The HF stories people don't tell
Everyone always talks about their great years, so let's do a thread about the bad years.
I want to hear all your "My friend was zeroed 4x and fired 3x in 5 years" stories (in case your friend is still lurking here).
Related:
My friend made low 7 figures two years in a row and has essentially been making a couple hundred k a year since then. I think he will bounce back but kinda sad. Turned down a crazy guarantee at another fund too.
Based on the most helpful WSO content, the hedge fund world is often glamorized, but the reality can be brutal. Here are some insights into the "bad years" and challenges that aren't always shared:
High Volatility and Risk: Even when you make the right call, volatility can wipe you out before your thesis plays out. For instance, strategies like "long energy, short financials" have left funds limping when markets moved unexpectedly. Funds like Tiger and Tontine, despite their success, eventually shut down due to such challenges.
Operational Failures: Contrary to popular belief, most hedge funds don't fail due to fraud or poor performance. A 2006 Capco study revealed that operational breakdowns, such as process errors or key personnel departures, are the primary reasons for failure.
Unforgiving Environment: Analysts often face immense pressure. A single bad idea can lead to being fired, as PMs are quick to assign blame. The job can feel like "man-eat-man," where you're only as good as your last call.
Career Setbacks: Stories of being "zeroed" multiple times or fired repeatedly aren't uncommon. For example, some professionals have faced years of slaving away at multi-managers with no bonuses, only to be let go with a non-compete clause that effectively sidelines them for a year.
Collapse of Funds: When a fund collapses, the aftermath can be devastating. Professionals have shared experiences of scrambling to find new roles, filing for unemployment, and dealing with the stigma of being associated with a failed fund. Interviews often involve tough questions about why they left their previous role.
Mental and Emotional Toll: The pressure of managing client money, dealing with losses, and navigating a cutthroat environment can lead to significant stress. One professional described hiding under their desk after a bad investment blew up, highlighting the emotional weight of such situations.
For more detailed stories and discussions, check out these threads: - https://www.wallstreetoasis.com/forum/hedge-fund/the-reality-of-hfs-0</a">The Reality of HFs - https://www.wallstreetoasis.com/forum/hedge-fund/the-brutality-of-worki…</a">The Brutality of Working at a Multi-Manager Hedge Fund
These threads provide a raw look into the challenges and pitfalls of the hedge fund industry.
Sources: The Hedge Fund Experience - Good, Bad, Ugly, https://www.wallstreetoasis.com/forum/hedge-fund/the-hedge-fund-experience-good-bad-ugly?customgpt=1, Hedging Can't Fix This - A Story of Being at a Collapsed Hedge Fund, Hedging Can't Fix This - A Story of Being at a Collapsed Hedge Fund, The reality of HFs
a lot of sad stories tbh. a couple of my friends left elite hedge fund pedigrees to each go start a startup... the startups didn't scale, now those friends are struggling to get back in the game. one hasn't had a seat in years
I want a wider discussion about these scenarios because tbh my career is kind of shaping up to be that. I'm 32, ran a super small fund myself for about 4 years that I wound down maybe 18 months ago and I've been struggling to recruit for any investment management job since.
real bummer more people aren't willing to share here, I need something to distract and make myself feel better about my mediocre PE existence lol
Knew a guy some years back who was at a big SM and got pinched for insider trading a FAANG company because his dad was senior exec and he went through dad's computer during the holidays to see what was coming out by EOY/after start of NY. Ended up killing himself before going to trial but the whole thing was kept quiet because the fund he worked for manages some VIP politics-adjacent money.
no way, is thre anything about this online? keywords to search to find this?
I doubt it
That is incredibly sad...this job is never worth your health/life
Kids in their 20s panic when they're looking at real time
Doing time sucks man I got arrested for a few days once and I had bigger ego death than dropping a few tabs.
Curious, did that ever cause any issues in future job applications, or other aspects of life?
Luckily, everything got fully wiped…was just a cop on a power trip—he turned off his cam before jumping me (because I was just standing there), so there was no just cause for him to apprehend me. I was luckily able to get a…I’m not gonna say the type of lawyer…he was a Jewish lawyer LMFAO. He was great and was able to get everything wiped from government databases as well because there was no just cause for the arrest. Funny story, I’d love to get into more detail but, seriously, just being behind bars and having your freedom taken from you unjustly makes you feel like the Count of Monte Christo after his marriage. Wouldn’t recommend it, but then again I definitely garnered some interesting insights about myself and life. My buddy’s dad told me to get arrested once, so I guess I checked that off lmao.
Out of pure curiosity, any ideas on how he actually got pinched ?
FAANGs are amidst the most traded stocks out there ? So even if broski opened a few positions before key dates/announcements - surely that’s not enough for the SEC to make a strong enough case against him ?
My theory is that after detecting the suspicious trades, they made the link with his father - then investigated the FAANG independently to ask if its internal system detected any files containing the information in question being opened from his computer??
Curious to hear what more experienced people think
Agreed, but there was probably some incriminating evidence in the internal communications between him and the firm that would've come to light.
I have 0 clue how it happened. It could be something like what you described or he could've been retarded enough to actually send files to himself which were marked with some sort of tracker that alerted the company they were opened/accessed and then the company sounded the alarm. If the case had actually gone public/he were prosecuted then the details would've become public record. Instead this just becomes a lesson that the SEC, much like Santa Clause, is always watching.
Jumped to MM ~18 months ago from IB. Been blown out twice since... Never got any bonus of course
Jesus (cool name btw). are you thinking of moving elsewhere or sticking it out with the current fund (if you're at a MM)?
Do you know what blow up means?
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