I'm sure you've all heard anecdotes of people leaving their seats to invest on their own. How feasible is this / at what point does it even become something you consider?
I fantasize about the freedom but it seems unrealistic; I'm thinking if I were in a position to solely trade my PA I'd be pretty close to retiring anyways. Thoughts?
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If you don’t feel the need to stay in NYC, I would love to do this if I have $7.5M or something like that liquid. Seems like a nice life
I'm going passive and real estate when I'm done.
What's the point of retiring if you're going to actively trade anyways? (vs. putting in the occasional fat pitch)
exactly, just front run like dodge and cox haha
I’m now 12 years into buyside career. I probably could’ve retired at year 10.
I love this job and don’t think I plan on leaving anytime soon, but I also don’t have kids/that could change things. It’s feasible if you have a few big years (both comp wise + PA wise). Happy to answer any follow ups
What was your path?
2 years IB, 12 MM HF
Worth it above $100 million (so need to be late 30s or older with decent success) but you probably have good seat at that level
depends on what you value in life. a lot of people derive their self worth from their job title and net worth. If you are one of those people, I'd advise not managing just PA. i think managing $ professionally is like having a massively levered PA without any of the financial downside (can manage 9-10 figure book?), so if your seat is good and you can deal with the downsides (extreme risk controls, annoying LPs, internal political BS, high COL area etc) it doesn't really make economic sense to be independent.
But money and job title isn't everything. Health, location, non-money related goals and personal relationships are super important too.
Eventually enough is definitely enough (e.g. I bet I could live off of $5m for the rest of my life, currently early 30s) so for most people (ex degens) it's less about the economic value of money and more about ego, reaching your full potential and/or being competitive. you just need to figure out what type of person you are and try to be happy.
I think at the end of the day, the worst thing you can do is follow other people's idea of success and not your own. If you chase a dream other than your own, whose life are you actually living?
Everyone has their own number, but I feel $10-15m liquid (again, for me personally given my goals etc) is the point at which I'd THINK ABOUT quitting and managing my PA. Would I actually do that? Probably not, since by that point (I'm about half-way there and have been doing this for 7-8 years), I'll be a PM where my earnings power is much higher.
+ golden handcuffs dynamic as I accrue more and more deferred $, which makes it hard to leave
"Fantasize about the freedom" might be a thing in a bull market where SPYs go up 20-30% a year.
Now try to put yourself in a March 2020 situation where your entire net worth just dropped by 30% and you have no other sources of income. And try to imagine the stress and fear in that context.
It's also massively tax-inefficient to trade around your PA, by the way. Depending on the time horizon, you could well need to outperform the SPX by 10% annual in order to compound at a similar rate after taxes (vs just having your PA on an index fund and not trading it).
Exactly. You also don't have the information, flow, resources you do at a large firm. Seems like a terrible idea. I think staying in a risk seat once you've "made it" is probably the ultimate deal. Collect base salary, less stress on your shoulder/less performance anxiety than say a 1st year PM.
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