If Analysts and PMs were paid the same, 99% would choose to be analyst.
I'm having a debate with a colleague about this.
I'd like your view on the title.
I find analyst job to be 100 times more fun and interesting. Which would be pretty logical 1) as we all entered this industry by being first interested in the analyst job and 2) every PM had to be first good analyst (and generally, you like what you are good at).
Also, is there a scenario in which the value distribution changes in favor of analyst in the future?
In the words of the infamous Charles Barkley: “if my aunt had stones, she would be my uncle.”
Well it is 2023 so she could still be your aunt
If my grandma had tracks, she’d be a tank.
It's basically our job to create debate and make assumptions around it man
disagree PM's have to navigate macro, positioning, hedges which is way harder than saying your DCF spits out a intrinsic value higher than market price
From what I can read, you have inaccurate view of both analyst and portfolio manager jobs.
1) I don't know any L/S PM that has an edge on the macro.
2) Assessing positioning is obviously the analyst job. PM has no clue what is the positioning on a name before the analyst tell it to him.
Some shops pay analyst abt the same as PM - they're treated as 2 separate career tracks, which I think makes sense honestly and shld be the case. We often conflate PMs as being the boss of the analysts but I think that shouldn't be true for all cases. Leigh Drogen has put out some rlly interesting research about a potentially more optimal PM-analyst dynamic - the PM playing 'coach' instead of 'quarterback' or 'commander', just objectively constructing the analysts' best ideas while trying to remove discretionary bias from the process. Essentially blending a quantumental approach. In this model, analysts are way more important than the PM and there could be a case where value distribution changes for the analyst. Imo, the traditional discretionary model definitely leaves holes wide open for intellectual blindspots and unintended bets.
Haha I can definitely imagine many high school hardos being interested in the flashy HF manager title more than analyst tbh
High schooler: hmm, prestige
This may be anecdotal...but my PM still covers some names in the sector he covered as an analyst. The other analysts under him cover other sectors apart from one junior whom he his training to take over his coverage. When that happens, he is then free to ramp up on other sectors to potentially include in the portfolio which he would eventually hire other analysts to cover.
I don't see it as PM vs Analyst as much as Analyst Evaluator vs Analyst. You become an Analyst Evaluator by being a good Analyst (making successful calls) over a number of years thus making you qualified to identify talent. PM's are paid the way they are because they were the best Analysts...
The pay difference is not about what job is more "fun and interesting". It's about the stress and pressure that comes with owning the P&L. I would happily give that up if paid the same.
Amen to that. Didn't realize the stress until I was in the seat myself. Would gladly go back if I could make similar money/upside as an analyst.
Unfortunately risk taking analysts have the same downside (getting fired) as PMs but have a much smaller payout on the upside.
Not sure exactly what a "risk taking analyst" is. If he has trading discretion, he is effectively a PM.
For a "non-risk taking analyst", he can always blame the PM for the blow up and find a gig in a different fund.
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