Most Lucrative vs Safest Path?

Say God actually blessed you and gave you the choice to spend a career as an

  1. MD/Partner in TMT investment banking at Goldman 

  2. MD/Partner in PE at BX, KKR, APO

  3. PM/Partner at a top SM HF (Tiger cubs, activist places)

  4. PM at a large MM HF such as Citadel or MLP

How would you rank each of them in terms of lifestyle, comp, and "personal pride/intellectual satisfaction"? Here are my thoughts: 3, 2, 1, 4.

One of the main drivers of how I ranked them was the good old Agent vs Principal question - the agent makes risk-free money for doing a service, and the principal takes on risk in order to either make a lot, or lose a lot. The principal will generally do better than the agent, in terms of comp. Also I would always choose a job where I am taking risk than one where I am not, that's just how I'm wired & operate. So that explains why I put 3 and 2 ahead of 1. Jobs at those top SM shops are amongst the most sought after jobs one can get in this business, and I would imagine that is because you can A. make the most there, and B. have a nice lifestyle. MF PE also has nice comp, but the lifestyle piece is weak. I chose option 1 for 3rd place because the comp and lifestyle are nice, but there's no risk in that job. No risk translates to nicer lifestyle/less stress. Choices 1, 2, and 3 all have really good job security too. Now we get to option 4, which I ranked last. There gets to be a point where the agent principal question doesn't matter to me, and I think that point is at the MM HF level. Sure, you can make a shit ton of mula quickly, but you can also lose your job just as quickly. Stress is off the charts, and it sounds like a shitty lifestyle. Plus I'm not sure many people find the MM L/S investment strategy to be mentally stimulating...

Let's here everyone's thoughts

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Comments (12)

Apr 6, 2021 - 6:13pm

If it last 4+ hours, consult a physician. You are welcome. 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

  • 1
  • Intern in HF - EquityHedge
Apr 6, 2021 - 5:36pm

3,2,4,1, agree with most of the points you made but see banking is less meaningful work than any investing role.

Although I think the ultimate end goal is being a managing partner at your own fund/starting own fund

Most Helpful
  • Analyst 1 in IB - Gen
Apr 6, 2021 - 5:54pm

Fuck banking and fuck PE. Glorified project management and pushing paper. Only real answer is three.

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  • Associate 2 in PE - LBOs
Apr 6, 2021 - 8:04pm

God yes thank you it's just PMO + accounting, why does nobody realize this job could be done by anyone with a state school degree and an unending willingness to eat shit 18 hours a day?

  • Research Analyst in HF - EquityHedge
Apr 7, 2021 - 12:02am

hominem

Why does this even matter?

HF forum has gone downhill since the recent takeover of college juniors who are obsessed with comp. It's sad because they probably don't even really like stock analysis or they'll burn out in IB/PE. I know several mid-level professionals at top tier PE/HF and none of them are this obsessed with comp or weird.

  • Associate 1 in IB-M&A
Apr 7, 2021 - 6:46pm

This is a silly question.

And who ever said being a Partner at an SM was significantly less risky than a PM at an MM. Turnover at these SMs you mention have been low but that's extremely likely due to the fact that the fund has done well, implying that these partners who probably are putting on risk, have done well for themselves. The same way a PM at Citadel would still have his seat if he did well. You think some of these Partners would still be around if their positions kept losing money? I have no idea, but some food for thought since it seems you're viewing these roles and risks from the lens of an analyst role and extrapolating that to the senior ranks. 

  • Works at Citadel Investment Group
Apr 8, 2021 - 12:15am

Ah - this is a bad take (but very reasonable for someone not at a MM or SM) and plz give me MS so I remember to come back and explain why tomorrow

Edit: Essentially it comes down to risk limits. At a SM there is a lot more room for error than at say, Millennium (even a PM doesn't always have the final say on a position, big positions are discussed with the CIO and there can be blame to go around if a position doesn't do well, and you certainly won't be axed for being down 5% if you've generally done well before that). Additionally, many SM funds are 'beta' neutral but not actually factor neutral, so it's 'easier' to make money by having some exposure to a factor, say growth, if that factor does well (as growth has over the past decade). Of course if that factor reverses the PM will do terribly.

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