Explain to me please a world where someone with IB -> PE experience can leave the never ending grind of PE dealmaking to make $$ at a HF.
Seems to me like its not a straightforward world to understand. I know the landscape in IB, I know the landscape in PE, what does a world in HF look like for someone with 4 yrs experience 2 + 2 IB to PE?
Obviously I assume it rules out the quants. What else is out there?
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One word: "stability".
80% of HF seats pay less than top PE/banking
the remaining 20% are either incredibly risky and require you to devote your life to the markets (pods) or take like 4 people every now and then with top tier backgrounds
also, as someone who’s team has interviewed 50+ IB/PE vets over the last 2 months for an opening in our pod, most people just aren’t cut out for it
What would you say makes someone cut out for it from that background? Do you think someone can get looks coming from LMM sell side ER?
MMHF ye
”Top” SM probably not
When I say cut out for it in MMHF, I mean producing ideas that are actionable and not cookie cutter. Knowing your model assumptions/sensitivity inside out and understanding why the trade set up exists and how you get paid (in <18m ideally).
A lot of pitches are effectively (albeit very good) write ups of businesses with some valuation slapped on them, not really the best overlap with teams that are trading weekly views based on xyz momo EPS or data point
Well said. I will live and die on that pod hill.
I live and breath this stuff and to be frank, yes comp has followed. College buddies and I do an annual ski trip where we share comp #s (all are buyside, majority are PE), and my peak #s have been many multiples theirs
It’s entirely up to your personality. One day when I’m a 37 PM with a wife and 2 kids, I’ll embrace the fact that this year I could make 8 figures or 300k. The upside is what draws me to it and I dont think that skew exists in other parts of the buyside (SM, LO, PE).
It’s probably the only career where you can (basically) be your own boss/run your own book and entirely engineer your outcome by yourself/those who work for you. No career in finance has the explosive upside of a pod PM
A senior, 40-50 year old PE person may make $40m in carry over 7-10 years. There are PMs that make that in a single year. There are also PMs that make 300k. Again…very wide range of outcomes and you get to engineer it yourself
I mean sure, but I’d still rather work at TCI/Pershing. But I don’t think money drives me as much as it does you haha
Would you say all the top MMs generally comp in this range or do you have any recommendations on which particular ones have this type of upside?
Where can someone learn about what the day to day looks like in a pod shop and how trades are made (examples of the thought process and research that goes into making a bet etc.)?
Because I hear that they’re high risk, quarterly focused, you have a tight margin of error (can’t lose money or be a couple of % off on a quarter) etc from this site. But I don’t understand in practice how you can trade and not lose a small amount every now and then - I’m clearly missing something about what you actually do.
Do PM's really make $40mm in a year? Isn't that the equivalent of telling a strong, talented software engineer to go start the next Facebook instead of working for Google?
feels like succeeding and being cut out in HF/general risk taking is very synchronous with being a good entrepreneur and having that "entrepreneurial spirit".
thuoghts?
I wouldn’t know about that, feels like that wording is just HF kool aid
Public markets are gay
You know unironically can’t even dispute this
Said the private markets bloke who would certainly lose his sleep and wet his pants if he's forced to put on a position.
Not everyone has the testosterone level to handle liquid portfolios.
Did you type that while taking Big Barry up the arse?
I had your mother in a ballsy position
You work in finance and don't know the concept of risk-adjusted returns? Fr?
Because you can fake it in PE. And you can fake it for a long time. Everything in investment is just (calculated) gambling. There are better gamblers than others, sure. But at the end of the day, there's a finite number of good deals in this world and yet every month, every week, every day there's a new team spinning out of Ares, KKR, Apollo, etc. All claiming to have proprietary sourcing. They're mostly jokers and very few of them can have outperformance that stands the test of time (meaning, even 3 funds).
HFs may exploit some opportunity to make money but at least they're conscious that every single day, they have to be better than they were the day before. That's why it's so hard to have a successful HF business. PE is fake it 'till you make it (or until you don't).
Citadel is overrated. That's why.
Mate you're VP in IB. You got rejected even from PE. And have to stay in banking to be a balding excel ape lifer.
Do you know Citadel interns have the same base comp as IB VPs?
No they don't.
And you're a quant that's already bald because you can't get laid.
You know what being a "quant" means?
It means you barely work in finance and get paid like a high school teacher
Back office Peasant.
Lot of this indeed sounds like “mental masturbation” to me - can’t stand liquid positions, can fake it in PE longer, HF is more true investing, etc.
Those reasons imho kind of just stroke one’s ego. What else is there? I.e., who the fuck cares about those other justifications?
It's not that you can fake it longer in PE - that would be a good thing. It's that others can fake it for longer in PE and at the top its all phonies i.e. master politicians and/or people who at once were good investors before realizing that horse trading and being a sycophant was a much safer path to success in PE than sticking to one's philosophical chops. This 100% was a major factor for why I switched.
thank god someone else said it. What the hell is the point of justifying PE returns over a pod shop? The justifications and internal rationalization of the "value" or "righteousness" of one specific investing process is crazy. Money is money, and work life balance is work life balance. Some people might gravitate to certain processes more, but we all just want to find a balance between money/interesting/enjoyment/money/what aligns with our personality. Strike while the time is right when your sub-industry is in vogue, work hard, and maybe you get lucky. I get that its natural to obsess over longevity and "what seat is going to be the hottest over the next decade to maximize my $$$", but I tend to think more of us end up with pretty limited choices/paths anyways
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