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Morning Coffee: The brutal life of a private equity “swashbuckler”. The secret to beating quants in hedge funds

"I like to be near water"

"I like to be near water"

If you’re a junior banker attempting to make it into private equity, Steve Schwarzman, the 70-year-old co-founder, chairman and CEO of Blackstone, is (maybe) something to aspire to. The world has changed on the buy-side since Schwarzman closed Blackstone’s first PE fund back in 1987, but his broad-ranging interview with Bloomberg shows just how brutal working in private equity can be.

Schwarzman said that he was “absolutely essential” to Blackstone during the “swashbuckling” days of private equity when the likes of him, David Bonderman, Henry Kravis, David Rubenstein were starting out, because there was hardly anyone working for the firm. “I was working 18-hour days, the business kept growing very rapidly, and the demands on me were astonishing. Beside the fact of living a life of perpetual overstimulation as we were growing, I could see that I couldn’t get to everything,” he told Bloomberg.

Even at 70, Schwarzman says that he rarely switches off, and it’s more about finding the right environment to work, rather than stopping entirely. How? Well, he’s a big fan of the 90s TV show Law & Order, which he watches while “working two and half full-time jobs”.

Also: “I like being in warm weather. I find that relaxes me. I like being near water. I like sitting on a beach and sort of hearing the water, watching waves break, looking at the shimmering. I find that really relaxing. I’ll do office work in that kind of setting, or I’ll read a book or a news­paper or talk on the phone to someone. I really like that,” he says.

Separately, a ‘bored’ macro hedge fund  portfolio manager has been imparting advice to wannabe hedge fund managers on the Wall Street Oasis. With all the talk about quants taking overt the asset management world, he has a view on what it takes to be successful. Don’t get too excited – the hedge fund world will shrink dramatically, he thinks, but the industry should be a “small, niche industry of the most talented minds in finance”. But, he says, it’s the human characteristics that give you the edge. Macro fund managers need to be “fundamentally introspective, innately curious, and intellectually honest”. 

He works 80-100 hours, most of which is reading about the market and relies on “power of subconscious processing power”. “Basically, I rely a lot on all the miscellaneous stuff stored up in the back of my mind, from a lifetime of voracious reading,” he says. So, the secret?  “The skill set (your ‘tools’) are pretty straightforward, but the true value add comes from creative synthesis, not rote application of industry-standard knowledge,” he says.

Meanwhile: 

Investment bankers still scratching their heads over whether UK M&A will take off after the election (Financial News)

Paul Marshall, the co-founder of Marshall Wace, has taken a Twitter swipe at the London Mayor Sadiq Khan on the latest terror attacks…and then deleted it (Financial News)

Blackrock credit manager Michael Clark has just joined GSA Capital (HFM Week)

Brevan Howard’s biggest hedge fund is still leaking money (Bloomberg)

Cory Rapkin has moved from J.P. Morgan to head up Credit Suisse’s healthcare investment banking team (Reuters)

The new hot job – data protection expert (Financial News)

H1-B visa were falling before Trump became president (WSJ)

But Indian tech companies are hoovering them up (Bloomberg)

The joy of an adult gap year (Medium)

Why some bankers will secretly be voting Labour (AlexCartoon)

Contact: pclarke@efinancialcareers.com

Image: Getty Images

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