Frequent lurker, first time poster. This is my story, with a bit of personal flair. I'll cover why not getting an internship was the best thing that ever happened to me. Why a high GPA and and an Ivy League degree are not as important as you think. Why Renaissance, Two Sigma, et.al. are not the best hedge funds. And why I.
Let's start at the beginning. I had a humble beginning, mediocre GPA at a non-target (Econ major math/stat minor) and a hard time finding internships. They say you can't get a top without an Ivy League degree or a stellar GPA. That's just pure BS. In thespace, your GPA is worthless. The only thing that counts is your ability to generate abnormal profits consistently. Fancy degrees are just a silly hoop they make you go through to give investors the impression that the fund is hiring the most competent people. But everybody knows that's just for show, nobody really cares about that. They care about the money. It's all about the money.
My journey to the creme of the crop on Wall Street stems from an event in my childhood when my girlfriend left me for someone else. When I found out she had another boyfriend, my heart was broken into a million pieces. I remember trying to hold back my tears back as they dropped onto the pages of my favorite book "The Stock Market Course." If I could get rich, I thought, I could make her regret her decision. In my darkest storm, that book was my anchor.
Getting closer to my senior year at a non-target university, I was consumed by another wrath - no internships, connections, and an inbox full of rejection emails. I was graduating without a job or experience, far behind my peers, ready to be ambushed by a student loan bill with compounding interest. This frustration accumulated to an unbearable level, to an explosive level, igniting a firestorm of motivation that led me to embark on a journey where I surpassed even the most elite candidates for the best positions on Wall Street. These candidates, which whom I looked up to, I now often interview for coveted positions. Interesting how the tables can turn so quickly!
Let's rewind a bit more. Over the years I've read and filled abooks. I've studied every corner of fundamental, technical and sentiment analysis. I started to realize that nobody in their right mind is going to publish or sell anything that can make you a fortune. If they really had something viable they would keep it quiet and exploit it themselves. They would go to great lengths to CONCEAL, not publish, their work. Nobody's going to sell you a $19 million dollar idea for $19.95 You see, trading or understanding the market will not make you a fortune. Only a consistent informational edge will make you a fortune.
This led me to dig deeper; I was restless. If this consistent informational edge existed, I was going to find it – through hell or high water. Over the years, I've looked into hundreds of ideas, but the crown jewel of them all actually stemmed from a random conversation with a family friend that had absolutely nothing to do with finance or the markets. Something completely off topic. Always on-guard, I was able to make an interesting connection. And from this one off-topic thought, a billion-dollar light-bulb switched on.
I was able to identify an informational inefficiency. This was deep in the rabbit hole. Very deep. I will not go into specific detail due to strict NDA. This ultimately landed me a very high-level position at one of the best-performing but low-profile HFs in the industry, which I will not name. I shouldn't be posting in the first place, which is why I'm posting anonymously. But my project involved pre-processing certain scientific datasets faster to gain a time advantage. I will not reveal the exact category or nature of this data for obvious reasons. But to give you a glimpse, I'll stay as remote, vague and ambiguous as needed.
It may or may not be that this type of market-moving data item(s) are disseminated frequently on the Bloomberg terminal that thousands traders immediately adjust their position after in a highly-liquid tradable product. It was a massive C++ programming in job to implement, but the end result was that I could obtain not only one, but various market-moving data-points many minutes before it hit traders' screens. Minutes before Bloomberg's servers even received it. Forget human traders, I had the data minutes before any millisecond algorithm could even crawl it. Perfectly and beautifully legally too. The strategy was so highly scaleable due to the massive liquidity of this product, that it blew my mind. Each day it became clearer and clearer to me that I may have found one of the most profitableplays in existence. It was then all of the anxiety melted away into bliss. I was in denial. Is this real?
Why hasn't anyone figured this out yet? Because it's not that easy. It's very, very hard. Reverse-engineering various proprietary models cost me a chunk of my early 20s. I was the computer guy who never came out of his basement.
As a side note, the biggest problem with the efficient market hypothesis is its definition of information. The EMH treats "information" as a one-dimensional item, but instead it is a dynamic process … first collected in raw form, processed, analyzed and then disseminated, often by a third-party or independent non-market participant. The process of gathering and preparing information takes time; it is within this time-gap that one may find an edge. There are ways of (perfectly legally) replicating this process by a market participant independently, and accelerating the process it to obtain and act upon pre-market information consistently.
These particular methods may not always be immediately apparent to the broader market. In fact, these methods may not even exist, you have to engineer them from scratch. This is why these anomalies may persist for years or even a decade. Yes, markets may be highly efficient on the surface by reacting to "finished product" information, but never even close to strongly efficient at the core because it would require multiple discoveries to occur independently and simultaneously, which are highly improbable.
You see, getting rejected from internships was the best thing that ever happened to me. I was lucky. I could have ended up as another casualty in a standard corporate job. These rejections forced me to create and work on something that was far more profitable on my own. Shut out and rejected into the cold, the anxiety and stress boiling inside me, I found my sweet escape.
With this high-caliber evidence, you'd think I'd apply to the top funds, Renaissance, Two Sigma, etc… I always thought these guys were the best, but I was wrong. The more research I did, the more I realized that these funds are actually perform quite poorly. There are some very exotic hedge funds that can put their track 20+ year record to utter shame. You've never even heard of them, and they try very hard to keep it that way. These funds turn down investors after reaching their cap. Getting them to accept your money is considered lucky.
How can I describe it? It is like when I found out about Asian massage parlors. You always thought prostitution was non-existent in your area, until you find out there's been 5 partially-legal brothels running down your block for the past ten years. How come nobody's ever told me about this? It's like discovering fire.
There was one that was a real gem – a precious hidden gem. I work at this fund now. Their long-term track record was so suspiciously good, they were constantly being investigated by the SEC, always coming out squeaky clean. With a flawless track record over decades, these guys know what they're doing. Even the SEC is very impressed.
I sent them a cold email. A few hours later I heard back from the CIO directly. Not only that, but the CIO cc'd my email to various partners (one was the CEO of a $20 billion investment bank) who cleared their schedule to meet me within 24 hours. Within 48 hours, I got an offer and was on-boarded. After offering me over $1000 per day, they asked … Is that enough?
It took two weeks for Goldman Sachs's strats/quant group to call me for an interview, but by then it was too late. In fact, Goldman Sachs rejected me after I applied many times in the past. They really need to fix their HR department. While they're too busy scouring the cream at the Ivy Leagues for the best a brightest at the top, they miss the treasure buried deep below – and it cost them billions.
So here I am, corner Manhattan-view office, limo transport to work, high-level position at low-profile hedge fund at the age 24. How? Because I generate risk-free profits. Massive zero-risk profits. Soon I'll be making my fund billions and a chunk of change for myself, and that's just the beginning. I'll pull every string, I'll microscope every idea, and I'll work like a machine to vacuum every informational inefficiency that may exist, of which I've found many. I don't have patience, I force breakthroughs.
What I hope you can draw from this is that for those who have a will, there is a way. Sometimes this "way" is not one that is taught, but one you need to create yourself.
This brings me to remind you of Charles Darwin's quote:
"It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."
We are in a new technological environment, and you need to arm yourself with a new set of skills, quickly, if you want to survive. This industry has changed, with a greater focus on technology. Most inefficiencies will be technological ones. You can no longer make money the old Buffet way by looking at balance sheets and income statements. You need to be the most responsive to this change. How responsive are you to this change?
Don't know how to program? Nor did I, until my junior year when I taught myself. Instead of doing an internship that summer, I woke up at 6AM and spent the whole day learning how to program in C++ every single day, 7 days a week 12 hours a day for 3.5 months (over 1000 hours). I programmed until my eyes bled. Am I the sharpest programmer on the street? No, far from it. But I got really, really good, fast.
Not good at math? Nor was I, in fact I was probably worse than you. But I got really good, really fast – by working really hard. I solved so many equations, and filled so many binders of hand-written pages, I developed a minor wrist strain injury. In fact, I worked so hard and got so good, that I was able to identify and point out a major improper application of the integral test for convergence published in the majority of calculus texts which my professors agreed was a problem. I was a C math student in high-school. Did that hold me back? No. Because I improved, excessively and radically and far exceeded those that got A's in high school.
Don't have the motivation? Nor did I. Find a way to get the motivation. The anxiety and stress of falling behind is a great source of motivation.
It's very possible to acquire a skill that you can find a new application for quickly, if you work hard enough. Sure, there will always be someone smarter, stronger, and more experienced than me or you combined. Do not let this discourage you - because so was Goliath, the most feared ancient giant warrior armies unsuccessfully fought. Yet then came David, a young rookie with a homemade slingshot, and with a perfect stone shot, brought Goliath crumbling to his defeat. Remember that story? Be that kid.
It's all about finding and hitting that critical nerve. The critical nerve in this industry is information. Finding something completely unrelated to finance or your field, and making a connection. You have to look outward. While everyone is thinking outside the box, you need to think in a different dimension. There are original, innovative and creative solutions out there yet undiscovered. Exploiting them may involve moving outside of your comfort zone and learning something completely radical and different. I hope I've encouraged you to find your slingshot. It's not easy. In fact, it's hard, very hard. But now you have the peace and comfort of knowing that is also very possible.