Better PM than Analyst?
Saw a tweet from an investor saying they'd rather be a great trader than a great analyst and it got me thinking. I know it's a pretty common occurrence for someone to be a better analyst than they are PM, but I wanted to get y'all's perspective on the flip side.
Does this even happen in practice? Seems like one needs to be an exceptional analyst to get promoted to running money
Is this ability somewhat innate (pattern recognition, sensing what "matters" to companies, etc.) or cultivated through portfolio mgmt. resources and experience? I assume somewhere in between is the correct answer but interested to what degree it skews.
Why tf are you conflating trader with PM
Trading as in dtd mgmt of position (sizing, trimming, etc.) is what I interpreted. SS trading would've made no sense contextually
Some MM's call their PMs traders.
Exactly. This is definitely the case in prop trading.
If had to pick one, obviously savvy trader is what you want to be. How many times does a stock "beat and raise" and then sell off?
It's like street smart vs. book smart, rather be the former every day of the week.
Exactly. Anybody can run a regression, but not everyone has the betting skills to evaluate everything at once on the spot to make the best call. This is why many shops recruit poker players, it’s because they know how to read the situation, evaluate the odds, and know the right amount to bet in each situation.
It totally happens. Maybe not as much in equities anymore for example. FWIW as a current allocator (and previous PM) I see plenty of funds and pods run by people who are “traders” rather than coming from a deep analytical background. I suspect some of these folks got a break to manage money early, took a different path, or kind of got through research without being great at it to run money. So often the actual work and investment thesis at funds and pods is nothing revelatory or deep or hard (this does not mean it doesn’t take time or effort).
There are lots of people in this business who literally got a single break and then ran with it (did really well or more usually, didn’t do badly). There is a tremendous amount of luck involved not just in getting a chance, but in being able to keep your seat. Plenty of gifted people get knocked out for whatever reason and plenty of mediocre people survive (a privilege of the allocator seat is that I get to see a lot of track records).
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