MM seat with young family
Hi all,
Currently an ASO1 in PE seriously thinking about a move to the podshop world. I have a lot of contacts/friends in the space, and for a number of reasons I think it would be a much better fit for me than PE.
Simultaneously, I'm pretty set on having kids in the next couple of years (currently 26, would be 28 when baby #1 pops out). I think I could work through the PE grind even with a kid, but the career uncertainty and volatility of MM HF makes me second guess myself. Any thoughts on this from any folks who've made it happen? Seems scary to introduce a child to the family with such a volatile seat - but it's not like everyone in MM HF waits until they're 35+ to have kids.
Thanks all.
I joined a long only and opted out of the MM career path for the reasons you’ve cited. Lower comp ceiling, but more stability is what I wanted.
If you want more relative stability as a pod jr, don't go to MLP
Thanks +1 SB. Could you expand why?
Well, because of their reputation of cutting books and teams faster and more algorithmically than other firms. Very tight risk management.
Bump
First, I never did PE, but I believe that the information here will be a great overview regarding the pod shops dynamics.
Above all, it is important to understand that a pod shop is a trading business, which is different from investing.
At a pod shop, your team's goal is to deliver the maximum annual P&L possible for the risk allocated. To deliver this, you can't just hold positions for a long time, as you will be likely taking large volatility for profits on an annual basis. Therefore, what successful pods do is taking advantage of relative pricing discrepancies using the principles of arbitrage (as this tends to produce consistent returns with low risk, but is limited in P&L capacity), while allowing for some speculation using fundamentals (as this significantly improves your P&L capacity, but it is higher risk). This portfolio management dynamics also explains why pod shops don't accept failure for small trading books, because to get a small P&L, you could just allocate the vast majority of your risk to low risk strategies and you would have a remote chance of losing money.
Furthermore, this industry's judgment is just about performance. Therefore, you will generally only get fired if your performance is insufficient, your team's performance is insufficient, or if the firm is blowing up and they are forced to unwind your risk, even if you are doing well.
That said, in terms of career volatility, it is just a "sink or swim". If you find success, you will be rich quickly, you will have a far better work-life balance and you will be able to provide a lifetime amazing standard of living for your family with just one great year as a PM. If you fail, you will be out of the industry in just a few years. Given that the time required to see if you have some success in this industry is relatively short (5-6 years or so) and the potential compensation can be great (8 figures or more), it is worth a try.
Yeah not sure what this has to do with the poor kid’s question he’s just trying to figure out whether he needs protection or not while working in the pods
I had a kid when I was a senior-ish analyst (6 years into my buyside career so not as junior as you). It was totally fine - my kid’s now 3, I spend like 2-3 hours a day with him + all day on weekends
Should only get better as I get more senior/become a PM. It’s hard during EPS, but my wife gets it and is really supportive of it. Think if I were you, particularly helps if wife or your mom or something is able to play bigger role and stay at home, which means you need to be in a seat that can make enough $, which is why I’d maybe wait until you’re 3-4 years in - not that you can’t make $$ in the first few years, you’ll be just fine, but moreso you want to take those 3-4 years to have absolute conviction in “yes, I can crush this career, I’m a $ maker, one day I’ll be a PM and I’m going to hit my stride now”.
TLDR: maybe wait 3 years unless you’re that horny.
You've managed to say a lot without saying anything
every year and, honestly, every month is a grind. job instability is part of what you sign up for. fwiw i'm 35+ no kids/married
Same age + no kids / married and this resonates.
I'm not at a pod, but thinking of transitioning after 6 years in SM world, half at ~$1bn and half at sub-scale launch trying to make it. I doubt WLB is much worse than whatever you are doing in PE. I did three years in MFPE and the principals (mid-30s) only really saw their kids on the weekends unless someone blew them up. In terms of risk: I think stability / low vol of non-pod seats is kind of an illusion. Single managers can shut down at moment's notice (see Matrix, Melvin), LOs have persistent outflows that will require ongoing HC reductions absent a continuation of the bull market (Wellington just fired a ton of people), and PE funds are closing or downsizing left/right (for example, Ares PE was a great seat when I recruited out of banking, and now the business is a fraction of its former self). Of course there are exceptions and avg. pod turnover is high (24 month median tenure?), at least you are in that ecosystem and can hopefully turn a 2-3 seats if you're any good but get unlucky. Lastly, in terms of just managing overall family life - hire a nanny at least part-time until preschool. It is expensive but necessary in any performance-oriented seat unless your wife does not work - which I don't recommend given inherent gaps from seat-to-seat.
But again, I'm not in that world so take with grain of salt.
Agree with a lot of this, however, I do think SM HF and long only funds tend to have longer tenured employees than pods on average. The stress about going to a MM HF is both the longevity of the seat and stress of constantly ramping up in new teams once you get inevitably canned in your first few roles. It’s easier to find pod shop analysts / PMs that have had 3-4 jobs in the last 5-6 years than a similar counterpart in a non-pod public markets role. The first year or so of starting a new job is always the most stressful period as you have to effectively “rebuild” your reputation and process every other year which is not exactly conducive to spending time with your kids in their earlier years. There are certainly SM HF or long only seats that end up evaporating earlier than expected, but on average, it can be more predictable albeit with a lower comp ceiling and longer runway.
All in all, if you’re trying to have kids on the earlier side (late 20s / early 30s), and you want to spend time with them in the early years of your life, I don’t think it’s a debate that going to a MM HF is not the right move. However, if you are okay waiting until your mid-30s with a few years under your belt and confidence in your process / team, it can be a much better outcome.
It depends man. This doesn’t need to be over complicated. Are you planning on joining some 2 person team running $700m at a tier 2 platform where the PM has 6 years of experience, came from a SM, and will be out the door in 9 months? Or are you looking at more scaled/tenured/larger teams with legit people and process? If it’s the latter, than yeah you can start a family lol. It’s not a binary thing.
And don’t let your career goals get in the way of whether you should or shouldn’t have a kid - that’s ultimately up to you and not some guys online
In general, don’t make any life changes when you are expecting a baby.
But 2 years out (means she’s pregnant in the next 12 months) you will be fine (if it was ever going to work).
But once you close in on the birth ohhh boy you better be ready for that and not worrying about proving yourself at a new gig.
Hi OP - I'm 35, am married with kids and have worked at Point72 L/S Equities for 4 years now (previously at 2 SM hedge funds that both closed). HFs are inherently "riskier" seats for job security than PE. The 2 SMs fund I worked at shut due to just 1 year of bad performance (due to fund-of-fund investors redeeming). At P72/MLP/Citadel, people get fired / capital cut all the time if they don't perform. BUT - if you do perform (and I would only work in a HF if I thought I could perform, otherwise whats the point?!), then the work-life balance with a family is actually quite ok. You leave when the market closes, have dinner and get to hang out with your partner/children. You might login after, but only briefly. If you can mentally withstand market volatility and are good at stock picking and eventually risk-taking, then I think it's worth giving it a shot!
Hi AlphaGen - for someone transitioning from SM to pod, what was the leeway you were afforded before you were expected to "perform." I am contemplating moving my family for a decent pod seat and have done well in a SM seat, but there's always the ramp. Further, how much does personal performance correlate to outcome? Have heard horror stories of folks moving only for PM to blow up 3 months in leaving everyone in the lurch. Seems unwise to move family for if that risk is real vs. apocryphal.
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