How to become a great investor?; Finance PhD vs. Finance MBA

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Hello all,

My long term goal is to become a great investor - a great stock picker. I'm a recent graduate of a prestigious liberal arts school. I had about a 3.3 gpa, I majored in History, I did my senior thesis in Psychology, I played varsity football, and most of my serious work experience to date is in the context of k-12 schools as a tutor/counselor. There are two approaches that I'm considering to reaching my long term goal...

1) get a starting position at an investment bank or investment management firm (and i might need to get a more relevant graduate degree in order to do this?)...get my pre-mba work experience there...get my mba...and then (hopefully) get a fund manager-track position somewhere...or...#2) get a masters degree in finance...get a phd in finance...and then (hopefully) get a fund manager-track position somewhere.

My question here is, which route should I chose?

Beleive me or not, I don't care, but it's not money that's attracting me to investment management. It's the theories, the strategies, the competition, the almost game-like atmosphere of the profession (/lifestyle, lol). I want to learn absolutely everything there is to learn about investment strategies, I want to cultivate my own personal strategy, and then I want to get out there and compete against the best minds on the planet.

The generic answer to this question seems to be something along the lines of - "Don't get a PhD unless you want to become a professor." Well, eventually, I think that I'd like to be a professor. But after getting my degree, I'd like to work for a fund for at least a decade or so, build up a nice bank account to invest with, and then sort of live off of that. I don't really NEED to be THAT rich. I'd like to be reasonably wealthy - have a nice house in a nice location, send my kids to good schools, take vacations, etc - but that's about it.

It's the strategy behind investment management that really attracts me to the field, not the money, that's really just a nice little bonus. So I don't think I'd mind being a professor that researches those strategies, not at all. I'd also still be able to make about 100k a year, have summers off to travel, maybe do some consulting on the side, and, if I'm really lucky, get tenure and have the ultimate job security.

But the real key here, the bottom line, is that I WANT TO BECOME THE BEST INVESTOR I CAN BE. I don't necessarily want to be the guy that makes the most money. I want to be the guy that is the best at his job. I want to be the guy that really, really knows how to pick the winners. It seems like I'd sort of be wasting my time as a low-level pre-MBA employee at an investment bank or investment management firm. It seems like I'd just be doing busy work, kissing ass, making connections, and building up a resume - not learning about the science behind it all. But as a PhD student in the right program, under the right mentors, it seems like I'd really be able to master the science behind it all.

I'd really appreciate any thoughts any of you have after reading this!

Best,

Blue

Region

Comments (49)

 
Sep 8, 2010 - 3:06am

OK here my thoughts:

being an investor is about finding information, processing them and coming up with a thesis.

you will never be nothing similar. You have created 500 topics asking the same question which is stupid especially regarding the fact that nobody wants to help you.

If you cant find that information about how to start a career in a forum which has discussed this for a million times which further is a topic where there are even books abot, you will never make it except of being a fireman.

btw Put that prestigious liberal arts college in your ass. loser

 
Sep 8, 2010 - 4:48am

awp:
OK here my thoughts:

being an investor is about finding information, processing them and coming up with a thesis.

you will never be nothing similar. You have created 500 topics asking the same question which is stupid especially regarding the fact that nobody wants to help you.

If you cant find that information about how to start a career in a forum which has discussed this for a million times which further is a topic where there are even books abot, you will never make it except of being a fireman.

btw Put that prestigious liberal arts college in your ass. loser

1) like i've said to you before, if going on the internet and trying to hurt the feelings of strangers is your 'thing', then you probably have some pretty serious mental issues and need professional help asap. i dont like what you are doing, but i forgive you, because you are ill, and that's not your fault. please, get some real help. there's nothing to be ashamed of. the sooner you get it the better the chance is that you can still manage to have a productive life.

2) i have created maybe a half dozen or so topics, total, over the summer, and each topic has asked a new question. it seems like you aren't all that intelligent - based on your horrible grammar, and academic jealousy - so i'll explain how this process works verrryyy slllooowly: 1) i have a question. 2) i ask a question on the board. 3) i get a lot of great answers and learn something new. 4) i do some follow up research on the new things i've learned. 5) this leads to me having some new questions. 6) i ask my new questions on the board. 7) i get a lot of great answers and learn something new...repeat, etc...etc...get it yet?

3) people on this board might not be willing to help you because you are so rude to everyone - as i am sure is the case in real life as well - but they have most certainly been willing to help me over the summer, and i have really appreciated it.

4) if you're going to continue to pretend to be a working financial professional, here are some hints: 1) don't make posts on internet chatrooms at 3 am on a wednesday morning. 2) learn about things like, idk, grammar, sentence structure, etc.

 
May 21, 2013 - 11:17am

awp:

OK here my thoughts:

being an investor is about finding information, processing them and coming up with a thesis.

you will never be nothing similar. You have created 500 topics asking the same question which is stupid especially regarding the fact that nobody wants to help you.

If you cant find that information about how to start a career in a forum which has discussed this for a million times which further is a topic where there are even books abot, you will never make it except of being a fireman.

btw Put that prestigious liberal arts college in your ass. loser


you're a moron.
 
Sep 8, 2010 - 5:19am

Im in Europe you moron.

I never said I was a professional I just finished my summer internship and will go for my masters before starting next summer.

I will stop posting now but just to stress my point: you are a loser and will never make it because you dont go out and get it but rather want to make other people do the work for you which will not work in the long run.

 
Sep 8, 2010 - 8:23am

Best article I've read recently on investing is:

http://www.newyorker.com/reporting/2007/01/08/070108fa_fact

I'd bet the message of the article goes right over OP's head, but worth a shot.

To summarize in layman's terms, you don't become a great investor by asking how in an online forum. Get out there, do some work, and have some original insight into how the markets work and you might be that one in a thousand that develops a strategy with expectations that beat the S&P.

 
Sep 8, 2010 - 2:45pm

jsmort11:
Best article I've read recently on investing is:

http://www.newyorker.com/reporting/2007/01/08/070108fa_fact

I'd bet the message of the article goes right over OP's head, but worth a shot.

To summarize in layman's terms, you don't become a great investor by asking how in an online forum. Get out there, do some work, and have some original insight into how the markets work and you might be that one in a thousand that develops a strategy with expectations that beat the S&P.

first of all, over my head? go fuck yourself.

second of all, this must be the wrong place to ask my question. its pretty clear that 99.99% of the people on this board only went into finance for the money. so none of you have any idea how to answer a question like..."i dont want the most money, i want to become a master of strategy, phd or mba??" all of you just respond, start working, make money, you lazy fuck. well, it seems like i'll learn less about investment strategies doing busy work, kissing ass, and making connections for the next seven years than i would as a student doing research on investment strategies.

 
Sep 11, 2010 - 7:55am

blueadams:

first of all, over my head? go fuck yourself.

For someone that doesn't know what NPV is, you sure have an attitude about everyone's perception of your level of knowledge.

blueadams:

second of all, this must be the wrong place to ask my question. its pretty clear that 99.99% of the people on this board only went into finance for the money. so none of you have any idea how to answer a question like..."i dont want the most money, i want to become a master of strategy, phd or mba??" all of you just respond, start working, make money, you lazy fuck. well, it seems like i'll learn less about investment strategies doing busy work, kissing ass, and making connections for the next seven years than i would as a student doing research on investment strategies.

Honestly blue, this place isn't called "FinanceOasis," it's fucking WallStreetOasis. So yes, people here want to make money. If you don't think that almost 100% of people on Wall Street are in it for the money, you'll have an eye-opening time going forward. We don't give a shit about your romanticized John Meriwether-esque vision of the Investing guru in a tweed fucking jacket, we've offered you help before and you insist that's it's not the right kind. Maybe it's time for you to find a new site.

"If you can count your money, you don't have a billion dollars." - J. Paul Getty
 
Sep 9, 2010 - 4:12pm

I would recommend the following:

Don't do a Masters or PhD in Finance. Don't bother with an MBA. The NPV for these routes is crap for your goal.

Get into a small/boutique asset management house if you can. If you're not sure on your chosen investment strategy go for a fund of funds. If you're clever enough to be a top investor you'll have plenty of time left over during and after work to broaden your investment horizons. Being in a small/boutique place you won't have a structured analyst program to work through, but you'll have a bit more freedom and opportunity to impress if you pick the right place. Once you have the standard analytical tools in place (should take a year or two) you should be able to branch out and find your own stocks etc. If you can really understand how companies work and present your investment opinions well you should be able to progress rapidly in the industry.

I have recommended against standard degrees/structured programs as while they do cover the basics, a lot of what they teach and emphasise is rubbish, as can be seen by the general quality of analytics in the industry (most investment managers will tell you that 80-90% of sell side research is crud, even though these folks have PhDs, CFAs, MBAs etc).

 
Sep 10, 2010 - 3:03pm

1) What is NPV?

2) How do I find out more about picking the right small/boutique asset management house?

3) Just out of curiosity, what is your experience in the field?

4) Just an FYI, a big part of why I'm considering a PhD is the stability. Nice 100+k a yr job. Nice hours. Summer's off. You can do it anywhere in the world (the caribbean). You're research can be on how to make money, lol. Then you can go off as a consultant or something and apply that research. It seems like it'd be really, really awesome.

 
Sep 14, 2010 - 5:29pm

blueadams:
#1) What is NPV?

2) How do I find out more about picking the right small/boutique asset management house?

3) Just out of curiosity, what is your experience in the field?

4) Just an FYI, a big part of why I'm considering a PhD is the stability. Nice 100+k a yr job. Nice hours. Summer's off. You can do it anywhere in the world (the caribbean). You're research can be on how to make money, lol. Then you can go off as a consultant or something and apply that research. It seems like it'd be really, really awesome.

I think you have a skewed perception of what it is like to actually be a professor....

1) it is pretty darn difficult to get a tenure-track position at any decent university
2) It will be quite a few years of hard work (if ever) before you even start to make $100k+
3) the hours can be pretty bad, especially when starting out
4) You don't get summer's off, don't know where you got this idea
5) You also can't just jet off to the Caribbean whenever you want and work from there

 
Sep 11, 2010 - 10:02am

My suggestion is to first master the basics of both fundamental and technical analysis. Read the Classics: Graham, Dodd, Lynch, etc. Also I think it would be a good idea to learn the material for the first two actuarial exams as they give a in depth look into financial products and how they operate to give you a idea how you can use them to invest in companies.

Cheers and good luck

 
Sep 11, 2010 - 5:44pm
  1. http://en.wikipedia.org/wiki/Net_present_value cost/benefit analysis wrt your goal doesn't add up, practical experience is superior and you won't learn that much (imo)

  2. figure out the investment style you want and then look for a good work environment with reasonable sized egos. Also look at how "sticky" their capital is and where its from. I'd recommend going with someone who follows the margin of safety approach and looks to go slow and steady.. As to how to find asset management houses, google, network etc etc

  3. Currently on garden leave having quit as a senior portfolio manager/strategist/partner at $bn EM hedge fund. Previously portfolio manager on a $1bn global l/s value equity fund, global investment strategist for decent sized ($100bn) institutional asset manager etc.

  4. Never seen any PhDs manage that successfully (have mates at all the ivys/oxbridge who have done DPhils/PhDs), you typically specialise very rapidly and have to work hard if you're anywhere decent. Still, if you can that package, sounds good. The one caveat to the above is that you're wanting to be a stockpicker. For anything quanty PhDs are a must.

 
Sep 12, 2010 - 1:01am

SHORTMYCDO:

sorry if i gave off the wrong impression, but i've tried to be as clear as possible in stating that i don't really know much about the details of the financial world at this point.

SANFRANCISCAN:

maybe it's not the right forum. i mean, to me, 100k a year and summers off is more than enough. as long as i enjoy what i'm doing.

ZEAKMAN:

wouldn't a phd in finance really familiarize myself with such things?

SOMEBODY:

1) thanks.

2) why value investing? is that just your personal preference...or just something that you think would be good for me?

3) very nice to have the input of someone with your credentials. why did you leave? what are you looking for next? (if you don't mind my asking).

4) specializing very quickly? couldn't i specialize in something like...value investing...and then work for a fund that specializes in that? is a finance phd quanty enough to get hired at a respected fund?

BONDARB:

I'd like to get as good of an education as possible before I "just start picking stocks."

 
Sep 12, 2010 - 9:21am
  1. value investing is one of the major approaches to stock picking and will give you a good skillset that you can leverage to other types handily (garp etc)

  2. personal reasons, probably cut down on the stock picking and move into pure macro next (should be a fun few years ahead). First though, some time off to get a tan/catch up on reading

  3. I personally don't know of any finance phds who walk straight into respected funds (except quant phds going to quant funds as mentioned above). Investment theory really isn't that complex. Practical experience is seen as more important, particularly portfolio manager experience which is valued far higher than analyst experience, even if you're running a small amount initially.

I would agree with Bondarb in starting as soon as possible. Doing personal investment in particular really will teach you as much, if not more, than most courses, particularly on the psychological aspect of things (humans react funny to draw downs). Pick a style you think sounds attractive, read a few books on it and try your hand. Buy low, sell high (or vice versa if you're shorting). Easy peasy.

 
Sep 14, 2010 - 2:26am
  1. What are some of the other major approaches? I'd really like to learn more about this. I'm sure you don't want to explain it, but if you knew of some good links/books I'd appreciate it.

  2. What do you mean, exactly, by 'going into pure macro'?

  3. I guess I hadn't understood that until just now - investment theory isn't that complex, lol. so it's just not the kind of thing you need to get a phd in to be the best at? (unless you're talking about being a pure math guy).

 
Sep 14, 2010 - 2:26am
  1. What are some of the other major approaches? I'd really like to learn more about this. I'm sure you don't want to explain it, but if you knew of some good links/books I'd appreciate it.

  2. What do you mean, exactly, by 'going into pure macro'?

  3. I guess I hadn't understood that until just now - investment theory isn't that complex, lol. so it's just not the kind of thing you need to get a phd in to be the best at? (unless you're talking about being a pure math guy).

 
Sep 14, 2010 - 3:17am

blueadams:
2. What are some of the other major approaches? I'd really like to learn more about this. I'm sure you don't want to explain it, but if you knew of some good links/books I'd appreciate it.

  1. What do you mean, exactly, by 'going into pure macro'?

  2. I guess I hadn't understood that until just now - investment theory isn't that complex, lol. so it's just not the kind of thing you need to get a phd in to be the best at? (unless you're talking about being a pure math guy).

  • can you pweez hold my hand while i learn all this stuff?

  • Jezuz Christ man do your homework.

    People like Coldplay and voted for the Nazis, you can't trust people Jeremy
     
    Sep 14, 2010 - 3:53am

    This blueadams guy is the best case anyone can make for the good old days of taking people out behind the bar...

    If I had asked people what they wanted, they would have said faster horses - Henry Ford
     
    Sep 14, 2010 - 2:38pm

    Kill yourself^^

    If I had asked people what they wanted, they would have said faster horses - Henry Ford
     
    Sep 15, 2010 - 12:04am

    Blue, I just don't understand how in God's name you know that you are passionate about investing and do research at a PhD level when you know absolutely nothing about the subject. Before reading the above books, I recommend picking up a basic corporate finance / investments book and learning the basics of corporate finance and investing. You will never make it in this industry if you expect people to hold your hand the way you have on this forum...

     
    May 21, 2013 - 11:23am

    SHORTmyCDO:

    Blue, I just don't understand how in God's name you know that you are passionate about investing and do research at a PhD level when you know absolutely nothing about the subject. Before reading the above books, I recommend picking up a basic corporate finance / investments book and learning the basics of corporate finance and investing. You will never make it in this industry if you expect people to hold your hand the way you have on this forum...

    he wasn't asking you to hold his hand. and there is no need to read a corporate finance book before asking some basic questions. your reply added no value to this discussion. which lame college did you go to?

     
    Nov 10, 2012 - 6:44pm

    As somebody who is looking for a balanced lifestyle, intellectual stimulation with decent, but not astronomical sums of money, PhD is the way to go. If you do good work as a PhD, you can consult on the side and make half your academic salary in addition. Top School Profs make 220K from school + 100-150K consulting. These are top academic placement salaries though, no walk in the park. From what I know MBB EMs make lesser than that. I will not compare banking with these numbers because it is like comparing apples and oranges (difference in nature of work, hours etc)

    I figured that the reason I liked Investing was the intellectual challenge. If Investing Academia is challenging enough and provides me with a flexible lifestyle, why not? Most of the top academicians run their own funds/are partners in them/take sabbaticals to serve top positions at top investment firms. So, while most MBAs 'work their way' to the top, you get to fly to the top (you have to be good for this, though). The odds of an MBA making it to MD at BGI vs a top PHD are something I'm yet to figure out, but most of them are Finance/Acct PhDs. I figure that given my current situation (Can't afford MBA, no great work exp (owing to bad market/geography), top Indian school, solid acads), PhD makes far more sense.

    If the prof gig takes 50 hours a week, I can put in another 20-30 and do whatever I wish with them!

    Also, in the process of working your way to the top at funds, you'll probably not see much of the management/performance fees, so really, there's no special incentive (monetarily), apart from the learning. And as it is, those jobs are insanely hard to crack (for me). Hence, I chose the PhD route.

    Keep in mind that my view is that of a potential immigrant, so you may have better choices awaiting you if you hold a US GC/Passport.

     
    May 21, 2013 - 11:20am

    xelink:

    Hi,
    I'm in a similar situation.
    After half assing my way through a liberal arts degree with a subpar GPA and no real accomplishments, my trust fund ran out. I have concluded that in order to reach my desired standard of living, I need to have 80 hours of free time a week and the same $300 daily allowance that daddy gave me while in grade school.

    Please help me so that I can go back to my old life with minimal effort. I don't want to work, lol. I need moar trust fund.


    not funny. lame actually.
     
    Nov 30, 2012 - 9:17pm

    Do you have any idea what a PhD requires, wait, no you don't. First and foremost, you know nothing. Your notion of the field of investments is entirely detached from reality. You have no idea how stupid you sound.

    But you said you study psychology, right? Imagine if I went to a psychology forum and posted: "Hey guys, I really love psychology. I've never studied it before though, but have some really incredible theories on mental disorders and how people act. I haven't ever studied biology, chemistry, biochemistry, or neurochemistry. But I plan on learning that later (PS: Should I do a PhD in neurochemistry?). I really like the idea of imagining different people and how they think. Sometimes I imagine myself working at a hospital, like House M.D., and diagnosing patients with severe mental illness and counseling sad people to find happiness again. I'm trying to decide if the best way to achieve this dream would be to pursue my PhD in neurochemistry/biochemistry OR get my medical degree and work my way up as a doctor in a hospital? Ultimately, I just really like the idea of how people think. and while I have never studied anything related to it, I like to imagine myself sitting with the brightest psychiatrists and psychologists in the world really trying to understand what makes up the human mind.

    I'd really like advice on what it takes to be good at psychology.

    PS: If anyone suggests that I should first study biology: fuck you. I'm far too smart to actually go to kahn academy or Yale/MITs online courses and start studying the basics of investing and economics. I'd rather ask the same questions on an online forum until someone realizes that I'm brilliant and offers me a fulltime job at their hedgefund--I mean--psychiatric ward.

     
    May 21, 2013 - 11:19am

    jjswag:

    Do you have any idea what a PhD requires, wait, no you don't. First and foremost, you know nothing. Your notion of the field of investments is entirely detached from reality. You have no idea how stupid you sound.

    But you said you study psychology, right? Imagine if I went to a psychology forum and posted: "Hey guys, I really love psychology. I've never studied it before though, but have some really incredible theories on mental disorders and how people act. I haven't ever studied biology, chemistry, biochemistry, or neurochemistry. But I plan on learning that later (PS: Should I do a PhD in neurochemistry?). I really like the idea of imagining different people and how they think. Sometimes I imagine myself working at a hospital, like House M.D., and diagnosing patients with severe mental illness and counseling sad people to find happiness again. I'm trying to decide if the best way to achieve this dream would be to pursue my PhD in neurochemistry/biochemistry OR get my medical degree and work my way up as a doctor in a hospital? Ultimately, I just really like the idea of how people think. and while I have never studied anything related to it, I like to imagine myself sitting with the brightest psychiatrists and psychologists in the world really trying to understand what makes up the human mind.

    I'd really like advice on what it takes to be good at psychology.

    PS: If anyone suggests that I should first study biology: fuck you. I'm far too smart to actually go to kahn academy or Yale/MITs online courses and start studying the basics of investing and economics. I'd rather ask the same questions on an online forum until someone realizes that I'm brilliant and offers me a fulltime job at their hedgefund--I mean--psychiatric ward.

    and you're a moron also. you don't know jack shit. and your comment is nonsense. and i'm not gonna waste my time proving it to you.

     
    May 21, 2013 - 11:02am

    why are so many negative posters here? the guy asked some questions and everyone is being rude. if it bothers you, don't reply. don't post your dirty 2 cents. you're wasting time of others who have to sort through your bulshit while looking for answers for similar questions. you're littering! if you can't just nicely answer a "stupid" question--however "stupid" it may be, then don't bother. if your reply is not adding to the discussion, shut the fuck up. so what if he posted questions of similar kind before? isn't this a forum for discussions? isn't this a place to ask questions? isn't this in itself a research? and why does one have to read books before asking you questions? you all, asshole-repliers, and you know who you are, need to just stay away from discussions. i don't care if you have the smarts. you're simply idiots.

     
    May 21, 2013 - 11:27am

    Yo Romeo you having fun commenting on a three year old thread by yourself?

     
    May 21, 2013 - 1:04pm

    Wants to be a great investor.
    Wants summers off.

    Does not compute.

    I wish that OPs came back to their 3-year old threads to give us an update.

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