just spend all of my free time preparing. This functionally means, I will learn minimally on my day job, but maintain the signaling.
2. Quit GS post Jan bonuses, spend 70-80 hours a week for 6 months reading every investing book I've ever wanted to, network hard, pitch stocks to people in my network / their PMs over coffee chats, with the view of trying to arbitrage actual competence vs. perception of competence, and land a seat where I can get real mentorship.
Have you ever seen any precedent on the second? In my mind it comes down to investment risk (chances I have incorrectly evaluated my potential) and execution risk (risk that I will drift and not spend the time wisely). I can get behind the execution risk and what would life be if you don't take the investment risk.
Having sat through garden leaves before, do 1. 2 sounds nice now but will be less productive than you expect.
Agree less productive than you expect re #2. I would vote for #2 except I have a US perspective. Roll the dice if you’re really risk on.
By US perspective do you just mean there are more names out there?
I mean that I have no idea about anything British, funds, culture, perception, etc.
I’d stick with the current gig. I’m not sure if the “self teaching” route is going to add that much incremental value that’ll make you more attractive to funds. In some cases they want someone “raw” so they can mold them to their investment style. Separately, as time goes on, that resume gap will get bigger / harder to explain on initial filtering (especially if you are fully writing off MM as an option).
I also am not sure if it’s higher odds of getting a “good” mentor in SM-land. Plenty of them just leave their analysts to do their own thing as well.
Reading books and research, actively refining and pitching ideas is not going to add much incremental value?
Even at my current job I have found self teaching to be tangible differentiating, I'm quite surprised that this wouldn't be the case. I have so far found the incremental value of reading books to be.. fairly high.
I’m not saying it won’t add value to your learning, I’m saying I don’t think it necessarily increases the odds of you getting a buyside seat relative to staying where you are. Particularly after you risk adjust for the possibility the seat you want isn’t available. It could be entirely different in London, but state side I’d say 65%+ of available seats are at the multis and of the single manager seats I’ve seen available, most are looking for experienced hires.
Take 1. You could persist at GS for a year and recruit. 6 months in, will you have a gig? 1 year in, if no HF gig, you may be out of a career. Unless you have $3m saved I don’t see how this is even a question. I’d just switch to a low gear at GS - they wont fire you for being mid-to-bottom bucket as there will be a lag in noticing golden boy is checking out. Then, even if you are fired, you’re back to option 2. which you thought was feasible anyway. TLDR: you have a lot of leeway for a middle ground where you put minimal effort and offload work to AI/analysts.
Agree with this as well.
Also you should def take interviews with the pods for a couple of reasons:
1. Great way to get reps at HF interview process
2. It might surprise you and you like the style
3. Realistically, most single managers invest “pod style” just without the market neutral overlay anyways
maybe as a started stop using chat gpt for your writing
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