Why Hedgefund/PE Shop?

We do people seem to pursue these positions so aggressively? It takes a long time to make it to the top at these firms and it seems you can make a lot more money as a trader with a much better lifestyle. Or a decent amount of money as a good private banker with great hours.

 
Best Response

I'm surprised by this question. To quote the title of a recent thread, "making money is not the goal." People make different career choices based on whatever is most important to them.

I think a lot of people target PE/HF because that is what is expected of them after they do their time on the sell side or because it's "prestigious." But I think many more are mentally and emotionally stimulated and fulfilled by the work. Finance draws a lot of freakishly competitive people. In the market, you're pretty much playing a zero sum game (ZIRP notwithstanding). For every winner in a trade, there is a loser. Money is just how you keep score. The game is played globally, and you win with skill, hard work and a bit of luck. And people love that shit. Buffett is one of the richest people on the planet and gets up every morning excited to do what he loves. Schwarzman built Blackstone from a $400,000 capital base to one of the largest financial institutions on the world and has a net worth of $4-5bn. John Paulson made ~$4bn in a single year. If it was all about money or "lifestyle" (whatever that means) instead of being a ferocious competitor, these guys would have retired to a private beach a long time ago. That's not what it's about for everyone. Making it to HF/PE in an investment role means you're a player on a team in the game, and that's rewarding to people.

Starting your own fund and having the freedom of an open mandate is a dream. You're your own team owner, and you get to decide how you play the game. With all the random variables, winning and losing is on you. Does that sound better than determining asset allocations and tracking down Superbowl tickets for some HNW clients even if you're making $100k less per year? It sure does to me. What gets YOU up in the morning?

 

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