Macro -> Equities or Equities -> Macro
I know this may be a somewhat uncommon question, but is it more realistic for a macro guy to switch to equities or the opposite? What about for credit and commodities? Am just curious as to the flexibility of shifting towards a different strategy if you have a change of heart? Does anything like that even ever happen?
Equities to macro is a lot more common.
Every macro fund has an equities team with a macro overlay. Often these are industrial or financial PMs that provide micro -> macro color. Its easier to learn long short and then branch off to trading macro instruments like rates, fx and vol. There's was even a term for it, macro tourist. And its how guys from the soros and dusquene lineage often got their start. Its almost unheard of for macro traders to start going deep in fundamental long short. Most common is macro traders buying thematic baskets, maybe quant equity or alt data strats.
So starting in equities does give some more optionality.
Interesting...
I am currently a student and have for a long time aspired to become a macro trader (precisely because of Soros and Druckenmiller who started in equities as you said).
I am conflicted on which type of starter role I should aim for.
Starting off in rates/FX trading on the sell side is where most macro PMs appear to come from today, and the role would allow me to be in a risk-taking position virtually immediately out of school. However, I'm doubtful as to the transferability of the skills I would acquire as a market-maker in the case of a career pivot.
But starting off in equities, would give me much more optionality (as you mentioned), allowing me to potentially adopt a hybrid style, where I am able to play in equities in low vol environments when macro isn't working and vice versa. However the road to a risk-taker position would be slower (probably starting off in M&A, ER or as a HF analyst).
What would you recommend as a better strategic choice, from profiles you may have seen throughout your career? I appreciate that this is very context-dependent, and that you don't know anything about me, but in general what would you say?
Thanks for the previous reply btw
macro today is almost nothing like the macro you find in books from the 80s, 90s and 00s. modern discretionary macro is usually some form of rates rv, vol rv or short term trading at multi mgrs. even soros and dusquene are now classic long/short equity shops for the most part.
so the equities to macro pm crossover won't really apply. the exception may be if its at macro multi mgr (tudor, caxton, graham), or a swf/ pension or family office type seat.
but realistically, it is hard enough to be a good stockpicker and macro trader. i could also tell you macro seats are a lot harder to come by than equities training seats, but that can also change so who knows, and frankly who cares.
my best advice would be: you are not asking yourself the right question, which is what are your most obsessed about? the answer can't possibly be both, basically pick the one that deeply interests you most (which do you spend most time reading/ researching and losing track of time), work your ass off until it clicks + pound the pavement until someone notices. thats the only thing that matter to get your start. forget about career optionality and long term prospects, nobody knows and that matters the least.
and if you're really unsure, do what every other confused person does and go down the consulting route or something. good luck.
Thanks for the tip
Why do you think that macro trading has moved much more towards this today (mostly RV etc.)?
Because it's uncorrelated. Old-school discretionary macro had known biases (correlations) - momentum, FX carry, duration. Institutional investors and HF risk teams can access those factors for cheaper - QIS desks, internally, etc - and don't want to pay HF fees for them. There's also a cyclical element. A lot of RV opportunities are driven by predictable, price-insensitive flows. This works best during 'normal' markets, but has an implicit short-vol bias, that tends to surface during big liquidity squeezes (macro shocks). For example, discretionary (directional) macro has generally outperformed systematic (RV) during the Iran conflict. What isn't directionally a conflict trade these days?
A bigger and more sustained macro shock would probably make directional strategies (at least temporarily) more appealing, based on lookback performance. But correlation-aware allocators will nearly always prefer RV strategies, all else equal.
Aside: someone who worked closely with Soros said he once admitted that, while he was known for the BOE trade and big macro punts, he made all his money in L/S equities. Not sure I believe the story, even if it came from a credible source.
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