Do you regret going into public markets investing?

Specifically for L/O or fundamental investors, do you regret going into public equities? I hear many people complain about the following:

  • Little to no transferable skills, tough to switch careers

  • Little upward progression and your role stays the same for your entire career

  • Your whole career is extremely stressful on a day to day basis as you need to constantly beat your index 

  • Research vs execution 


Looking back, would you do it again? What would you do instead

 

I would say that I regret it but I didn’t really have many options in my careers. I had a hard time growing up and barely graduated HS; went to community college and then transferred to a state school and had bad grades and my first job was at a dead end company administering surveys for $40k a year. After many years of battling I broke into SS ER and then broke onto the buyside at my current role at a tier 3 LO where the work we do is meaningless and I have had a very difficult time getting looks from better firms. It’s just too competitive and there are too few seats, I’m now 33 years old making under $300k and after ten years of fighting it feels like I’m back at the same dead end harassing people to talk to me. I’m just fishing in a way smaller pond now. I’m not passionate about changing money around, the stocks market’s function is totally corrupted, I was just broke when I was young and didn’t want the same for my family. I guess they’ll be better off than I was but it would be nice if I could be proud of what I do/who I am.

 

If you ended up doing banking out of undergrad, what career path do you think you wouldve chosen?

 

Also would love some examples of what firms are considered tier 3 LO?

 

So I don't regret going into publics, but parts of this definitely hit home for me. I tell myself things like perseverance no matter what - but the reality is there are a lot of people who did just that and it still doesn't go anywhere. Its a scary thought, but pretty useless to worry about. 

At times it can feel like I'm chasing a profession I don't get to truly participate in.. but again there is not much stopping me from spending my time doing largely the same work anyone else can. I know I won't end up a PM at viking, or even a senior analyst at any firm with a real brand name.  

But I'll get to do what I love somewhere, and I can't imagine doing anything else with the same determination, passion, and curiosity. 

Maybe I'll look back on this post in 5-10yrs and be like "damn you were an idiot", but I also think I'd regret it more if I gave up.  

Life could be a lot worse. We get to think and learn and essentially gamble all day for money. 

 

 

Finance really is the dream when what many would consider to be a subpar career on this forum still has you making 300k a year at 33 

 

To me it sounds like you're doing well. Who knows what the future will bring to you, but at the moment you're giving your future self the opportunity to drop everything and do something you truly want in 10 years time.

 

I worked at a HF (20B AUM) doing L/S TMT, my dad had his own fund (much smaller, generalist), and I know many friends who are in the industry.

Personally, I have always loved public equities investing, and this love has grown tremendously as I have worked through the years.

I think it is a fascinating universe, and the puzzle of trying to understand the economic mind in order to be ahead of the curve is, to me, exhilarating. I live for making a thorough analysis, learning and understanding businesses, and developing a variant view that withstands counterarguments. I love being right, and I love the humbling that being wrong yields.

The con would have to be that the emotional roller coaster is significant - if you don’t have mental fortitude, discipline, and methods to unwind/relax, you will crumble. It is very tough, and there is no right answer. Playing guitar has always been my outlet, as well as socializing, playing video games, reading, watching tv shows…anything non-markets related.

This profession isn’t for everyone. Passion is only sufficient as to having mediocrity as a floor. You need efficiency, passion, and ambition, to thrive. I have always understood that and accepted that the obstacles could become insurmountable. But I am willing to see it through. I don’t want to do anything else as a profession. I like stories, I like learning, I like understanding businesses and narratives. So I will probably stay in this universe for as long as I can.

 

I've regretted it in the past, but think it can be the best career if you get to pursue it on your terms.

At the family office I’m currently at (which is now focused on direct PE) we used to do more public and had an internal L/S strategy.  Despite that strategy performing well while we ran it, I got incredibly frustrated at the family rushing the research process.  I knew this was going to eventually crush our alpha since the original intent was to do deep research and make concentrated bets. 

So I said let's quit the public strategy and focus on PE and I'll pursue publics on my own time and my own terms.  They were fine with that and I'm happier now.  I get to do it my way and can eventually launch something once I find the partner who is fully aligned.

Point being, if you have a real passion for investing, you're likely to want the autonomy to do it your way and that's probably what divides the satisfied people from the unsatisfied people.

 
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thoughts from sr pm who's had their teeth knocked out more than once... i don't regret it... now ... but i regretted it at first (~20yrs ago).  pay was not great at first and was working for weird / so-so pm.  looked at friends in private equity or that stayed in i-banking and was jealous.  definitely not the case now, but was disappointed at first.  need to stick it out, master your coverage, master the risk model, find a mentor, work for good PMs, stay sane (exercise, have good friends / get a girlfriend)... and have a little luck.

looking back, i totally would do this career again.  i've made 10s of millions, retired my parents a while back, spoil my wife and daughters, have a charity, have multiple houses, and gave my kids the life i never had.  it's probably the only career i can think of where the upside truly is uncapped / "up to you"... not someone above you.  not the case in private equity, not long-only, and not hf's where you're stuck as career analyst (single managers).  yes, downside also capped (your base haha).  it's quite entrepreneurial at the pm / sr analyst level (at least at the platforms).  sure it gets stressful but i can't help you manage that, that's an aspect of every buyside career   

no transferable skills... debatable.  have friends that run SMB's, left to be CFO of big co or startup, some own a bunch of RE, some started their own funds, some, trade their PAs, some work with funds as consultants / even do investigative activist short type research.  loads of things. 

role has changed quite a bit: jr analyst --> sr analyst --> jr pm --> pm --> senior pm --> partner / still senior pm

working at large HFs really is an amazing opportunity.  very grateful to play this game everyday

 
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I buy the fact that you are a real baller PM that has been in the game for a while (and not a LARPer) because you truly write like a boomer, respect

 

replying to you + others here:

- grey hairs… yes… but I’m technically youngest end of genX! daughters are genAlpha… fitting… hopefully i’m on a beach somewhere by the time they enter the HF ringer in 2040… one of you can train them.

- asset class: l/s equity, not saying sector. uncapped upside requires explicit % payout and access to more gross should you perform. the platforms do that, and if you perform, they give you more gross (actually not the best/easiest thing to get more gross after big pnl yrs… tactically want to degross after big yrs but can’t). they want you to run big teams with billions of gross and if you perform… yeah… you will get paid… more than you can imagine. and if you keep performing, they make you partner / keep you that way. on a $3-5bn book… you can do the math… payouts are uncapped. sure, they can make you defer x% or force you to sit out 18 mo if you try to leave, but no matter how you cut it, at that level, the $ can truly be uncapped. it’s become NBA $… more than i could’ve ever imagined 20 yrs ago. friend of mine just got offered eye-watering $ to join another platform, so what i’m getting at is… yes… the upside exists. there is a totally different side to this, tho… the struggling PMs with $300m books at verition / exodus. lo doesn’t have that / they don’t get hf fees obviously / pm’s therefore cannot have uncapped upside (i suppose unless you run the firm or something). tho my lo friends have great wlb and make solid $ too. sm also doesn’t have explicit % payout / you’re not the cio / you likely won’t own enough of the gp (after many years of working to become a partner) to earn the same uncapped upside / there are a million ways cio will “reduce” your contributions and justify paying you less than you may think you deserve. can still do very well in all 3, of course…

- MM, but have been around the MM block over last 2 decades

an aside: i used WSO many, many years ago and my analyst reminded me of it a few months ago, glad to be back

 

Very obvious why it isnt. At LO (thinking typical 40 act LO with no performance fees), your comp is more so tied to flows and multi-year performance periods and/or relative to peer group AFAIK in a lot of cases. Makes sense why that is the case. Its a lot more of a typical business vs. just eating what you kill in an individual year performance wise if that makes sense. 

Now at a SM, how do you allocate responsibility for performance. Gets messy; how much was beta vs. alpha? What names did you work on with sole responsibility? What if your names were all up 30% and someone else was down 25% and fund was only up 5% for the year?  How much was performance driven by CIO ramping up net? Also the politics side of it all; the performance fee pool goes to the partners, and the uncapped upside CAN come as long as you have written somewhere you get x%, but that is very difficult to get, and again your individual performance matters less than group. People are greedy and only part with as much money required to keep other people around. Now in 2021 when SMs with only 15 investment professionals were up +40%, the fee pools were massive so you can get everyone making a ton, but the partners made ungodly amounts that set them up for the rest of their lives. And then today, a few are still climbing back from high water marks...


MMHF; well the model runs on eat what you kill or be fired immediately if you don't. It is written that you get xyz% of PnL for the money you manage - very simple. The more you perform, the more money you get to manage. 

Like every career in life, the only ways you get REALLY paid are when 1) you own equity in something 2) you have something written out that says you get a certain percentage of whatever you generate in revenue/profits. 
 

FUCK man I'm never going to be rich - all I want is to be just slightly ok. NYC expenses on 250k sucks... 

 

The whole GameStop situation unfolds exposed how random the markets are 

The SM guys are just gambling - zero skillset 

 

Public markets are fascinating, perhaps the ultimate intellectual game. The market is a whirlpool with currents flowing in all directions. You can approach the problem many ways - fundamental investing, pod shops, quantitative, technical trading, and so forth. Your time horizon can be as short or as long as you like it. It's a mix of fundamental business analysis, your (and the market's) view of where the world is going, and human psychology. Someone can sell a stock to a buyer and both parties, in their respective strategies, be correct.

Most people never come close to truly enjoying their job. Many people 'enjoy' their job but have a sense of relief on Friday and that of dread on a Sunday. Public market investing, in all its fascination, is one of the few areas I see where many folks genuinely enjoy their job. They're happy to go to work on Monday. I've seen billionaire PM/CIOs' faces light up like Christmas trees on discovering a new undervalued stock, even though it's the 100th time they've done it. 

Every now and again at the sports club or on the plane or wherever else, someone asks me what I do for a living. The way in which in describe it, and I can't remember exactly what I say or how I say it, often leads to the response, "You really love it, don't you? I can just tell". For many of the guys on the desk it is the same.

Obviously, there are lots of other good aspects to it - good pay, good lifestyle (single manager with longer time horizons), fun amount of travel, learn a lot about the world, and so forth.

 

Good comment. The circumstances at these funds vary, I have seen the good for myself but heard the bad elsewhere. Things can go wrong but anecdotally many places have stable investment teams, there is little turnover. The irony is seats are hard to get but as a firm we find it difficult to find good analyst/snr analyst talent - many folks don't have the gut instinct. 

 

Yes :(. Unfortunately wasn't focused enough on prestige when leaving banking and landed at a fund that did mediocre so never got paid. Went to a pod and had back-to-back blowups 2yrs in a row. Was at early 30s and getting married - didn't have the heart to go for pod seat where could get zero'd/fired on a factor rotation with 1 month left in the year.  Loved the public markets but just wasn't in the right firms to capitalize on it.

Several friends are doing well because they landed at the right fund post IB/PE or because they landed with the right PM who survives most rotations and makes money. Several others hate their lives because pod work demands 70+ intense hours (most Sundays) and the monetary results can still be pathetic sometimes. Some have gone the route of trading down pod levels (i.e. Citadel down to Baly down to Verition down to North Rock etc) and at some point haven't had a job in 2 yrs. 

So I regret it deeply but I'm probably in bottom 5% of outcomes. 

 

Would you recommend something like point72 academy? Considering the factor of uncertainty

 

Pretty much ya regret a lot of my career. I’ve been unemployed for nearly a year even though I have a stellar resume, due to some missteps that are really anything remotely like a screwup. The misstep was I had the audacity to consider trying something outside of public markets for a couple short years before going back - this is why I am apparently unhireable. Mind you what I did outside of public markets was poorly compensated by comparison. 
 

I work a shitty part time job and now living in New York means I see my savings dwindle each day. If I get a real job then my resume would look even more confusing to an interviewer which will make my prospects of doing what I’m passionate about in public markets even more difficult in the future. 

The worst part is nobody really understands what being a hedge fund washout feels like, nor do you really get anyone’s sympathy unless you pay them $300 an hour. It seems insane to most people that you can go from making $600k a year to not being able to find a job. I of course can find another job, but the next best job that’s realistic might only pay $150k which is essentially barely a living wage in New York City (not an exaggeration actually). Some people think I’m just hesitant to take a job that’s less prestigious in finance. No, honestly less prestigious places are often hesitant to hire me because they think I don’t actually want to work there and they are interested in retaining employees, especially when they are not as much of a career specialist that needs a bit of ramp time. 

My hot girlfriend I thought would be my wife broke up with me. She said it wasn’t because of the job situation but I mean it obviously was. My Hinge algorithm keeps recommending Princeton grads for me to date because it doesn’t seem to realize I had to sell all my nice furniture. I tried anyway for awhile. You realize your insecurities are actually just a recognition of truths - most women actually were primarily interested in me primarily because of my career success and not something “deep” in me. They don’t like my eccentricities. They put up with them for the reward of having an elite boyfriend. 

My immigrant mother keeps sending me job postings for an accounting role at Tesla and suggest I talk to the stock broker my dad has used since the 1990s for help in getting a job. It has been nearly 10 years of me being employed and explaining simple concepts of how different parts of the labor market are different. I kind of would like at least them to perhaps understand so I can talk about my life in peace without having to hear their tone of disappointment whenever I speak to them. I’ve never sought their approval or at least I never thought I did. But when I now am clearly failing in their eyes I wonder if I actually did seek their approval unconsciously given that I now hardly speak to my parents. 
 

its actually hard to hang out with some of my friends. Sometimes they are like bro wanna get dinner then I get dinner and it’s a $1,000 bill because they are a PM at Citadel or something. My friends are all rich af. But when I go outside my new apartment I wonder if I’m supposed to buy pepper spray or something like that. I’m not entirely sure yet what I’m supposed to know now that I’m poor lmao. 
 

I wonder what I’m supposed to do. I actually did work at some of the best places in the industry and I actually was really good at the job. This doesn’t matter. My sincere best idea is to move to a low cost of living country and start an emerging markets fund with my own money. It’s hard to start a fund in the US given the delta between cost of living and a realistic rate of return, but this issue is less severe in certain low cost of living countries. This plus finding perhaps another part time job might help me make it work. 
 

I liked to think that I did this because I enjoyed it and not for money. I also liked to think that I was a man of the people. Boy was I wrong. Thx for calling my bluff - life. You only realize and have sincere empathy for what it’s like to just be a normal American in NYC when you have lived as one. My part time job is under the table and is the pretax equivalent of making $60k a year. To be clear, this isn’t exactly poor but it isn’t enough to get by in New York. It infuriates me that this is the case, not because of how it affects me but because I live in a city that makes a perfectly acceptable level of income an unlivable wage. 

Being poor is a skill and frankly most finance people haven’t the faintest idea how the average New Yorker lives. Given I’m obviously interested in economics I have grown fascinated with the economic issues that my new neighbors face and exactly how it is they get by. I’ve spent a lot of time reading about the economics of welfare programs, informal employment, and the like. My worldviews have been completely turned upside down. Ray Dalio has a book called “How the Economic Machine Works” but he means just how the stock market works - it doesn’t really deal with any of the issues facing the common person. The more I’ve understood about that the more disillusioned I am with contemporary society and the more I want to leave it. I see the wisdom in how a lot of Gen Z sees jobs - they are much more reasonable in how they see the world than older generations. They are the ones that walk uphill both ways and it was our parents that actually had it downhill both ways. Our parents generation is the one that sets a lot of values and ambitions for people and I now see that as the aberration - one fueled by an insane level of government spending that was utterly unsustainable and will leave recent graduates with bleak prospects.

A lot of the macroeconomic views of finance people seem clownish to me. The reality is that the most important proxy for the common man is how much a common meal like a Chipotle costs versus the year prior (or how much rent was versus the year prior) and the working age labor force participation rate, not reported inflation and the unemployment rate. If you want to understand how we have fared over the last 100 years, it is better to look specifically at the male working age labor force participation rate to account for the change in the gender composition of the workforce over time. If you look at these statistics you see that reported inflation is not real, which should not be surprising if taking the outside view - most countries bullishit this number - and when you look deeply at the methodology you realize it is almost comically a joke. If Chipotle costs more that is not inflation because a person is assumed to just go to McDonalds instead if that happens - that’s how the calculation works and this has the effect of underreporting inflation (among many other tricks). 
 

most people actually stop looking for work. And this is why the unemployment rate looks so good. And women entered the workforce which is why labor force participation doesn’t look terrible. But the point is capitalism doesn’t create infinite jobs. It doesn’t. The male working age labor force participation rate today is the same level as it was during the Great Depression in the 1930s, all while the stock market is at all time highs. This fact alone should shake the worldviews of anyone with a sincere concern for society and if you follow a sincere line of investigation from this simple observation it is difficult to share the worldview of the vast majority of my friends any longer. If it’s true that men as a category are as unemployed today as they were in the 1930s why can it seem that everything is OK? It’s a long story my friend. The worst part is if I try to explain some of this to others it is of course dismissed since I’m the one that’s a failure lmao. 

I live a bit like an outsider. I live in a nearly all black neighborhood as one of a few non-Black people. When I see my friends in Manhattan, every white guy who looks like they probably work in finance immediately makes me think “wait do I know that guy, were they in my analyst class?” Then I realize - no. I just don’t see rich white people anymore. 

 

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