Intrinsic motivations

Sorry that this is a bit of a philosophical question, but I'm curious to know what the intrinsic motivators are that drive most people in the industry? So not talking about money/prestige (which are extrinsic motivators), rather deep down, like if you had to do the hedge fund analyst or PM job for "free", what is it deep down that makes you love the job? 

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Nov 11, 2021 - 11:45pm

Only being in the industry for money is not wrong but not a sustainable intrinsic motive.

As investors and surveyors, over-emphasis on absolute monetary returns (for the fund and the individual analyst) is not a characteristic we look for and is seen as an uncontrollable risk.

We look for truth seekers with integrity, diligence, and intelligence/curiosity.

Individuals solely focused on year-end bonuses lead to uncontrolled risk-taking of LP Capital, putting the firm at risk. Talk to risk managers at multi-managers to see how they regulate flagged PMs and limit their trades going into a down year.

Extreme focus on monetary gains leads to greed and unanticipated acts that can and will endanger a fund. On the analyst level, this can be biased research anchoring towards a view based on technical and momentum indicators as opposed to quality fundamental diligence. On the PM level, this can be making short-term aggressive trades to try to get out of a down quarter.

This is why the main focus of any reputable fund is on the Investment Process and not the outcome.

The Investment Process is to discover the True value behind any asset.

Nov 7, 2021 - 6:28am

cant speak for others, but my favorite parts of investing have to be:

(1) the thrill of attempting to solve the "puzzle" that are markets, which i see as a web of connections.

(2) part of the appeal is the difficulty of it: being different and right is hard, and that makes attaining it that much more desirable.

(3) being deep on a name and being able to speak the company's language is, for some odd reason, super rewarding.

(4) (my favorite part currently) markets are alert and alive, constantly adapting to new information - i wake up each morning knowing that no day in the market is the same

Nov 11, 2021 - 8:41pm

investing is always stressful, especially when it isn't your own money - the level of responsibility is just far higher. Each mistake isn't just a "learning lesson" for yourself, but a money-losing move that will likely bring in external scrutiny. but it goes both ways - when I make a right call, especially with other peoples money, its that much more rewarding. something that does help reduce my stress is focusing on learning and becoming a better investor rather than focusing solely on returns, which can be impacted by exogenous variables: investing is like poker, not chess - professionals in chess always win if they memorize a certain skillset, but poker professionals can (and often do) lose to amateurs even when they make the right call beforehand. to me, market-beating returns should be a byproduct of learning, not the target in it of itself, especially when you're just an intern or a junior analyst. 

tldr; yes -  the joy from the other 4 points definitely makes it worth it. i love waking up in the morning and reading the WSJ and then guessing how it'll impact the stocks I'm currently holding my PA or for my funds portfolio.

Nov 11, 2021 - 8:44pm

LMAOOO yea looking back my answers do sound a bit rehearsed for an interview but it really is the case for me. most people are happy when its friday night, but i get sad bc that means markets are closed the next day :(. 

dont get me wrong though, I see money as a prerequisite for doing the job; if i loved something but it didn't pay, itd be a hobby. I think im just lucky enough to have found something that pays and that i wake up in the morning for.

Nov 8, 2021 - 10:50pm

Let me put it in another way, certainty can give the human being a sense of security.

And the underlying certainty for any type of investment career is that risk and reward are highly correlated. When you are after a high risk, you are very certain that you expose yourself to high risk; I call that certainty a sense of security. 

Nov 11, 2021 - 4:07am

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