World's dumbest 'smart guy'?

OldChimp's picture
OldChimp - Certified Professional
Rank: Monkey | banana points 53

I left a large family business that had close to $200 m in revenues. I got 2 Master's degrees (Financial Mathematics and an MBA from an Ivy). I am now 46 and own a semi-profitable restaurant, some real estate, and have a small severance package. All I ever wanted was to work in hedge funds. I didn't realize how ageist people are and that they just don't hire people in their late '30's and '40's. I stand to inherit $15 m, but I may be 60 when that happens. Any words of wisdom as my family is finally willing to give me a few million to manage?

I was widely regarded as one of the smartest people in my home town, my high school, my undergrad, and both grad schools. Yet I feel like I have wasted my career and am wondering if I should just buy some real estate or a company with a nice cash flow instead of trying to get a track record.

Hedge Fund Interview Course

  • 814 questions across 165 hedge funds. Crowdsourced from over 500,000 members.
  • 11 Detailed Sample Pitches and 10+ hours of video.
  • Trusted by over 1,000 aspiring hedge fund professionals just like you.

Comments (43)

May 7, 2018

I have a few ideas for you.

To begin with, consider securitization. It is very much like hedge fund asset management without the partnership aspect.

May 7, 2018

Well, I did work as an options trader in Chicago for 5 years and later in quantitative research for a sell-side boutique that sold trading strategies to RIA's and HNW offices and was funded by 2 Skybridge founders. But the firm was somewhat sketchy and most of our strategies exhibited a strong degree of correlation.

    • 1
May 7, 2018

You're surprised that HFs won't hire someone who has no relevant investing experience? Of course no one will hire you if you haven't worked in the industry or don't have a personal account you've done very well with over a period of time. Even if you are smart or know how to operate a business.

    • 1
May 7, 2018

Well, I did work as an options trader in Chicago for 5 years and later in quantitative research for a sell-side boutique that sold trading strategies to RIA's and HNW offices and was funded by 2 Skybridge founders. But the firm was somewhat sketchy and most of our strategies exhibited a strong degree of correlation.

May 7, 2018

Does your family business hire a CEO out of undergrad with no experience or relevant degree? Would this not be a liability to their company and consequently the company's revenue? That's how you look to a fund, minus the fact that they cannot invest (train) you because of your age. Bottom line, your a bad investment so throw this ageism shit out the window.

    • 1
    • 1
Learn More

814 questions across 165 hedge funds. 10+ Sample Pitches (Short and Long) with Template Files. The WSO Hedge Fund Interview Prep Course has everything you'll ever need to land the most coveted jobs on the buyside. Learn more.

May 7, 2018

See previous comment and I would think that 5 years experience as an options trader, 1 in quantitative research, and pricing 25+ acquisitions worth several millions of dollars is pretty relevant. Is it not?

    • 2
    • 1
May 7, 2018

Somewhat relevant. Not from personal experience (as I'm still in UG) of those family friends I knew who lost their jobs around the recession those who had work gaps over 2/3 years struggled. Value of your experience seems to diminish soon thereafter (from what I've observed). Still wouldn't call it ageism

    • 13
Best Response
May 10, 2018

He's got more track record to go for HF than you have to give anyone advice, junior.

May 10, 2018

I'm well aware someone 20+ years my senior is more qualified. Nor was I giving advice, more so alluding to the fact that "ageism" is a poor excuse for a commonly occurring issue older candidates often face with gaps.

    • 9
May 11, 2018
thallsy:

I'm well aware someone 20+ years my senior is more qualified. Nor was I giving advice, more so alluding to the fact that "ageism" is a poor excuse for a commonly occurring issue older candidates often face with gaps.

Ageism exists; old or young. You don't know shit.

    • 2
May 7, 2018

Well, I did work as an options trader in Chicago for 5 years and later in quantitative research for a sell-side boutique that sold trading strategies to RIA's and HNW offices and was funded by 2 Skybridge founders. But the firm was somewhat sketchy and most of our strategies exhibited a strong degree of correlation. Also, again I had 2 Masters in Finance (Financial Mathematics and MBA from Ivy).

    • 1
May 7, 2018
OldChimp:

I didn't realize how ageist people are and that they just don't hire people in their late '30's and '40's.

I am surprised to hear that, being 40+ myself and having started a new PM gig about a year ago. Plenty of people move to hedge funds as a second leg of their career so a you do see a lot of 40+ and older guys.

May 7, 2018

Well, it's frustrating. I have interviewed at some places like Black River in Minneapolis, Axonic in NYC, and AQR. But most are really looking for a client-facing, someone with direct experience, or someone younger. Of course they don't say that, but they do ask why I would want to come and work for them. No, I was never a VP in Goldman's IB division but I think I can manipulate excel models as much as the next guy. What separates me is a f*cking passion to do this stuff. I load FRED and Compustat data in my PC for fund just to come up with regression and time series models. I have to think that someone somewhere would appreciate this. Perhaps I am just socially awkward beyond reproach?

    • 1
May 8, 2018

I doubt they're "ageist," they most likely just don't want to toss a few mil to a guy who spent 5 years trading options several years ago and doesn't currently have a strategy, track record, or any other concrete business model

    • 2
    • 1
Learn More

814 questions across 165 hedge funds. 10+ Sample Pitches (Short and Long) with Template Files. The WSO Hedge Fund Interview Prep Course has everything you'll ever need to land the most coveted jobs on the buyside. Learn more.

May 7, 2018

Imagine that you are managing north of 10 billion and that your one investor is locked up for ten years and would likely agree to do another ten years when done.

Further imagine that your one investor is satisfied with a fixed 4 or 5% per year and nothing more. Forget the 2/20, they are not interested. Just pay them annually in arrears and keep everything for yourself.

If this interests you, then contact me and we will work something out.

T

May 7, 2018
OldChimp:

All I ever wanted was to work in hedge funds.

I was widely regarded as one of the smartest people in my home town, my high school, my undergrad, and both grad schools. Yet I feel like I have wasted my career and am wondering if I should just buy some real estate or a company with a nice cash flow instead of trying to get a track record.

What makes you think you will be able to "get a track record"?

Have you come up with a unique strategy, or replicated a non-unique investing strategy? Have you back-tested and forward tested that strategy? What would the annual return of that strategy have been over the last year? Can you articulate your strategy?

Or, is your "strategy" just that, you are a "smart guy" and if given a chance you "just know that you'll do well"?

Are you a stock picker...long/short equity...high/medium frequency pattern recognition...global macro, relative value arbitrage...something else?

What is your "edge" ? Most successful people in the alpha investing business take years to find their edge...and some never find it. So, what is your edge?

just google it...you're welcome

May 7, 2018
want2trade:

Are you a stock picker...long/short equity...high/medium frequency pattern recognition...global macro, relative value arbitrage...something else?

That's not fair, I literally was typing "what type of investing do you want to do" and you scoop me. You're an HFP :)

    • 1
May 7, 2018

So I have done a few different things:

  1. Floor trader making markets in liquid options being mostly Greek neutral but occasionally taking calendar positions in straddles as a core position. (taught by Tony Saliba's firm)
  2. Volatility arbitrage between SPX and SP futures (no longer exists)
  3. Developed and traded mean-reversion strategies that were basically a 2-day negative autocorrelation of returns on volatile stocks. (Kind of like Andrew Lo's strategy in 'What happened to the Quants in '07' paper; this has also lost much of its luster)
  4. Factor models with a Black-Litterman rebalancing portfolio allocation model (similar to Kepos)
  5. Real estate investing - Own 10% of a 10 m building that has a 10 cap rate. (syndicated equity)
  6. Picked value investments from quantitative screens that were the traditional "value + a catalyst" strategy.

Quant models are great but their shelf life is finite. Other than the ultra-high frequency guys who are using microwave technology and Field Gate Processing arrays (huge amounts of dough to spend), I don't think many quant strategies have sustainable alpha. Witness AQR, Whitebox Advisors and other several large hedge funds revert to asset management shops. I do believe concentrated value investing, small scale private equity, and exotic strategies like closed end fund arb are can endure. Just my $.02 and I would love to hear from people that are not gadflies like me.

May 9, 2018

You seem intelligent, but your experience seems a bit scattered....so what role specifically are you looking for now?

just google it...you're welcome

May 10, 2018
want2trade:

You seem intelligent, but your experience seems a bit scattered....so what role specifically are you looking for now?

This - jack of all trade master of none.
I was in a similar situation but just a little over 30. People would love my experience but couldn't be bothered with me and worried that I was too senior to take a junior role. It was extremely hard to break this barrier. I eventually did, but I can't even fathom the idea of trying to do this past my forties. No one would have talked to me.

    • 1
May 10, 2018

Absolutely, I am a jack of all trade. Master of none. I would classify myself as an:
decent quant
mediocre data scientist
excellent accountant
good options trader

I have invested in stocks, real estate and companies. I am a good financial modeler but am shocked that people even view this as a skill, I code a lot in MATLAB and Python but am not a hard-core programmer. I just love markets. They are living, breathing, entities.

I am a rambling idiot spilling his guts to a bunch of strangers in a chat room. Get back to work so you don't end up where I am!

    • 1
May 10, 2018
OldChimp:

Absolutely, I am a jack of all trade. Master of none. I would classify myself as an:
decent quant
mediocre data scientist
excellent accountant
good options trader

That's pretty ambitious. I might have vestiges of qualification for 2 out of these 4 (an options trader and a quant) and I would not consider myself "good" or "decent" at them. Do you think if you were called to an interview, you can hold your own when discussing options risks, for example?

May 15, 2018

You have the right aptitude and experience for securitization. Stick with it.

May 8, 2018

Well if nobody will take you. Start your own firm. Hire the best of the best. Learn the system's ins and outs. If you have a network or some kind of connections see if you can shadow a HF higher up or manager.

I know this sounds risky but if you really want to do it there is nothing stopping you. It seems your family is in a higher social position so you might know some wealthy individuals by association who would be able to start you off with some decent capital.

Talk to some of your friends from college being a mathematics major, maybe some of them went into quantitative finance and would be a great part of your team. Honestly in 2018 you can learn a lot from the internet and teach yourself a lot from textbooks, but hedge funds, I think requires a lot work experience to be successful. I claim to be a very risk adverse person, but if it is your dream to work in a hedge fund and you have the resources to do it what is stopping you?

If you fail at least you can say you tried to live your dream. Most people don't even chase their dreams, I think it is sad. You took your first step in the right direction by posting on this forum. Good Luck for whatever the future may bring.

May 10, 2018

Here's some real advice.

Sell everything you have and ask your parents for a loan. Then take your ~$10-$15 million and fund a start-up PM with a good track record and background. There's plenty of those guys out there, I just met with one who has an amazing background and only raised $50mm so far.

Tell him you'll pay full 2% and 20% fees and you'll lock your money in for 3 years which is longer than usual. In return, he has to train you and involve you in all the idea generation. Then you can slowly learn the ropes while at the same time telling everyone you work at a hedge fund.

Ta da! Your bucket list is completed.

    • 7
    • 1
May 10, 2018

I LOVE this idea.

That is brilliant, and I am sure PMs would take him/her on.

Basically like working an unpaid internship in DC on the Hill, except you actually benefit if they succeed AND gain experience at the same time.

May 10, 2018
datguy345:

I LOVE this idea.

That is brilliant, and I am sure PMs would take him/her on.

Basically like working an unpaid internship in DC on the Hill, except you actually benefit if they succeed AND gain experience at the same time.

Or you lose it all - SanityCheck was being a bit tongue in cheek in his comment me think...

    • 1
May 10, 2018

That is a ridiculous idea. Why does anyone go into finance?:
1. They like to invest (and/or trade)
2. They believe they can do it just as well or better than the next guy.

I've read literally hundreds of finance books. I don't believe reading a 10-K is anything that difficult. Warren Buffett and Leon Cooperman believe that only average intelligence is needed to be a good investor. I'm not Jim Simmons, but I've made doubles and triples in my own portfolio routinely. It's knowing where to look and turning over as many stones as possible.

    • 1
May 16, 2018

This is a good idea.

I can confirm that this happens (not seeding, but regular LP capital contributions) but with hiring/training LP children

May 10, 2018

You need a friend not a hedge fund to join. As you described yourself why would you even want to work at a hedge fund. You are highly unlikely to make enough money to make it worth having a boss.

Basically you need to find a trader friend to work with and do individual stuff. I know a guy who designed missile systems and founded a biotech firm. Math genius. Found a group of traders he liked and started doing quant stuff for them. I couldn't imagine working at say citadel if I already had money just for a salary. You need to find a couple man shop with guys you like being around and develop ideas together both trading and perhaps other investments.

Array
    • 1
May 10, 2018

I agree traderlife. I have already reached out to a few quants who are running $50 m portfolios and one with a billion in asset mngmt. It's finding a team and creating an infrastructure. Just like starting a company.

May 10, 2018

One more thing I'd like to add. The whole hedge fund industry is pretty fickle. That is quoting a friend who works for a Tiger Cub. He won't buy a house in case he gets fired, but pays $30K/yr for private school. Think about Julian Robertson. One minute running a multi-million firm, the next it is closed. Same with Galleon, SAC, and several others. You can have one great idea and get funded for a couple of hundred million (Fahmi Quadir) or have one billion dollar idea and not be able to raise capital again (Michael Burry). It seems peculiarly arbitrary.

    • 1
May 11, 2018
OldChimp:

One more thing I'd like to add. The whole hedge fund industry is pretty fickle. That is quoting a friend who works for a Tiger Cub. He won't buy a house in case he gets fired, but pays $30K/yr for private school. Think about Julian Robertson. One minute running a multi-million firm, the next it is closed. Same with Galleon, SAC, and several others. You can have one great idea and get funded for a couple of hundred million (Fahmi Quadir) or have one billion dollar idea and not be able to raise capital again (Michael Burry). It seems peculiarly arbitrary.

That's the risk to reward side. Have you looked into entering a physical commodity end of trading?

I'm biased, obviously, in my suggestion. Know of a similar guy as you, bit more capital up front(nothing that adding a partner can't solve) and he stepped into that space. Loves life this way. Problem is he's coming upon the age he needs to get off the daily desk but refuses to believe it.

May 15, 2018

I would be surprised someone with your background - academic, family wealth and real world experience is asking us for advice.

Hopefully, you are not trolling.

If you are, it is not funny.

If you are not, it is really not funny at all.

The fact that you are given all of these opportunities and still having to figure things out at age 46, you are definitely not "smart" in anyway you measure.

    • 1
May 15, 2018

Naoki,

The thing is I'm not kidding. My family thinks I am a bit crazy, but I can't help if I am passionate about something.

I do not live in NYC. I live in a medium size town in Florida where I moved for my wife. Now, I am in the middle of a divorce and realize that all that I had sacrificed was now pretty much worth nothing. I am actively seeking relocation with the ability to travel on the weekend to see my children. I have a mediocre career and a ton of education and experience. No more. I will work until they put me in the coffin. The days of being content are over!

May 15, 2018

Why don't you open your own shop? You have experience, knowledge, wealth... give it a try.

May 15, 2018

I don't really see what the real issue is. You say that you are passionate about the markets and that your family will give you a few million dollars to trade. Just go do it and document your track record in an auditable fashion. Network with HF and family office types to talk trade ideas to build relationships. Someone may decide to pick you up if they like enough of your ideas.

I have a cousin who was working in a non-investing finance role where he did have access to HF relationships. He used to discuss his personal account trade ideas with some of the fund managers over dinners and other events. Eventually the HF guys started running ideas by him. A few of the managers decided to back him, and he started his own fund. I think he's managing like $500M now.

May 16, 2018

OP, @OldChimp -

I am starting college currently, and I am in my early 30s. One thing I heavily learned from successful business owners, people in their industries, is that network and connections matter.

I understand you are chasing a dream, or passion - however you call it. Interview rejections will come with many reasons, if the people were able to provide feedback I would make note of it. However, living in Florida and wanting to work in HF or "X" firm/company, sounds a little difficult. I think you should take some time and move out to NYC, Chicago, or whatever city that the firm/culture you want to work around and network. Building connections will have a higher chance of you landing a position given your situation. Call me old school, but I like to meet people and shake hands to build connections.

At my previous jobs - when a position opened up, our directors would ask us, "Know someone you can refer to interview?" Part of this is because they are tired of going through hundreds resumes for a single opening.

Opening your own shop poses a huge risk - you can make a lot of money or lose it all. I wouldn't go that route. I am a simple person, given what you have stated are your assets - I could just retire or manage a few small businesses and still be content.

Good luck!

No pain no game.

May 16, 2018

With your family background, I find it hard to see that nobody would want you. Why don't you start your own thing, you should have the connections to raise at-least 5M starting out, then grow from there. Maybe those guys, who are saying no to you now will absorb you if you can show promise. In any case, you are lucky enough to be one of those people who can be their own bosses, I don't see why you wanna do the grind at your age.

May 18, 2018

Just a thought but putting money at risk just because you're bored or think this would be a fun career doesn't make that much sense to me....

Most people in hedge funds are trying to make money. If you already have money, don't lose it trying to be a hedge fund.

Seems like an expensive hobby.

Also, on a side note, the market doesn't care how smart you are. I've seen tons and tons of super smart people get blown up at their hedge funds. Being smart doesn't make you special in this business.

    • 1
May 18, 2018
May 18, 2018
Jan 30, 2019