There have been several of these so I don't know how helpful I can be. Will do my best
Took a pretty traditional route to get the job:
- Target school
- Top banking group
- HF job through headhunter
Not going to give out too many personal details, but I'm sure people could figure out who I am based on my posting history if they really cared/tried. Anyway... I work at a $10b+ L/S fund. I "cover" several industries (co-coverage with a few senior analysts) and while I typically stick to fundamental L/S, I've done some event-driven and credit/distressed investing.
Ask me any questions about banking, HFs, the interview process, the actual job, etc. Try to keep questions public unless it's extremely personal - best for everyone to see so that I can avoid repeats and help everyone at once
Answering these somewhat slowly because I'm pretty busy these days, but I will do my best to get to all of your questions and provide as helpful an answer as I can.
Big picture? I am tasked with finding compelling longs and shorts (primarily equities, but can use credit, derivatives, etc--whatever is best for the situation) and then try to convince senior analysts or portfolio managers to put on positions.
In more detail:
When I first started, I was typically told which companies to look at. I had to learn them inside out, assess them as investments, put together a short writeup, then discuss with whoever gave me the task. As I've developed over the last year, I spend significantly more time working on my own ideas and then pitching them as I see fit. I'll usually run my stuff through the senior analysts to get advice, but I now typically work directly with the PMs, versus before where my thoughts were typically vetted before getting to the top guys.
How do I learn about a company?
I like to learn a company's history, so I'll typically read through the following:
-2-3 10-Ks -several Qs -minimum of 3-4 earnings call transcripts, but typically more -event transcripts (conference presentations, etc) -important 8-Ks and other documents -Street research -Speak with analysts (this is typically to get objective info about the company and NOT to get their opinions--there are very few sell-side analysts whose opinions we give any weight) -Industry experts, consultants, etc -Management or, at minimum, investor relations
Thinking about a company as an investment:
This is the hard part and why some guys get paid big money. If I had to boil it down to one word, it would have to be "edge." That could mean a variety of things. Because I'd like to keep my career going, I focus exclusively on the legal. In simple terms, "edge" basically implies that your research has led you to have a divergent view.
Maybe you disagree with the logic of a story. Maybe you think the Street is misinterpreting information or perhaps assigning too much or too little weight to the wrong things. Maybe they're modeling things incorrectly. Maybe you understand a technology better. Maybe you think a trend will play out differently. Maybe you think everyone is missing something crucial. I could go on and on. Basically, when you go to a PM, you want to tell him you have a heavily researched and well-supported divergent thesis.
On top of that, ideally you also have a catalyst, or several. Perhaps you have a great long idea, but it wouldn't be particularly beneficial for your job security if you convinced your PM to catch a falling knife (stock with a precipitous fall in price) without having a strong, well-supported view of when the price would turn around. The "ideal" investment is a good business, at a good price, with something that will cause a convergence between your view and the Street view. This could be anything from hard catalysts like a merger, reorganization, etc, or something softer like strong earnings, company/industry tailwinds, etc.
The reason catalysts are important is that most hedge funds are concerned with business continuity. We want to continue collecting that 2%. Most capital isn't committed for extensive periods of time, so we need to show strong performance on a yearly, quarterly, or even monthly basis. We're a large fund so we have the benefit of the doubt from investors, given the extensive track record we offer, but smaller funds don't have that luxury.
Absolutely. I love what I do and I still have plenty to learn. I have no plans of changing companies or roles any time in the near future.
To be honest, I don't know. Maybe I'll be an analyst for a long time or maybe I'll eventually make PM. I know kids on WSO interested in HFs masturbate over the thought of being a PM, but it's not for everyone. There's a clear distinction between the skillset of a PM and an analyst.
For example, David Einhorn (Greenlight) and Bill Ackman (Pershing Square) are much more like analysts than PMs. Their funds are built to make focused investments on stocks and they do not build highly diversified portfolios like some other funds.
Steve Cohen, on the other hand, is a PM. He spends his time managing his stable of PMs and also the overall exposures of his fund. He doesn't spend much time getting dirty with specific company details.
A PM focuses on the big picture and doesn't do much work on individual names. He makes money by picking the right themes. An analyst gets deep on companies and industries and makes money on their bottoms-up, stock-specific analysis more than anything else (themes are important too, of course).
I'd say banking was helpful in the sense that I became a speedy gonzalez on excel, I could model, and I knew my way around a company's financial statements. Beyond that, there was very little carry-over. My banking experience (and I'd imagine pretty much everyone else's) didn't teach me to think critically. I simply took assumptions from the company or my seniors and plugged them in. At a HF, no one cares if I can build a model with a million sensitivities if the outputs have no real meaning. I'm paid to think critically and provide meaningful work/analysis, not to spit out a million pages. For example, I have NEVER put together a writeup longer than 5 pages. They're typically 1-3 pages, actually. I'll get the big picture on paper, then discuss in person. My team doesn't care about the quantity of work I produce, as long as something has been well-researched and I have supporting research/logic for my arguments.
Pretty intense. I had a case study after the first round and had to meet with every single investment professional. You had the good cops and the bad cops. Had to show that I was smart and had a strong passion for investing. I'd sum it up as follows:
-are you a top analyst? -does talking/thinking about stocks get you hard? -if yes, why does it get you hard? -has this been something that's gotten you hard for a long time? -you don't swing both ways, do you? no, you'd better not... HFs only. fuck PE -pitch me a stock and don't sound retarded when you do it -case questions -ask me some questions to fill the remainder of the interview
If you can get into a respectable hedge fund, go for it. However, unless your family is extremely well-connected or you're ridiculously talented, your chances are pretty awful.
Only a select few consider kids fresh out of school (I can only think of Bridgewater, Jane Street, and DE Shaw off the top of my head, and the latter two primarily look for quantitative backgrounds, so you’re probably shit out of luck there). I’m sure there are some other good ones that I’m unaware of.
You (I’m referring to new grads generally, not you specifically) know very little and are a huge time sink. Your finance and accounting knowledge is okay at best. You’re slow and inefficient on excel. Your modeling needs work. You haven’t seen how finance works outside of academia. No matter how many finance classes you took, you lack fluency and comfort with company filings that one only develops with extensive time and practice (ie, lovely late nights doing bs work at the office). Your employer would have to take you by the hand and teach you things they find to be extremely basic and rudimentary. Unless you’re some investing prodigy or a family friend/client, why would any grown man sink so much time and effort into you, AND compensate you well?
Did I hate banking? Absolutely. If I could go back and do it again, would I? Absolutely. It helped smooth my rough edges and get me as ready as possible for my HF job. Despite that, I still felt like I was in way over my head for the first few months. The few other guys I know at HFs all felt the same way. It’s not an easy job and if banking analysts find it tough, a kid fresh out of school is going to find it near-impossible. But… if you can get into a solid place right out of school and succeed there, kudos to you. I mean it. It’s not something I was capable of doing.
What about small places? Maybe you get lucky and join with the next hedge fund superstar. However, you have a better chance of losing your job a few months in when your boss shuts down the fund. Business continuity is a big question mark for new funds, no matter who the founder is. Furthermore, you’re basically betting your early career on a guy you don’t know. Finally, as Groucho Marx said, “I don’t care to belong to any club that will have me as a member.” Go back to #2: be skeptical of any place that is desperate enough to hire you. Mind you, I’m not insulting you in any way—I’m simply saying that you’re most likely not that special. I wasn’t at your age and none of my friends were either. But hell, maybe you are.
And complaining about a 10 week internship? Come on dude. I have a buddy who graduated from BUD/S (Navy SEAL training) and I didn’t hear a peep from him. You’re sitting in an office doing mindless shit for many hours a day, but it’s a cushy job that pays well, and you’d only have to do it for 1-2 years of your life. If you don’t think you’re cut out for banking, you’re sure as hell not cut out for success in hedge funds. And speaking of the SEALs, they start you off with running, situps, etc—the most basic of shit. Once you’ve been conditioned, they move you on. Your career is the same. You’re not going to start off doing the cool stuff. You have to be a bitch for a while before you move on up. If you have a problem with it, go start your own business and hire people to do the shitty stuff for you.
An idea will typically take me a few weeks to flesh out. Basically, what I do is read, talk to people, interpret my research, slap it into excel, put together a short writeup (2-3 pages), send it to relevant parties, and try to get a time to sit down and talk over it. Even if they don’t like it, they’ll sit down with me and give me feedback. Watch out for any place that doesn’t do that – it makes it significantly more difficult to develop.
I typically get in around 7:15-7:30 and the mornings typically consist of reading general news and catching up on anything new that may have been released on the companies I’m closer to. If there’s anything news-worthy regarding a position in the portfolio, I’ll pass a short e-mail on to a PM. I do this even if it won’t result in a big move – best to be safe and keep the senior guys informed. If it is something major, I’ll put together some back of the envelope analysis (say, a merger is happening, I’d run a quick accretion/dilution) and try to sit down with the PM by 8:30/9. This job is very different from banking in that formatting and amount of content don’t matter. They don’t want to see my work, they just want the answer. I don’t send long e-mails explaining my rationale. Hell, I rarely write in full sentences. I simply get the numbers ready, maybe include a few bullets, and we talk it over in person. No reason to waste time on bureaucracy.
The rest of the day is simply spent working on ideas. That basically means that I read extensively and spend plenty of time talking to various people, such as company execs, investor relations, sellside and buyside analysts, industry experts, consultants, and anyone else that might be helpful. I’ll model, sure, but after you’ve built out your initial model, you don’t need to spend all that much time in excel. The assumptions are what matter at the end of the day and to predict those with any accuracy you have to have an understanding of the business and its industry. After all the research that I do, there’s still the challenge of synthesizing it all into a cohesive message. The right conclusion can sometimes be very difficult to find.
I’ll leave around 8 or 9. No one is telling me to work on the weekends, but I’ll typically spend time reading anyway. I enjoy what I do and want to be good at it. That’s not going to happen working the minimum necessary.
Don’t be afraid of asking questions. My HF is the first time I’ve found myself in an environment where, thus far, I’ve been impressed by everyone’s intellect. Definitely didn’t feel that way in banking, particularly with certain associates. Anyway, I was terrified of appearing stupid in front of people I respected, so I wasted a large portion of my own time figuring out the answers, when I could easily have saved myself the trouble. Plus, HF guys appreciate curiosity – definitely a positive trait to have.
I always thought that PE firms care much more about pedigree, while HF put more emphasis on the actual experience (books read, personal trading, etc.)
How much of the "edge" do you gain by talking with people outside of your immediate professional circle? I've heard of a case when an analyst called WalMart managers and ask them about the best selling toys.
Which blogs & news do you and your co-workers read on daily / weekly basis?
Book recommendations? Preferably something not as obvious as Intelligent Investor, Common Stocks and Uncommon Profits, or books with Buffett in their titles
Thank you in advance
Unfortunately, pedigree absolutely matters and coming from a lesser firm puts you at an immediate disadvantage. Furthermore, there continues to be school-based discrimination. I was at a top group which, collectively, received every headhunter-driven interview out there. There were some funds that literally interviewed every one of the HF-pursuing analysts, but others picked only a minority. That minority tended to come from top targets. It was not at all based on who the best analyst was, though our group as a whole didn’t really have any weak analysts as far as I was aware.
The reasoning behind this is relatively simple: hedge funds often hire multiple headhunters to fill a position, as well as reach out through personal and professional networks. Because a headhunter is limited in the number of candidates they can refer, they tend to select the “paper rockstars”—ie, top bb/elite boutique, high GPA, top target school kids.
By no means am I suggesting that only those of highest pedigree can get these jobs. You may have an uphill battle, but it can certainly be circumvented.
Reach out to all of the headhunters, even the obscure ones that may not have many opportunities for you. Dynamics and SearchOne have the most post-banking HF clients, but there are many others that can help you.
Crush the headhunter interview.
Demonstrate an unbridled passion for investing. Talk about the PA you’ve run since early college, even if you’ve never touched a brokerage account in your life. They need to be convinced that you love investing and you are absolutely certain that you want to be a HF analyst. Even better, tell them you felt that way since your early interest in college, and time and experience has only helped solidify that initial gut feeling.
You need to convince them that you are a top analyst, which, as long as you’re decent, will be easy enough to do because rankings at most banks don’t come out until you’ve completed your first full year. At that point, even if you’re second tier, it will be good enough. Do not do this if you think you’re going to be mid-tier or lower, because if you haven’t locked up a job by then, you will have some pissed off headhunters and they’ll have no trouble deciding they don’t want to work with you anymore
When they ask if you’ve considered PE, immediately respond with “no.” There should be no thinking. No hesitance. If you’re uncertain about whether you want to do PE or HF, 95% of the time you will fail the HF process and end up in PE.
Finally, get them to like you as a person. I swear each analyst class gets nerdier by the year, but for those of you that do have reasonable social skills, lay on the charm, be funny, and get them to develop a vested interest in you. This is racist, but if you’re Asian and come in fitting the stereotype, you are likely fucked.
You need to go into your first real hedge fund interview way over-prepared. You need to impress these guys because if a headhunter has taken a leap of faith on you and you bomb on the first opportunity they give you, then you’ll have some difficulty winning their trust back.
If the headhunter route is relatively fruitless, networking and cold emails are another option. You’ll get plenty of rejections, but just like going out and approaching girls, you know it’s a numbers game. You will get rejected regularly, but with enough approaches you’ll get enough “yeses” to make it worthwhile.
The other thing you can do is to speak with fellow analysts and other friends at banks to try to figure out where they’re interviewing, and then send e-mails to those funds telling them that you’re aware they’re running a search process and you were hoping to be considered for an interview. Reword and include more than just that, attach a resume, and hope for the best.
In securing a job, you absolutely need solid references. Have at least 2 people that will go to bat for you without a doubt. Funds will sometimes call other random people they know at your fund, but hopefully you have a solid reputation and that’s not an issue. As long as you’re not a bad analyst, you should be fine.
I talk to a wide variety of people: buyside and sellside analysts, experts/consultants, company management, investor relations, lower-level employees, and others I’m not thinking of at the moment. The usefulness of channel checks varies significantly by industry. If someone came to me and told me that they had this amazing variant view on CAT (Caterpillar) specifically, and not just macro, I’d question the legality of their information. It’s difficult to do extremely meaningful bottoms-up analysis on a massive heavy industrial machinery manufacturer with operations around the globe. While there is a modicum of stock-specific analysis that will be helpful, CAT is very much a macro-driven name, so whether you’re buying, shorting, or none of the above, you’re going to be relying on your macro and industry-related work more than anything else.
The typical news sources: WSJ, FT, Economist, Bloomberg, and others. I try to avoid reading articles that will be absolutely useless to me in a few months’ time. For example, while the killing in Lybia is inhumane and highly important current event, knowing too many of its details will do nothing for me in the long run. I read headlines and I skim the first paragraph, if anything. I prefer to spend my reading time on either really interesting articles, or anything that will help me develop professionally or personally long-term.
I don’t really follow any blogs personally beyond some industry-specific stuff that I’ve found helpful. The reason is that I get so many summaries and articles through the banks and industry experts we hire, that I have more than enough to read to get my fill.
In my free time, my reading is either mindless shit on the internet or a good book—all depends on my mood.
Books?
If I had to pick just one thing that flicked that light bulb in my head and made me certain I wanted to be an investor, it would be this behavioral finance class I snuck into at college (they were full and not letting undergrads in; too bad for them I’m not very good at taking “no” for an answer). My biggest interest, by far, is human behavior/interaction/motivation/etc. In terms of what books I read, the majority are focused on cognitive, behavioral, and motivational theories. My most recent book was “The Social Animal,” by David Brooks. Definitely recommend it.
That may sound strange, but I think that’s one of the big reasons one of the guys at the fund absolutely loved me. I’m great at reading people. I understand framing and asking questions in such a way that I maximize the chances of getting the answer that I want. I pay close attention to body language and voice intonation, etc etc. My father was in intelligence and I grew up learning this stuff, so it’s not just something I picked up out of the blue. I am not expert by any means, nor do I even have so much as a bachelor’s degree in any of those fields, but I read a lot and then refine my understanding of the material through repeated practice and observation. Also, due to my father, I’m a natural skeptic, which I’ve found to be quite useful when the vast majority of people you interact with have a reason to lie to you or bend the truth.
Accounting, financial statement analysis, and solid modeling skills are the most important for a junior analyst, but as you progress through the ranks, so many more qualitative factors enter into decision-making processes. You’ll sometimes have to make a call based on the gut feeling you had after a meeting with a management team. You’ll have to detect lying. You’ll have to understand how people will behave and why: politicians, businessmen, consumers, etc etc. Combine that with a near-mastery of the financial side, and you can be a very, very good analyst.
In terms of finance stuff, I don’t know that I’ve found any books particularly useful. I enjoyed Einhorn’s “Fooling some of the People All of the Time.” I’ve read a few other finance books, but typically found them minimally useful in terms of teaching me how to invest. I’d rather read something that would give me better insights into what drives a person’s purchasing decisions, or how to interpret macro events more accurately, etc etc. I want to learn things, not just read some rich guy telling me how he made all these wonderful investments, built a fortune, all the while making it seem near-effortless. There are good ones, but I haven’t gotten around to reading them.
For example, you hear Buffett talk all the time, spewing his cliché investing advice of “buy good businesses at good prices. Fucking brilliant. Why did I never think of that? Now tell me how to actually do that asshat. Most of my financial reading has led me to learning some history and maybe some relevant case studies, which limitedly helpful, at best.
I’d prefer to read Einhorn’s pitch on GMCR, Ackman’s pitch on GGP, or any of the other detailed presentations out there. I don’t want to read theory or watered down advice. I want to understand how good investors think and for me the best way to do that is to have them literally walk me through their thought process.
Unfortunately, pedigree absolutely matters and coming from a lesser firm puts you at an immediate disadvantage. Furthermore, there continues to be school-based discrimination. I was at a top group which, collectively, received every headhunter-driven interview out there. There were some funds that literally interviewed every one of the HF-pursuing analysts, but others picked only a minority. That minority tended to come from top targets. It was not at all based on who the best analyst was, though our group as a whole didn’t really have any weak analysts as far as I was aware.
The reasoning behind this is relatively simple: hedge funds often hire multiple headhunters to fill a position, as well as reach out through personal and professional networks. Because a headhunter is limited in the number of candidates they can refer, they tend to select the “paper rockstars”—ie, top bb/elite boutique, high GPA, top target school kids.
By no means am I suggesting that only those of highest pedigree can get these jobs. You may have an uphill battle, but it can certainly be circumvented.
Reach out to all of the headhunters, even the obscure ones that may not have many opportunities for you. Dynamics and SearchOne have the most post-banking HF clients, but there are many others that can help you.
Crush the headhunter interview.
Demonstrate an unbridled passion for investing. Talk about the PA you’ve run since early college, even if you’ve never touched a brokerage account in your life. They need to be convinced that you love investing and you are absolutely certain that you want to be a HF analyst. Even better, tell them you felt that way since your early interest in college, and time and experience has only helped solidify that initial gut feeling.
You need to convince them that you are a top analyst, which, as long as you’re decent, will be easy enough to do because rankings at most banks don’t come out until you’ve completed your first full year. At that point, even if you’re second tier, it will be good enough. Do not do this if you think you’re going to be mid-tier or lower, because if you haven’t locked up a job by then, you will have some pissed off headhunters and they’ll have no trouble deciding they don’t want to work with you anymore
When they ask if you’ve considered PE, immediately respond with “no.” There should be no thinking. No hesitance. If you’re uncertain about whether you want to do PE or HF, 95% of the time you will fail the HF process and end up in PE.
Finally, get them to like you as a person. I swear each analyst class gets nerdier by the year, but for those of you that do have reasonable social skills, lay on the charm, be funny, and get them to develop a vested interest in you. This is racist, but if you’re Asian and come in fitting the stereotype, you are likely fucked.
You need to go into your first real hedge fund interview way over-prepared. You need to impress these guys because if a headhunter has taken a leap of faith on you and you bomb on the first opportunity they give you, then you’ll have some difficulty winning their trust back.
If the headhunter route is relatively fruitless, networking and cold emails are another option. You’ll get plenty of rejections, but just like going out and approaching girls, you know it’s a numbers game. You will get rejected regularly, but with enough approaches you’ll get enough “yeses” to make it worthwhile.
The other thing you can do is to speak with fellow analysts and other friends at banks to try to figure out where they’re interviewing, and then send e-mails to those funds telling them that you’re aware they’re running a search process and you were hoping to be considered for an interview. Reword and include more than just that, attach a resume, and hope for the best.
In securing a job, you absolutely need solid references. Have at least 2 people that will go to bat for you without a doubt. Funds will sometimes call other random people they know at your fund, but hopefully you have a solid reputation and that’s not an issue. As long as you’re not a bad analyst, you should be fine.
I talk to a wide variety of people: buyside and sellside analysts, experts/consultants, company management, investor relations, lower-level employees, and others I’m not thinking of at the moment. The usefulness of channel checks varies significantly by industry. If someone came to me and told me that they had this amazing variant view on CAT (Caterpillar) specifically, and not just macro, I’d question the legality of their information. It’s difficult to do extremely meaningful bottoms-up analysis on a massive heavy industrial machinery manufacturer with operations around the globe. While there is a modicum of stock-specific analysis that will be helpful, CAT is very much a macro-driven name, so whether you’re buying, shorting, or none of the above, you’re going to be relying on your macro and industry-related work more than anything else.
On the other hand, I’ve been working on GMCR for the better part of 6 months and the channel checks do provide some insight, but the info you gather isn’t always particularly easy to synthesize and use to comfortably defend a position, nor do most talks provide much in terms of quantitative data. Furthermore, the people you talk to might not always be honest. Or, vocabulary used to describe the exact same scenario could vary. For example, “things haven’t been that great” for one guy, could mean “this shit may as well be worthless—I can barely move any units anymore.” There’s a number of other idiosyncrasies, but you get the point.
Anyway, I convinced a PM to go short GMCR slightly before the Q1 call. We got crushed. Up 20%+. I updated my model, stepped back to think about what this meant for our investment, and decided that I was still comfortable being a short. After a few emails, PM and I spoke, and while he joked that my leaving would save face, it’d be better if they fired me because I’d get some severance. “Oh, and just avoid trying to invest that money we give you.” We’re on great terms and he knows this shit happens. Everyone hates losing money, so it’s not like he was extremely cheery, but he thought I had done good work and he approved the trade because he also believed in it. We ended up adding to the position. Fast forward a little over 2 months. This is a week or 2 before the Q2 call. The results of my channel checks were someone dichotomous: either “everything’s fine,” or “why the fuck did I buy so many of these things? They’re not moving the way they used to and I can’t fucking wait to get rid of them.”
The “things are fine” came from NPD, a reputable data provider. Some other channel checks indicated the same thing. However, after speaking to some execs and lower level management at some of the larger retailers, I got a completely different message: volumes have come down significantly. That’s the big picture; a lot of work went into filtering post the raw data accumulation.
Met up with my PM and told him I think we should buy some puts, with the rationale being (in no particular order)
Long story short: stock down 40% post-earnings and I was pretty damn happy with myself. That’s one of the favorite parts of my job: standing out of the crowd and seeing something that few others do, and then being proven right in a very meaningful way.
The typical news sources: WSJ, FT, Economist, Bloomberg, and others. I try to avoid reading articles that will be absolutely useless to me in a few months’ time. For example, while the killing in Lybia is inhumane and highly important current event, knowing too many of its details will do nothing for me in the long run. I read headlines and I skim the first paragraph, if anything. I prefer to spend my reading time on either really interesting articles, or anything that will help me develop professionally or personally long-term.
I don’t really follow any blogs personally beyond some industry-specific stuff that I’ve found helpful. The reason is that I get so many summaries and articles through the banks and industry experts we hire, that I have more than enough to read to get my fill.
In my free time, my reading is either mindless shit on the internet or a good book—all depends on my mood.
Books?
If I had to pick just one thing that flicked that light bulb in my head and made me certain I wanted to be an investor, it would be this behavioral finance class I snuck into at college (they were full and not letting undergrads in; too bad for them I’m not very good at taking “no” for an answer). My biggest interest, by far, is human behavior/interaction/motivation/etc. In terms of what books I read, the majority are focused on cognitive, behavioral, and motivational theories. My most recent book was “The Social Animal,” by David Brooks. Definitely recommend it.
That may sound strange, but I think that’s one of the big reasons one of the guys at the fund absolutely loved me. I’m great at reading people. I understand framing and asking questions in such a way that I maximize the chances of getting the answer that I want. I pay close attention to body language and voice intonation, etc etc. My father was in intelligence and I grew up learning this stuff, so it’s not just something I picked up out of the blue. I am not expert by any means, nor do I even have so much as a bachelor’s degree in any of those fields, but I read a lot and then refine my understanding of the material through repeated practice and observation. Also, due to my father, I’m a natural skeptic, which I’ve found to be quite useful when the vast majority of people you interact with have a reason to lie to you or bend the truth.
Accounting, financial statement analysis, and solid modeling skills are the most important for a junior analyst, but as you progress through the ranks, so many more qualitative factors enter into decision-making processes. You’ll sometimes have to make a call based on the gut feeling you had after a meeting with a management team. You’ll have to detect lying. You’ll have to understand how people will behave and why: politicians, businessmen, consumers, etc etc. Combine that with a near-mastery of the financial side, and you can be a very, very good analyst.
In terms of finance stuff, I don’t know that I’ve found any books particularly useful. I enjoyed Einhorn’s “Fooling some of the People All of the Time.” I’ve read a few other finance books, but typically found them minimally useful in terms of teaching me how to invest. I’d rather read something that would give me better insights into what drives a person’s purchasing decisions, or how to interpret macro events more accurately, etc etc. I want to learn things, not just read some rich guy telling me how he made all these wonderful investments, built a fortune, all the while making it seem near-effortless. There are good ones, but I haven’t gotten around to reading them.
For example, you hear Buffett talk all the time, spewing his cliché investing advice of “buy good businesses at good prices. Fucking brilliant. Why did I never think of that? Now tell me how to actually do that asshat. Most of my financial reading has led me to learning some history and maybe some relevant case studies, which limitedly helpful, at best.
I’d prefer to read Einhorn’s pitch on GMCR, Ackman’s pitch on GGP, or any of the other detailed presentations out there. I don’t want to read theory or watered down advice. I want to understand how good investors think and for me the best way to do that is to have them literally walk me through their thought process.