Like most people, I prefer to do the deed in private. Others, with enough coaxing (and alcohol) are willing to let a few people watch. Then there are the exhibitionists, who want every minute and every detail recorded. These people actually perform best when the whole world is watching. If you want to work at a hedge fund, prepared to become an exhibitionist.
When I'm talking about performance, of course I'm referring to returns (get your mind out of the gutter). One of the great things about working at a hedge fund is everything is transparent. I, like everybody else on the investment team, can see the returns for the firm in real-time, and P&L is sent out every day. The only job of a buy-sider is to make money for investors, so they want to make sure you're on top of it.
There's no hiding when you work for a hedge fund. Investors see our returns monthly, and on occasion, you'll hear about your fund's performance in the news, usually when it's a big out-performer, or a severe under-performer. This is great because everyone knows about your returns,which makes it a little more meritocratic. We all know who came up with the idea that's up 50%. We all know which team is crushing it.
The downside is...there's no hiding when you work for a hedge fun. Literally, everything is transparent. When you're down a lot, it's hard to hide from the shame. No one's going to say it, but unless you work for somewhere like Millennium where your losses only apply to your immediate group, when you're down a lot you're killing everyone's bonuses. People aren't in this industry for charitable reasons.They're here to MAKE MONEY. And because of you, they're MAKING LESS OF IT.
It's not always bad. Sometimes you'll get sympathy since everybody is down at some point. But you probably won't get much because most people in this industry are very good about forgetting the times that they were wrong, but will never let you forget the times that they were right.
This is one of the reasons why working at a hedge fund is so stressful. It's even worse when you have different teams with the same trading strategy. If you have multiple teams covering the same sector, you're automatically going to be compared to them, regardless of what people tell you. If your team is at the bottom in performance, you can't help but second-guess your investment decisions. Then you start to copy their trades. This is how hedge fund hotels start. The party's fun when it works. When it stops working, everybody gets blown up.
So if you're looking to get into the hedge fund industry, make sure you can perform when everybody's watching.
Margin of Saving was created by an analyst at a multi-billion dollar hedge fund to help others learn how to invest and save.
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