Should I be nervous?
Finishing up my first year at a name brand MM, having been in LO for a couple of years before that.
My PM hired me to set up his pod with him i.e. it's his first year at an MM as well, although he has over a decades experience as a trader and has a pretty stellar reputation (other PMs both inside and outside my firm talk about him very highly whenever his name is mentioned). He seems to know what he's doing anyway.
However, we're on track for a bad first year. He's already given me a range for where he thinks my bonus will be, and it's very low. He says he'd love to do more but it's been tough etc. I think a lot of the problem was being unwilling to deploy risk aggressively when we were confident; there were some plays we had predicted perfectly but just didn't take a strong enough position on. I'd guess first year jitters but what do I know.
Anyway, he doesn't seem too concerned, says we'll make it up next year etc. He's still bantering in our chats etc, you wouldn't notice anything was off. Except, he seems less willing to deploy risk now. Anything remotely hairy we were in he's pulled out of.
I'm not thinking of jumping ship or anything: I'm learning a lot more than I was before, getting good experience, and still making decent enough money on my base. I like my PM and I'm willing to wait it out for him to eventually find his feet and make it rain.
I guess I just don't like hearing that we're not doing well PnL wise. Am I being naive? Should I be more concerned? Or is this all just part of the MM rollercoaster?
Lack of track record wouldn’t give me much optimism that next year can be materially better to be honest
Even with his long track record before joining?
Having a bad year is part of the MM experience, it’s inevitable. That’s not a red flag - what is a red flag is joining a first time MM PM depending on their prior xp. The MM framework is a game in and of itself. Countless MM PMs that do the standard bouncing around game.
edit: don’t work in macro so not sure how other roles transfer over skillset wise. L/S it’s materially different that I raise my eyebrow
*delete*
Having been in similar situations to you myself my biggest advice is always have a backup plan. You need to realize how your PM is appearing has nothing to do with chance of blowing up. i.e. I've seen PMs talk enthusiastically making a new hire less than 48 hours away from whole team laid off. It's honestly disgusting but you only realize it after being through it
Same thing happened to me. Well, my situation was slightly different. So I got hired at a hedge fund to manage a small prop book but mostly for market making natural gas via electronic and OTC. We got paid by the exchange to provide liquidity. Like $250K a month by CME for one desk. So this guy who ran the shop was a complete sociopath. Like legit. If I named the firm and you saw it on glassdoor, you would see the same thing on the reviews. Anyway, this guy was a floor trader back in the day. Just a pure gambling mindset. As a market maker, you try to be risk neutral as much as possible. This dude put on like 50 outrights. Not hedged, just straight delta risk and was gambling our profits away when the market was super volatile. That one bad trade that lasted like 20 minutes, ate up our entire desk's one month or two month profit. It was ridiculous. Shortly, he got margin called and had to lay off people. Fucking goof. Always have a back up plan.
99% of gamblers quit before its too late
Same boat as you - I’ve learnt a ton and honestly am a better investor for it, but understand how it’s wildly frustrating an experience.
The good thing (for me) is that the axing seems to be over for my group this year. Two other PMs left which I assume means we live on another year.
The guy I work for has a good track record and is actually pushing some interesting initiatives, so I’m curious to see what happens. To be frank I’m treating this as a good learning experience more than anything else - I’ve been able to build more on the buy side in two months than six on the sell side. If we crush it next year yay, otherwise plenty of people land on their feet fine and I’d like to think I’m actually a better risk taker for all of this.
Good luck!
Yep, I'm trying to treat it the same way. Even if the money sucks right now ("sucks" being only relative to people in other top finance jobs) you're getting a great finance education that should open plenty of lucrative doors should this one fail to deliver.
Good luck to you man.
In large MMs Analysts can still move across pods after PM gets axed.
First, are you in rates or another FICC product? Where was your PM before this MM (buyside or sell-side)?
If you're in an FICC product and your PM was on the sell-side prior to this year I'd be marginally worried (market making experience doesn't always translate well to taking principal risk taking), but otherwise these behaviors are all fairly typical. No PMs like to take risk the last two weeks or so of December if they can help it. Ideally you're conservative in risk deployment throughout the year and have some ammunition to take advantage of the dislocations that emerge from other PMs cutting risk, but ce la vi. In general, it's sensible to be low in risk deployment your first year at the fund.
How far in the red are you guys this year? Which fund are you at? Some are known to be more lenient than others and these two questions will be more important than anything else.
General macro. I cover a specific FICC product, but my PM trades both that and general rates. Said he wants to tidy up a bit and be more focused on my specific asset class in 2025. PM was indeed on the sell-side before this.
Caught up with him day after I posted this, we're $1m in the red. He seemed really relaxed about it and said we're ages from even the first risk limit and that it was all because of one stupid trade he made towards the end of the year against his gut instinct. Don't really want to say which fund it is even though it's pertinent information, but from what I've heard it's one of the more lenient big names. I'm in one of the bigger offices and I've only seen one pod blow up this year.
-1m is literally nothing lol
Do you not have live PnL visibility? Anyways, like the other poster said -1m is literally nothing lol.
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