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:
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Little to no transferable skills, tough to switch careers
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Little upward progression and your role stays the same for your entire career
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Your whole career is extremely stressful on a day to day basis as you need to constantly beat your index
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Research vs execution
Looking back, would you do it again? What would you do instead
bump
No, I do not regret it. I love suffering for my comp.
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?
what defines a Tier 3 LO in your opinion?
Also would love some examples of what firms are considered tier 3 LO?
I’m not sure how I could define it but you’ll know it when you see it. And if you find yourself working at one you will never be more acutely aware of anything else in your life.
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.
Nah bro, from the journey you had to go thru to get to where you are, you've made it by all means
Ngl, at the beginning I thought you are Martin Shkreli lol
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.
Very interesting and very important question especially nowadays. Following/bumping.
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 be more interested in publics and ran an internal L/S strategy that I focused on. Despite that strategy performing well while we ran it, I got incredibly frustrated at the family rushing my research process. I knew this was going to eventually crush my alpha as I'm much more of a deep research, one-bet-a-year kind of guy.
So I said let's quit the public strategy and focus on PE so I can pursue publics on my own time and my own terms. They were fine with that and I'm happier now. Even though I get less time to focus on the kind of investing I want to do, 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.
Dude what are you even yapping about
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
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
Why isn’t the upside uncapped doing LO or at a SM? Also, what strategy are you focused on? Do you think you would’ve enjoyed L/S as much?
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...
Are you at a SM or MM?
did u read the comment?
Everyone gonna read this comment and imagine they can be you, and not the struggling $300mm PM at Verition (which is already hard enough to become)
Do you mind if I ask you a few questions as someone at a MF doing a mixed public/private strategy looking to hop into the HF waters? Would be great if I could DM you.
sure - ask away
The whole GameStop situation unfolds exposed how random the markets are
The SM guys are just gambling - zero skillset
I would do it again every single time.
Why?
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.
No because I am public
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.
sorry to hear. what are you up to now, if I may ask?
Would you recommend something like point72 academy? Considering the factor of uncertainty
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