Would you choose Hedge Funds all over again?

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I'm just out here looking for opinions from actual people working at a Hedge Fund. In regards to finance career paths, if you had to do it all over again, would you still go the Hedge Fund route?

For me, I'm a college student just waiting for my turn to break in. Lately, I've really began thinking a Hedge Fund is the right route for me. PE sounds really nice and also sounds like something I would really like, but it isn't the same. I LOVE the markets. I am extremely passionate about investing and a HF just seems to be the more desirable route for me.

So, out of curiosity, would you do it the same if you did it all over again? I really am looking for some inside experiences or opinions on why you love/hate working at a Hedge Fund and what you would do differently or the same if you had to do it all over again.

Thanks~ Looking forward to reading the posts.

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Comments (47)

 
Aug 8, 2015 - 6:26pm

Just to make it clear, working at a HF does not mean you are making investment decisions. It's difficult to get a position such that you are being entrusted with money. It's especially difficult if you have no prior experience and don't have a quantitative background.

 
Aug 9, 2015 - 5:38am

I would do it again. Pros are the comp is the highest and you get great experience. Cons are the fact that HFs and Long Only firms can be boom or bust. Funds blow up all the time and then you are out of work. It is difficult to make long term life plans if you don't know if you will still have a seat in two years....

 
Aug 9, 2015 - 10:29am

I honestly enjoy my job, but the worst part is the stress. Even when you're performing very well you are always concerned about your positions and P&L can very easily dictate your mood (both positively and negatively).

Also (this may be team specific), but its definitely not a "buyside dream" some people think it is. A lot of people I know want to go to HF because they think they work market hours and they are done. This is not true whatsoever and unfortunately, nights and weekends for me are the norm.

In all, yes I would choose again at this point in my life (mid-20s). The job is far more interesting and exciting than other options I have encountered. However, ask me the question again in 3 years and my answer might change.

 
Aug 11, 2015 - 11:27pm

I am not a trader, fundamental analyst at a multi-strat. Night and weekend work is just spillover from what I can't get through during the day, which is always a lot since my team is very fundamentally focused and my PM is a bit neurotic. As I mentioned above, HF experiences are very team specific especially at multi-strats. The way my PM manages me is drastically different than the way other PMs manage their analysts.

 
Aug 20, 2015 - 2:25am

If i had to do it all over again, knowing what i know now... would i choose HF?

the answer is a big fat NO. the gold rush ended almost eight years ago. i'm a PM at a multistrat and the amount of effort ive put in so far (and will do so for the next 10-15yr) would've yielded a payout that is at least 20x greater had this been early 2000s.

the money doesnt grow on tree anymore in this industry... and believe it or not, it actually use to.

the trading game has changed a lot as well.. now its all about risk management. the days of making heroic directional bets in a meaningful way are long gone.

and...regulations... ugh. ewww.

so in short, the game is no longer financially and intellectually rewarding as it was decades ago.

dont get me wrong... even if you are just above average (intellectually) you can make a lot of money in the industry. but no one is pulling is really pulling in $100mm/yr anymore as a PM unless you got your start decades ago and have piece of the fund itself.

an avg PM w/ 250mm book would make $2.5-$3mm on a 10% yr... but also you have to realize how difficult it is to achieve 10% return on a RV book. and even if it is directional, sizing based on a 4-5% half stop loss will be a real buzz kill and make it difficult to achieve.

as billymay pointed out, the stress is 24/7 (imagine on a PM level) and even though i leave the office at 5pm, and put in just 35hours/week at the office, i never have the luxury of shutting my mind off... it actually kind of sucks. im forever a slave to the markets.

so to all of you prospective monkeys....

go join a start up... or do something else where the wine is still flowing. because HF is certainly not the promise land. very few make it to PM, yet what you are fighting for is hardly worth it.

 
Aug 12, 2015 - 8:59am

Lexington55:

If i had to do it all over again, knowing what i know now... would i choose HF?

the answer is a big fat NO. the gold rush ended almost eight years ago. i'm a PM at a multistrat and the amount of effort ive put in so far (and will do so for the next 10-15yr) would've yielded a payout that is at least 20x greater had this been early 2000s.

the money doesnt grow on tree anymore in this industry... and believe it or not, it actually use to.

the trading game has changed a lot as well.. now its all about risk management. the days of making heroic directional bets in a meaningful way are long gone.

and...regulations... ugh. ewww.

so in short, the game is no longer financially and intellectually rewarding as it was decades ago.

dont get me wrong... even if you are just above average (intellectually) you can make a lot of money in the industry. but no one is pulling is really pulling in $100mm/yr anymore as a PM unless you got your start decades ago and have piece of the fund itself.

an avg PM w/ 250mm book would make $2.5-$3mm on a 10% yr... but also you have to realize how difficult it is to achieve 10% return on a RV book. and even if it is directional, sizing based on a 4-5% half stop loss will be a real buzz kill and make it difficult to achieve.

as billymay pointed out, the stress is 24/7 (imagine on a PM level) and even though i leave the office at 5pm, and put in just 35hours/week at the office, i never have the luxury of shutting my mind off... it actually kind of sucks. im forever a slave to the markets.

so to all of you prospective monkeys....

go join a start up... or do something else where the wine is still flowing. because HF is certainly not the promise land. very few make it to PM, yet what you are fighting for is hardly worth it.

but buysdie is indeed paradise compared to sellside... sellside sucked balls.

This.

Disclaimer for the Kids: Any forward-looking statements are solely for informational purposes and cannot be taken as investment advice. Consult your moms before deciding where to invest.
 
Aug 12, 2015 - 10:40pm

Lexington55:

If i had to do it all over again, knowing what i know now... would i choose HF?

the answer is a big fat NO. the gold rush ended almost eight years ago. i'm a PM at a multistrat and the amount of effort ive put in so far (and will do so for the next 10-15yr) would've yielded a payout that is at least 20x greater had this been early 2000s.

the money doesnt grow on tree anymore in this industry... and believe it or not, it actually use to.

the trading game has changed a lot as well.. now its all about risk management. the days of making heroic directional bets in a meaningful way are long gone.

and...regulations... ugh. ewww.

so in short, the game is no longer financially and intellectually rewarding as it was decades ago.

dont get me wrong... even if you are just above average (intellectually) you can make a lot of money in the industry. but no one is pulling is really pulling in $100mm/yr anymore as a PM unless you got your start decades ago and have piece of the fund itself.

an avg PM w/ 250mm book would make $2.5-$3mm on a 10% yr... but also you have to realize how difficult it is to achieve 10% return on a RV book. and even if it is directional, sizing based on a 4-5% half stop loss will be a real buzz kill and make it difficult to achieve.

as billymay pointed out, the stress is 24/7 (imagine on a PM level) and even though i leave the office at 5pm, and put in just 35hours/week at the office, i never have the luxury of shutting my mind off... it actually kind of sucks. im forever a slave to the markets.

so to all of you prospective monkeys....

go join a start up... or do something else where the wine is still flowing. because HF is certainly not the promise land. very few make it to PM, yet what you are fighting for is hardly worth it.

but buysdie is indeed paradise compared to sellside... sellside sucked balls.

Thank you for sharing your insight.

 
Aug 22, 2015 - 1:03am

I think a large part of your dissatisfaction comes from expectations that were wildly out of whack. As someone with a bit more experience I can tell you that 100MM paydays werent just falling from the sky before the GFC and seats where you took wild directional bets with no risk management were rare and hard to come by back then also. If you are running a 100MM book at 27 years old my advice would be too focus on learning your craft and continuing to get better at what you do, because you have a tremendous opportunity to make a lot of money over the next 20-30 years.

 
Aug 13, 2015 - 7:50am

IMO anything besides fundamental long term oriented long/short is a gamble, so no I would not do any HF strat other than long/short. And although we are killing it YTD (knock on wood), I'm still learning new things on companies I've looked at for years. There is simply no way you can get an edge (outside of inside information) when you are looking at countries, commodities, etc.

Oh and no one can tell you what will happen in the short term, that's all noise.

Answer to your question, yes I'd do it again and even faster (skip PE), because long/short is awesome. Again, depends on the PM and your fund. I'm at a Tiger cub if that helps.

Edit:
PS Lexington, you were asking about what to wear half a year ago (probably one of the dumbest questions I've ever heard in this industry, which is why you deleted the OP) and now suddenly you're a PM? If that true then I totally get it, I wouldn't want to work at your fund either.

//www.wallstreetoasis.com/forums/hf-attire

 
Best Response
Aug 20, 2015 - 2:27am

graduated little over three yrs ago to be exact. i shopped for bargains at tj maxx and macys then and i still do now. is that a problem?

after graduating (ivy), i was fortunate enough to spend the first two yrs out of college doing international relations work for the MENA region and Russia.

i also spent time doing geopolitical consultancy work for a macro firm, which is how i ultimately ended up at my current role. so i spent all of my post graduate years in different front office roles so i was very timid about my wardrobe...being new to the industry and all.

i initially thought i would be the worst dressed, but those worries were quickly put to rest as half the guys come to work in polo shirts and jeans. i even spotted a dude in a track suit the other day.. making "swoosh swoosh" sound everytime he walked down the trading floor...

back to the main subject...

am i deeply unsatisfied with my work? yes and no. i had certain pretenses coming into the industry... in college i read about soros and tudor and the heroic shit that they did. i thought AUM would be sticky and that people tolerated risk and the swings as long as your ideas were solid.

well all those assumptions i had about the industry was wrong. AUM is never sticky enough. institutions rather have consistent low vol return w/o drawdowns. the only guys i know who are doing deep dive , long term macro stuff are essentially old guards turned family offices.

i interned at a bulge bracket six years ago in S&T to know that sell side is where your soul and dream goes to die. my end game was indeed trading macro, but i knew i wasnt going to accomplish that making money off bid/ask on the rates desk (although some people are able to make the transition).

parts of me wish i had set my eyes on something else besides HF in college.. back then, HF seemed like the promise land. now that i had the chance to sit on a PM seat and now that i'm a bit older, i realize that you can make seven figures (btw, im no where close to clearing seven figures this yr.. my book is up just 2%...sigh) in a lot less stressful way and by doing something more meaningful.

yes, looking at price action and working/talking w/ smart people are few things that i like about the job. but the entire HF culture is broken and it reinforces negativity. if any of you guys work on the sales desk at BB, you guys know very well how retarded the system of perpetual ass kissing is. you are constantly wined and dined and you deal with some of the fakest people in the world. im forced to go to and maintain relationships w/ fake people so that i might actual get some color on flow beyond what's published as "xyz firm view for Q1". some guys enjoy it, but i dont...

so what's next? well im sort of pot committed (poker ref) now and i probably will stick it out till im like 31-32 and hopefully save up a decent amount - low seven figures (which really isnt a lot of money if you think about it...) - so that i can commit to a meaningful second wind...you only live once, and for anyone who really thinks making it to HF is everything (first BB, HF analyst, then PM), think again.

look i get that for some, finance is the be-all and end all... and thats great. but you will also find a lot of guys who have made it pretty far in the industry espousing the same views as i do. sometimes on sites/community like this, we put certain things on a pedestal... and opinions that chip away at the glory of what many consider to be their end game is obviously not going to be popular.

however i think OP asked a fair question and thus i thought i would share mine. nothing more.

 
Aug 13, 2015 - 11:46am

Sanity check, you work for a long/short and for the most part under the single manager model...which is a very diff world. I'm sure other macro guys at multistrat can chime in as well. Believe it or not, PM seat at a multi manager is often the only place for macro guys to take risk in the industry now. In fact, it's pretty much the only way. Tudor, Moore, brevan, autonomy, balyasny, Citadel, Caxton, millennium, Fortress and etc are all multi manager platforms now. so perhaps my feelings are more relevant to those who want to trade macro.

I might have been in a PM seat six months now, but that shouldn't change how I feel about the industry. In the end I don't see how that makes my views less valuable. I trade macro. I have a starter book (100mm - seems like its a lot, but it really isnt given that its a RV book). I'm one of few who got lucky enough to get a book. But that doesn't mean I should drink the kool aid and be absolutely happy about my job. The outlook for the industry stinks, model/environment stinks. Money doesn't grow on tree anymore. If you are smart, way better opportunity exists now outside of finance. This is true whether you are in l/s or macro, tiger/tigercub or Tudor

 
Aug 14, 2015 - 7:25am

I love my job and would do it all over again. Like billy_mays said, HF jobs are very interesting and exciting; no two work days are identical.

I work at a mid-sized value long-bias fund that takes very concentrated positions (10-15) with low turnover. The benefit to a concentrated fund is not constantly being pressured to find compelling investment ideas at this moment. I look at about one company a week and most of my research is => great company - check = > attractive price - no => add to list of companies we want to own and check back later if prices are more attractive. In today's market, that's a very lengthy list (on the long side).

Most days, I'm not overly stressed. I usually end my day when the market closes, however exceptions are very common. I'll work two weekends a month. Once or twice a week I'll work till 2-3 am in the morning depending on how many tasks I have to complete and the complexities of those tasks. I don't get stressed out working till 2-

Value investor working in the hedge fund industry. Portfolio Manager, Analyst at a $380+ million Texas-based value investing HF. Former Research Consultant, Analyst at a NYC-Based deep value and special situations HF.
 
Aug 15, 2015 - 8:37am

RE going HF over whatever? It's better than IB BC anything sell side must be dreadful comparatively. As I focus on more private firms vs public, I actually prefer the investigative and investment process w private names so growth equity/VC is really awesome. However, I think this is more a function of my particular sector and my experience may be an outlier.

In the end, if you don't love what you do, then the grass will always greener. You can make good money doing anything in this world, can you make it quicker in HF? Sure, but if you truly love what you do, then you'll get to where you want to be no matter what the field.

 
Aug 20, 2015 - 4:46pm

The honest answer is I don't know if they would let me in today (assuming I was new trying to break in). If I could retain everything I know now and had to start over, I would forego the HF route but still do capital allocation. Not going to bore you with the types of investment vehicles I find interesting but I will say how much more Buffett's last partnership letter resonates the longer you're in the business.

 
Aug 21, 2015 - 1:22pm

Yes, I agree with what you're saying. The game has changed. Too many college kids watching movies and getting ideas of grandeur.

Its tough on wall street. If you have the skills to make it big in the hedge fund world, you should have the skills to make it big in any other field too.

If I didnt find success in HF, im sure I would chase it down somewhere else. Its a personality and lifestyle decision. But there are days that I definitely question whether my skills would have been put to better use creating or building something from the ground up. Luckily I dont think its too late to transition down the road.

On the street, everyone is hungry, everyone is ambitious, everyone can be cut-throat and the guys on the very top who make a big name for themselves reap the majority of the benefits. Attaining that level of success (Soros, Einhorn, etc.) is next to being struck by lightning.

 
Aug 21, 2015 - 8:14am

I'm not trying to chase anyone away but the amount of posers/fakers/idiots on this site have really gotten out of hand. I've stopped trying to give actual advice.

And if you couldn't tell, I simply copy/pasted my reply to Lexington from the movie Billy Madison.

So Lex makes 200k currently and is 27 and wants to retire with multi-millions by 31 (this is post tax savings where the tax man takes 40% and you still have living expenses) and HF's are not lucrative anymore, right? Makes sense.

 
Aug 31, 2015 - 10:38am

Only been in industry for a year as fundamental L/S equity analyst @ a $5-10bn fund. Echoing off others here are my points albeit I'm only been in the industry for a limited time:
(1) the sellside absolutely blows so if you're going to do finance and are passionate about the markets / investing, HF is not a bad place to start. I think my friends in PE are frustrated because they cant really point to a P&L and they're salaries are typically capped. Not that you are directly responsible for P&L as a jr analyst in your first couple years anyway but sure helps to be the one covering the winners...
(2) much better chance of making More Money Than God working at a HF than a tech startup (pun intended)
(3) every day is different and I am constantly learning so I find that intellectually rewarding
(4) I thought it would be more mkt hours but it's probably closer to 60-70 hours a week and that can definitely flex up... someone said 2 weekends per month and that's generally right.
(5) I'm 26, went on the path (IBD and Ivy que circle jerk) and nobody at my fund became a PM @ 27 so I'm highly skeptical of Lex's claims given it sounds like he came from a nontraditional background to begin with so not sure how you get a PM seat in a year. Usually it takes years to become a PM but sure...
(6) I do know some "PMs" at regional banks... I think our definition of PM may be vastly different. Then again, I feel idiotic for even addressing this kid's post.
(7) negative is that you can definitely have mood swings based on your portfolio and market. It's a different kind of stress than working 100 hours in banking but frankly I love that there's a scoreboard that I can benchmark myself and my peers every month / quarter / year.
(8) My biggest concern is that I would not know exactly what I would pursue if I didnt work at a HF. Security Analysis is pretty specific skill and you can work at LO or another HF sure.

 
Jul 10, 2016 - 7:33pm

SanityCheck
Lexington55

To everyone saying there's no way Lex is a PM at 27...there exist PMs even younger than that. Based on his book size ($100mm) and payout ratio (10%) I'd call him more of a junior PM. But still someone that runs a book and owns his risk. The path to a risk-taking seat in macro is much less structured than in the fundamental world.

This sort of progression probably doesn't happen (if at all) at a Tiger Cub (single-manager) fund, which seems to be where most of the skeptics work at. But title doesn't really matter. A senior analyst at a large single-manager fund who personally has a good year is going to be comped multiples of what a junior PM like Lex would make in an equivalent year.

 
Jul 10, 2016 - 8:14pm

For those in HF, what would you have done differently if you were to start all over? (Originally Posted: 10/23/2013)

For those in HF, what would you have done differently if you were to start all over? (i.e. start with AM instead of ER; go for PE instead of public market; work your ass off in college.. etc.)

I love my bananas!
 
Jul 10, 2016 - 8:16pm

Chill more. Always ended up on amazing desks on the sell side (product and timing wise) with extremely cool people. But we all stressed a lot. Wish I hadn't worried so much.

Now on the buy-side though I miss the whole buzz of the trading floor. I wish I had a lot more fun when I was younger. Some of the guys were perfectionists in a way that their targets were met and they always had a blast. I was a bit more on the work-today-enjoy-tomorrow side. But the fun guys were always curious about me thinking God knows what; I'm sure they wanted some part of my lifestyle.....

I don't regret what I did as I had no other options, bosses were demanding and I delivered. But it's just that when I look back I feel like I missed on a few things...

 
Jul 10, 2016 - 8:18pm
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