Investment Management Business

[tnathan]

Do many people in the forum work in the investment management business in some form? I am planning on going to business school next fall (happy to be talked out of it) and am thinking about pivoting into the field (happy to be talked out of it). Former consultant / now work in tech. What are some major downsides of the industry that most don’t know of? I think I would enjoy it far more than what I’m doing currently.

[spartansaver]

Investment management is fine. It becomes more of a job than a hobby. You're asked an opinion on a lot of things Buffett and Munger would say you shouldn't have an opinion on. You're constantly asking yourself why the firm you're working for does things so differently than how Buffett says things should be done. You'll likely be forced into some kind of structure, which I personally think hinders investment performance. Your fund will most likely underperform so your stuck wondering what the point of your fund is. You can drink the cool-aid to make yourself feel better. The work can be interesting, but I think it can also poison your mind. You see people start believing in a stupid amount of diversification and 300bps becomes a big position (among many other bad habits). But the grass is always greener. Most jobs involve a lot of stupid tasks that you ask yourself what the point is. The people you work with will likely be intelligent. I've worked at other jobs and the best job to me will involve financial independence.

 

Would I go to business school just so I could transition in? No. Jobs are jobs, so kill it in your PA and reach financial independence. Then you can manage your own personal fund which is much more fun. 

 

This is all my personal point of view which others could completely disagree with. 

[Gregmal]

Used to. If the only thing you care about is money, do it. It’s the easiest and fastest route to making tons of it. The catch is that 98% of the people you’ll deal with on a regularly basis are single dimensional folks who don’t give two shits about anything but money, lack ethics, and will stomp your head or hurt someone else without thinking for a few extra bps.

 

Typically the exception to this are the single person shop managers or small shops that have few employees and are pretty much off the beaten path. Most of the good folks in the biz I’ve met fit that profile.
 

The worst examples, which are superfluous, are the mid size and larger fund analysts and pms who are little but stereotypes and only care about career advancement. I’ve met a few folks from the old Steve Cohen SAC fund and to a T they are what you’d have pictured just worse. Walking stereotypes of the NYC hedge fund bro. 
 

So it’s clearly not for everyone and definitely not an environment I cared for very much. It comes down to what you want and for how long. Probably easier just to setup a small time RIA biz somewhere in middle America and do boring but fulfilling biz. It’s not hard and doesn’t cost much to do a basic money management operation. Maybe $50-100k. 

Edited August 24, 2022 by Gregmal

[SharperDingaan]

There are a lot of sociopaths, and all that goes with it. If this is your thing, there is no better work environment; if it isn't - walk away.

The reality is that if you aspire to a career in corporate finance, you will at times need to work with them ... so having some experience isn't a bad thing. Just don't expect it to be a pleasant experience, and keep your gaming expertise sharp.

 

SD

 

[Gregmal]

2 hours ago, spartansaver said:

You see people start believing in a stupid amount of diversification and 300bps becomes a big position (among many other bad habits).

This is what I call the plague of high level finance. There is a systematic “risk management” protocol established that gets taught from entry level, to mba classes, to higher level. The logic corrupts ones individual investment process because it’s ridiculous and sometimes downright stupid. But at the institutional level it makes sense because the golden rule is to never burn your “fee generating capital”. Hence the “big positions” are meant to never burn your base. It’s why you see so many guys who work in finance routinely holdings high levels of cash, gold, and puts. Because their bread is buttered from OPM. Of course they never want to risk their own money and often even, they are invested in other stuff. Real estate, “personal businesses”, etc. Of course none of those things are wrong per se, but they always manage to look out for themselves first. If the work bets go south, and all the stupid risk protocols fail, they still have theirs.

[spartansaver]

1 hour ago, Gregmal said:

This is what I call the plague of high level finance. There is a systematic “risk management” protocol established that gets taught from entry level, to mba classes, to higher level. The logic corrupts ones individual investment process because it’s ridiculous and sometimes downright stupid. But at the institutional level it makes sense because the golden rule is to never burn your “fee generating capital”. Hence the “big positions” are meant to never burn your base. It’s why you see so many guys who work in finance routinely holdings high levels of cash, gold, and puts. Because their bread is buttered from OPM. Of course they never want to risk their own money and often even, they are invested in other stuff. Real estate, “personal businesses”, etc. Of course none of those things are wrong per se, but they always manage to look out for themselves first. If the work bets go south, and all the stupid risk protocols fail, they still have theirs.

Completely agree. What’s good for an investing business isn’t necessarily good for investing results. The ideas get conflated. 

[thepupil]

16 hours ago, tnathan said:

Do many people in the forum work in the investment management business in some form? I am planning on going to business school next fall (happy to be talked out of it) and am thinking about pivoting into the field (happy to be talked out of it). Former consultant / now work in tech. What are some major downsides of the industry that most don’t know of? I think I would enjoy it far more than what I’m doing currently.

 

downsides: 

1) the industry is in secular decline and has less obviously transferable skills than others. 

2) there's probably a less equal distribution of good jobs than tech/consulting/corporate. there's just a huge amount of SWE's at FAANG's and other tech co's making very good money, have nice lives, etc. i have a very good job in investment management. it's pretty niche and opportunities are few and far between. 

3) the bureaucracy, politics, and bullshit that exists wherever you have well paid people focused on self preservation and advancement / careerism exists in investment management. i think this is true of almost any hard charging high paying field. 

 

upsides: 

1) no real formal education requirements. I've made money every years since undergrad and never had to get an advanced degree (this doesn't apply to someone going to b school) 

2) high pay per unit of stress/effort across the entire stress/effort/elite spectrum. you can make millions at the most elite of jobs that will run you ragged, but even at the lower end, the field pays well. 

3) see number 2. 

4) see number 2. 

[tnathan]

Thanks everyone for the thoughtful replies. I moved into tech to get better WLB (was working 70 hours a week previously doing PE due diligence) but now that I'm here the bureaucracy is what I am hoping to avoid in future roles. Perhaps I'm best suited to work for a startup where there aren't so many stupid tasks! 

[Gregmal]

I think it really comes down to determining what you want in life. Then figure out what that costs to maintain. Then figure out what the most practical way is to achieve that.
 

I’ve never understood how people with millions choose career over stuff like seeing their kids grow up. Or not being able to drop them at school because they have business meetings or work shit. I laugh every time I see another Paulson, Ackman, Gross, Einhorn, Tepper, etc getting divorced. Buffett too even. There’s more to life than shallowly chasing money or obsessing over your “career”. 
 

So really it’s a personal thing. What gives you the best chance and the easiest path to doing what you want with your life? What the current generation of kids doesn’t seem to get…is that the answer is often doing something very unpleasant for a short while to get started. If you’ve already gotten yourself a solid foundation, I don’t think it’s worth putting up with egomaniacs and pathetic money whores like you encounter regularly in the investment world.

Edited August 24, 2022 by Gregmal

[dwy000]

2 hours ago, tnathan said:

Thanks everyone for the thoughtful replies. I moved into tech to get better WLB (was working 70 hours a week previously doing PE due diligence) but now that I'm here the bureaucracy is what I am hoping to avoid in future roles. Perhaps I'm best suited to work for a startup where there aren't so many stupid tasks! 

at your age (or what i assume is your age), with a b-school background you're going to be working 70 hours a week at whatever you're doing.  With a good chunk of it being face time or make-work to prove your mettle.  Hours at a start up will be worse but at least the work will be more diverse (and the pay much worse).

 

If you're going to work 70 hrs a week at something, make it something you at least enjoy doing or that it's providing the benefits to get you where you really want to be.  Once you get on the treadmill, it's really hard to walk away from the money despite the dipwads you're working with.  

[hasilp89]

19 hours ago, spartansaver said:

Investment management is fine. It becomes more of a job than a hobby. You're asked an opinion on a lot of things Buffett and Munger would say you shouldn't have an opinion on. You're constantly asking yourself why the firm you're working for does things so differently than how Buffett says things should be done. You'll likely be forced into some kind of structure, which I personally think hinders investment performance. Your fund will most likely underperform so your stuck wondering what the point of your fund is. You can drink the cool-aid to make yourself feel better. The work can be interesting, but I think it can also poison your mind. You see people start believing in a stupid amount of diversification and 300bps becomes a big position (among many other bad habits). But the grass is always greener. Most jobs involve a lot of stupid tasks that you ask yourself what the point is. The people you work with will likely be intelligent. I've worked at other jobs and the best job to me will involve financial independence.

 

Would I go to business school just so I could transition in? No. Jobs are jobs, so kill it in your PA and reach financial independence. Then you can manage your own personal fund which is much more fun. 

 

This is all my personal point of view which others could completely disagree with. 

i printed this out and taped it next to my desk. well said.

[tnathan]

Wanted to follow up here -- does anyone have any opinions on any of the teams at Artisan Partners (Milwaukee based) and the work they do / reputation? I'm not intentionally going down this path, but this opp kind of landed in my lap so might as well see it through.

[Dinar]

11 minutes ago, tnathan said:

Wanted to follow up here -- does anyone have any opinions on any of the teams at Artisan Partners (Milwaukee based) and the work they do / reputation? I'm not intentionally going down this path, but this opp kind of landed in my lap so might as well see it through.

Very, very good investors.  A number of their funds have excellent returns.

[tnathan]

Thank you!