Build investing edge while young, before going independent
Ignore title. I'm a few years out of undergrad, working in TAS Deals (think quality of earnings, valuation, etc.), accounting background.
My long-term goal is investing and trading my own money in public markets in ten to twenty years. Not starting and running a fund or building a career for its own sake, just being able to do serious analysis and invest money well, and live a lifestyle/make enough money that's really family friendly and self-sufficient. I could focus on analysis, markets, and improving while making good money and not needing to sell to clients and hire/fire people.
My strategy for trying to build edge while I'm younger is twofold, deep sector knowledge in places retail doesn't pay attention to, like cyclicals (esp. nuanced and unpopular sectors) and smaller companies, and enough capital structure and instrument fluency to know where in the stack to invest and which tool fits the situation, whether that's equity, debt, leverage, options, or something else.
So the near-term pivot looks like restructuring or investment banking to me. Rx IB/PE/Private Credit/other investing roles are not realistic from TAS right now, which is why I've narrowed it down, rightly or wrongly. (There's not a lot of these seats and the default feeder is IB, where it is possible they are likely not that strong).
Restructuring seems like the fastest way to learn capital structure depth and see how companies perform under stress, while paying well enough to clear student debt and start saving. Investment banking is an alternative path as well, certainly strong comp but different skills and exposure. Not moving into anything bigger than MM in IB.
I didn't grow up around finance and am learning as I go, so I don't have this all figured out. Even if it doesn't workout I'm sure I'll do well regardless. Curious if anyone has an opinion about my goals and the way I'm approaching it, and if you have any advice, whether you think it's unrealistic or you would approach it differently. Thought I'd post this in the HF forum as it seemed like the most natural place to post it.
Thank you!
Based on the most helpful WSO content, your approach to building an investing edge while young is thoughtful and well-aligned with your long-term goals. Here are some insights and advice to refine your strategy:
1. Deep Sector Knowledge
2. Capital Structure and Instrument Fluency
3. Restructuring vs. Investment Banking
Investment Banking: Provides broader exposure to deal-making, valuation, and financial modeling. While it may not offer the same depth in capital structure as restructuring, it can still be a strong foundation for transitioning into investing roles later.
Given your goals, restructuring seems like the better fit, but IB could still be a viable alternative if restructuring roles are not accessible.
4. Building an Edge While in TAS
While in TAS, focus on developing transferable skills that will be valuable in restructuring or IB:
Additionally, use your time in TAS to network aggressively. Many professionals in restructuring or IB have transitioned from TAS, and leveraging those connections can open doors.
5. Long-Term Investing Goals
6. Additional Considerations
Your approach is well thought out, and with persistence and strategic moves, you can achieve your goals. Keep networking, learning, and refining your strategy as you gain more experience. Good luck!
Sources: Q&A: I’ve held Pre-MBA MM LBO, Growth Equity and Venture Capital investment roles for funds with $500M+ AUM to $5B+ AUM, How many of you actually plan on going independent?, Leave MF PE for H/S MBA and Pursue Goal to Develop Country?, Finance Career Path & List
You'll need to cut your text down like 80%. I don't get what you're trying to ask. If it's just "I will learn to invest, then invest my PA": RX and IB are good for basic finance fluency but aren't really good teachers of investing. Do them if you want a career out.
Your best bet is to actually invest. Build models for cyclicals you like and form a view on the 5-year cycle. Read the good books and podcasts (several of the old guard are very cycle-oriented and old-economy and loathe tech, so read with that in mind). Then go forth, bet what you can, and based on your 2-3 year results, rinse and repeat.
This serves a dual purpose. It helps you ace IB interviews, since you can speak to a sector in genuine depth instead of parroting BS from a guide; having tried to be an investor is more intellectually honest than 90% of bankers' approach to looking at a company. And it makes you a better investor, because investing your own money and losing it (i.e., hard knocks) will always be the only real approach...
In retrospect, my post was convoluted. Intent was to stress test my long term plan from people who know more than I do and hear other's opinions. Good idea on building sector knowledge and also building an opinion/position. I've read Marks's Market Cycles, not familiar specifically with the 5 year cycle but will look into that. That sounds like a sharp approach, I can learn from a few full cycles before quitting the day job. Good perspective, thank you for sharing.
I just mean taking a 5-year view, i.e. holding through a cycle or waiting until something is normalized. 5 years is an arbitrary number.
e.g. - one would expect the high cycle stuff to get lower or the low to get higher, or the medium to swing somewhere up or low. Of course high-high, low-low is a thing too (e.g. tech from 2021-26), but you may hold through a cycle.
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