Assistant Portfolio Manager

[NewbieD]

I've previously worked in IT at an investment manager / mutual fund company with $10b in AUM.  My current dream job is to go back to them (leaving my current insurance pricing role) and start with them as an assistant portfolio manager. They have 6-7 portfolio managers where I live. Don't have any assistants on the investment side but they've grown quickly and might find they can spend a small part of the new flow on my meager salary. And I could get a nice reference for future investment work. Now thinking about how to frame my suggestion.

 

What would you, assuming you manage a medium sized fund that has grown quickly, want help with? Trade execution, reporting, transactions etc are already taken care of by others.

 

Yes, I know it's a bit backwards to ask what your dream entails 8) But I'm firstly looking to cross the gap into the investment side and am willing to do whatever is helpful, as long as it's some small part of the investment process. For those working in the industry - have you seen this type of move work before? Success factors?

[jawn619]

I suggest you learn as much as you can about investing, either by taking the CFA or taking some financial modeling course. You'll get some raised eyebrows coming from IT, so you really have to know your stuff.

[cmpnd15]

This from Klarman's latest annual letter just about sums it up. :) bolded some words for effect :)

 

Did we ever mention that investing is HARD work — painstaking, relentless, and at times confounding? Separating relevant SIGNAL from NOISE can be especially difficult. Endless patience, great discipline, and steely resolve are required. NOTHING you do will GUARANTEE success, though you can TILT the odds significantly in your favor by having the right philosophy, mindset, process, team, clients, and culture. Getting those SIX things right is just about everything.

 

Complicating matters further, a successful investor must possess a number of seemingly CONTRADICTORY qualities. These include,

 

a) The arrogance to act, and act decisively [AND] the humility to know that you could be wrong.

b) The acuity, flexibility, and willingness to change your mind when you realize you are wrong [AND] the stubbornness to refuse to do so when you remain justifiably confident in your thesis.

c) The conviction to concentrate your portfolio in your very best ideas [AND] the common sense to nevertheless diversify your holdings.

d) A healthy skepticism [bUT] not blind contrarianism.

e) A deep respect for the lessons of history [bALANCED] by the knowledge that things regularly happen that have never before occurred.

f) The integrity to admit mistakes [AND] the fortitude to risk making more of them.

g) The intellectual honesty not to confuse luck [WITH] skill.

 

"You don't become a value investor for the group hugs."

[oddballstocks]

Is this a pedigree place or is it the type of place that only cares about results? I've come to understand 90% of working on Wall Street is what college you went to and what connections your family has.

 

There are other places out there (and very well represented on here) that were started by non-traditional managers. If your dream is to just get a job in finance get the best MBA, network and get working on climbing the ladder.

 

Alternatively if you are creative, a bit of a hustler and can create your own unique value proposition you can skip the MBA and ladder all together.

 

Start to research and write your ideas publicly. If your ideas are good and you can write you will be offered jobs and money. If you can't write or have bad ideas then it's worth reconsidering if this is a good path for yourself.

 

That 10% of Wall Street that doesn't care about degrees cares about results. If you can deliver your background doesn't matter.

 

It's also not hard work. You could read endlessly and spin your wheels on marginal ideas. Or you could focus and bang out a few killer ideas that are offbeat but good. Those offbeat ideas will garner recognition and get you further than reading another KO or BRK or flavor of the day value 10-K.

 

Did you develop software? If so I'd try to stick with that, find an intersection. With software you can create actual things of value for clients. Money managers don't known if they've provided value for years, and sometimes years of value is destroyed at once. You can create products that create value now and continue to create value.

 

If you're looking for prestige run for the local city council or school board. Everyone where you live will know you, you will have real power over a small locality and will be treated like a king. In money management no matter how much you have you will always want more. And outside of CNBC and a few investing groupies no one knows anyone besides Buffett.

[Palantir]

For those working in the industry - have you seen this type of move work before? Success factors?

 

Why don't you reach out to those PMs and ask for feedback?

[Phaceliacapital]

Off topic but can anyone tell me where to find the Klarman letter?

[doughishere]

http://www.businessinsider.com/seth-klarman-on-what-makes-a-great-investor-2016-1

 

[NewbieD]

jawn619: I've checked out the CFA and it seems a bit daunting and unclear if it will make one into a better investor. My current boss is a CFA who is extremely structured, detail oriented and risk-averse. Nothing wrong with that but it's not my way of being, and I can see the value as a trust building device. Now studying Damodarans book on Investment Valuation instead to get some ideas for how to improve my simplistic models.

 

cmpnd15: Nice description of what investment is. If this was in reaction to the title of Assisstant: That thought was not born out of a desire to avoid having to make decisions but rather a way to get a mentor or two to learn from and being in an environment thinking about equities. Possibly even without having to study for a boring CFA exam:)

 

Is this a pedigree place or is it the type of place that only cares about results?

They are focused stock-pickers with one big global strategy and some local smaller ones. A slow moving place, the first guy to leave after me left now 4 years later. It's a nice place to work except the IT challanges, once systems are running, are too predictable to learn much new and portfolio managers make 10-50 times the rest.

 

Alternatively if you are creative, a bit of a hustler and can create your own unique value proposition you can skip the MBA and ladder all together.

 

Start to research and write your ideas publicly.

 

YES. This path resonates more with me than the 'get your education first, then do' path. Like most I want to make a lot of money. But I think even more than that I want to pursue the joy of being creative and adding value doing something fun without compromising values of independence too much. Ideally something I can do for a long time and ripen as I grow older. For sometime I've wrestled what the meaning of my diverse background is. I.e. research assistant, ski instructor, poker, climbing instructor, building an apt to rent out in basement, one mobile golf-map app with sales of $150k (that was hard work!), now insurance analyst). You can only live life looking forward and I think the upside of this type of experience is a broader and fairly robust set of mental models. And I might not be great at it, but I do enjoy writing. The vibes you and others who have followed a non-standard path give off is proof positive that there is merit in listening to your own thoughts. It helps when the fear of leaving the herd roars it's ugly head:)

 

Finding a niche and dominating, heard that before yeah:) A small experiment in that direction: www.scandismallcap.com. Not much there yet but the idea is to put my research there and help foreign investors access small, listed companies in Scandinavia. There is a language gap that an english speaking site can help breach. Also the capital markets are well-regulated, there is a thriving scene of tech startups and many companies are well run. This market is getting more efficient with more micro cap fund managers and research available but there is a long way to go and I think the foreign investments are very low.

 

That 10% of Wall Street that doesn't care about degrees cares about results. If you can deliver your background doesn't matter.

Yeah, results is what I would like to be judged by. I guess you mostly mean investment results. But the clarity of thought and process must be a big part of gaining trust, in practice. A few good years doesn't mean much statistically when working with concentrated bets. So yes, writing skill. How many % of Wall Street doesn't require you to sit physically in New York?

 

It's also not hard work. You could read endlessly and spin your wheels on marginal ideas. Or you could focus and bang out a few killer ideas that are offbeat but good.

Did this so far, and it's a fun style and feels more like a joy than hard work although a lot of thinking and reading is involved, when there is positive feedback from the markets. Much more interested in this than (being a part of) managing a strict mandate. Going for a PM role it needs to be semi-concentrated stock-picking.

 

Did you develop software? If so I'd try to stick with that, find an intersection. With software you can create actual things of value for clients. Money managers don't known if they've provided value for years, and sometimes years of value is destroyed at once.

Good point. That feeling of regret and shame every poker player knows and to have it for years like e.g. Hussman should have trying to validate a failed approach would truly suck. And I still get a small pleasure every time some random person buys my old app for $10.

 

Still curious what part, if any, of the research, sales, investment process you as money managers would feel comfortable to delegate to someone with less experience?

[cmpnd15]

Looks like you are already way ahead on the right path (entrepreneur, investor, on a path of learning... :) ), though I would recommend a structured reading of Financial Statement & Analysis and Economics volumes in CFA Level I prep, not for the exam but for yourself :) especially if you are not with an accounting background and as aspiring DoItYouself ActiveInvestor :). If you are on the path of learning and improving, there is no other outcome than getting better and making a lot of money (slowly, compounding works on both knowledge & money). Btw, you do not need to work under someone to get better, but if you can can, all the better :)

 

I feel that most do not like the marketing aspect of fund management (to raise capital and handholding of clients), no wonder some went the route of buying businesses that let them invest the float (the business names are in this sites address :) ).

 

If your goal is to make money for yourself at the expense of your investors, then you are in the right profession and well if you are lucky you investors might make some too :).

 

Finally do not be disheartened if Active investing does not work for you (say after 10yrs of working at it, for most it does not - or does it-as they end up making a lot of money despite their investors being worse off than the market, seems 2/3rds of active investors fail to generate returns higher than the market), you can always fall back to passive investing (periodically investing in a low cost index fund or invest with another fund manager whose framework you can relate to :) )

 

As Munger aptly puts it,

 

"If you invested Berkshire Hathaway-style, it would be hard to get paid as an investment manager as well as they're

currently paid ‑ because you'd be holding a block of Wal-Mart and a block of Coca-Cola and a block of something else.

You'd just sit there. And the client would be getting rich. And, after a while, the client would think, "Why am I paying this

guy half a percent a year on my wonderful passive holdings?"

 

Good Luck or should I say Good Skill :)

 

[NewbieD]

 

Finally do not be disheartened if Active investing does not work for you (say after 10yrs of working at it, for most it does not - or does it-as they end up making a lot of money despite their investors being worse off than the market, seems 2/3rds of active investors fail to generate returns higher than the market), you can always fall back to passive investing (periodically investing in a low cost index fund or invest with another fund manager whose framework you can relate to :) )

..

Good Luck or should I say Good Skill :)

That would be unfortunate wouldn't it:) But a few insurance prices are hardly saving the world either. Might give this a try now, before GOOG's stock research robots take over the job. Thanks, the CFA Economics volume looks good.