David Tepper is a boss.
A man who "wasn't an A student in high school", and attended the University of Pittsburgh, landed a credit analyst position at a crappy bank, and then earned his MBA at Carnegie Mellon. With his MBA he got a job at a smaller mutual fund complex, and in two years earned his desk at Goldman Sachs. According to his highly ridiculous wikipedia page, he started as a high yield credit analyst at GS and within six months on the job, was appointed head of high yield trading. That paragraph is not footnoted in wikipedia.
What is footnoted and documented in various financial periodicals, is that he was in contention for various high ranking executive positions within GS. He was denied these critical promotions and promptly quit to establish his own hedge fund. With his hedge fund wealth, he subsequently purchased the mansion of his former boss who snubbed him for the promotion at GS (Disgraced CEO and Former Senator Jon Corzine). He razed the home to the ground, and built a newer, and two times larger, home in its place. This home was in the Hamptons, and this home cost Tepper 43 million dollars to purchase, and an additional undisclosed sum to demolish and rebuild. Public multi-million dollar revenge must be sweet.
He likes to show up on CNBC once in a while and tell people whats what. He moves the entire financial markets when he gives interviews.
All around ridiculous and philanthropic guy.
Friday, June 13, 2014
Equity Research and Other Musings
Introduction:
Which is worse: the emptiness and drudgery of pulling operational levers while wishing to use your brain in a analytic and academic manner, or the longing to come off the analytic sidelines and play the game itself in an operational or managerial capacity?
Is it a basic introvert versus extrovert bifurcation? It seems it's not that simple. Extrovert skills are needed in research in developing contacts that will provide you with the information you need to do a great job. Extrovert skills are needed to sell your work, defend it against your peers and plead your case with portfolio managers. Introvert skills are required for the nights when you're up alone in your office updating your valuation model for the quarter end. Introvert skills are absolutely necessary when your phone doesn't ring all day and your working on a month long project to forecast next year's growth rate in U.S. aggregate consumer spending.
There are always two sides to the coin. Operations may seem pointless and automate-able while research may seem hopelessly academic.
In my opinion, the portfolio manager role provides the perfect combination of all types of work. It combines an entrepreneurial spirit in operationally managing others money with an academic, almost professorial, approach to decision making and viewing the world, and top's it all off with the ego stroking of the sales pitch. It's interesting that the successful portfolio manager is essentially a renaissance man, but he is required to specialize and succeed in single field before the opportunity to hold the position is awarded.
The Question: Why do I want to do equity research?
1. It is the dream. Equity research to portfolio management to hedge fund manager,to fame and fortune.
2. It is the perfect combination of introversion and extroversion for a person who regularly straddles the line.
3. It fulfills my egotistical insecurity i.e. the need to employ myself in some academic pursuit
4. It fulfills my emotional insecurity i.e. the need to feel superior to others in my chosen profession
5. It pays. Often it pays very well.
6. I'm passionate. I think, and I am definitely over operations.
Closing Thoughts
Which is worse: the emptiness and drudgery of pulling operational levers while wishing to use your brain in a analytic and academic manner, or the longing to come off the analytic sidelines and play the game itself in an operational or managerial capacity?
Is it a basic introvert versus extrovert bifurcation? It seems it's not that simple. Extrovert skills are needed in research in developing contacts that will provide you with the information you need to do a great job. Extrovert skills are needed to sell your work, defend it against your peers and plead your case with portfolio managers. Introvert skills are required for the nights when you're up alone in your office updating your valuation model for the quarter end. Introvert skills are absolutely necessary when your phone doesn't ring all day and your working on a month long project to forecast next year's growth rate in U.S. aggregate consumer spending.
There are always two sides to the coin. Operations may seem pointless and automate-able while research may seem hopelessly academic.
In my opinion, the portfolio manager role provides the perfect combination of all types of work. It combines an entrepreneurial spirit in operationally managing others money with an academic, almost professorial, approach to decision making and viewing the world, and top's it all off with the ego stroking of the sales pitch. It's interesting that the successful portfolio manager is essentially a renaissance man, but he is required to specialize and succeed in single field before the opportunity to hold the position is awarded.
The Question: Why do I want to do equity research?
1. It is the dream. Equity research to portfolio management to hedge fund manager,to fame and fortune.
2. It is the perfect combination of introversion and extroversion for a person who regularly straddles the line.
3. It fulfills my egotistical insecurity i.e. the need to employ myself in some academic pursuit
4. It fulfills my emotional insecurity i.e. the need to feel superior to others in my chosen profession
5. It pays. Often it pays very well.
6. I'm passionate. I think, and I am definitely over operations.
Closing Thoughts
"It is hard to fail, but it is worse never to have tried to succeed." - Theodore Roosevelt
I personally believe that equity research is right for me. I straddle the line between extroversion and introversion on all the MBTI's I have ever attempted. I haven't met much success trying to be extroverted in the world of operations, and I have experienced the anxiety related to not using my critical faculties on a regular basis.
I think it's time to make another career jump.
"Write drunk; edit sober." - Ernest Hemingway
"Apologies for the mistypes and tangents" - Your humble author, disinclined to edit a blog.
Footnote:
Some philosophical thoughts for those inclined
"Write drunk; edit sober." - Ernest Hemingway
"Apologies for the mistypes and tangents" - Your humble author, disinclined to edit a blog.
Footnote:
Some philosophical thoughts for those inclined
What if the majority of my drive to be in equity research stems from my egotistical needs for acceptance from others and from myself. What if, as I grow, I become more detached and aware of my 'self' and reduce the influence of my 'self' on decision making? ....Will I quit? Will I leave everyone, run away from urban living and seek to commune with nature and the reality of existence? Probably not. </sarcasm>
Really, that all may be so. It may be that economic and societal notions of "success" are really only good for alleviating the specific type of anxiety that accompanies every ego as it travels through life. In the end, maybe the wise and "unsuccessful" are as satisfied with their lives as the "successful". Certainly it is more profitable and satisfying to become wise than to toil your life away seeking "success".
Though there is some psychological significance related to priming one's thoughts with the notion of ones own death, but I think it is comforting when I get too existential to 'remember that you are dust, and to dust you shall return'. [My favorite holiday is Ash Wednesday: the day when we all admit to ourselves that we really are just dust, there is nothing more. Christianity has great ideas, but there is a more rational reason to be good than 'eternal life'. Admittedly, the benefits to the delusion of the afterlife outweigh the cons: The masses are more easily deluded than educated, and education can be manipulated while mass delusion is more easily controlled and kept on point. In the end, we are all just walking each-other home.]
Really, that all may be so. It may be that economic and societal notions of "success" are really only good for alleviating the specific type of anxiety that accompanies every ego as it travels through life. In the end, maybe the wise and "unsuccessful" are as satisfied with their lives as the "successful". Certainly it is more profitable and satisfying to become wise than to toil your life away seeking "success".
Though there is some psychological significance related to priming one's thoughts with the notion of ones own death, but I think it is comforting when I get too existential to 'remember that you are dust, and to dust you shall return'. [My favorite holiday is Ash Wednesday: the day when we all admit to ourselves that we really are just dust, there is nothing more. Christianity has great ideas, but there is a more rational reason to be good than 'eternal life'. Admittedly, the benefits to the delusion of the afterlife outweigh the cons: The masses are more easily deluded than educated, and education can be manipulated while mass delusion is more easily controlled and kept on point. In the end, we are all just walking each-other home.]
Sunday, May 4, 2014
I Really, Really, Hate Public Accounting
A view from the other side.
If you follow along, you know I was able to secure myself a new position where someone pays me to do something other than accounting. This is my first winter without the busy season blues, and let me tell you first hand, its as amazing as it sounds. I love skiing and winter sports, and I essentially had to give it up to be an auditor and sit in a conference room and "tie-out" work-papers for 13 hours a day, 3 months straight.
What's also striking is how short the first quarter of the year really is. Life moves fast, and public accounting's busy season really slows it down for you. Outside of the audit room, three months is flying by, but when your life is miserable, it seems to never end.
I want to share with the auditing world some truths about the working world that really shocked me when I first sat down at my desk at my new job:
1. People deserve their own desks!
What an unbelievably depressing thing to not have your own desk. As an auditor I was a travelling workpaper output machine, and was sent to where I was needed, be it down town, cross town, or across the country. I love my desk. I have a place to sit everyday! Literally, on more than one occasion, I went home from my Big4 job beacuse I had nowhere to sit. All of the desks in the building were taken, the tables in the cafeteria had been claimed by those senior auditors more adept than I at claiming real estate, and after over an hour of stressed out searching, I decided the fastest way to get working and get to billing my time was to go home and log on my wifi. What an unacceptable way to run a business!
2. No one yells.
How many times have you heard someone yell during your accounting career? I've heard it a lot. Senior managers particularly like to yell, as they are the most stressed and most underpaid. But senior auditors like to yell too, its their first time as a manager, and most dont know the first thing about handling people. Part of the problem is busy season and the stress it creates, the other part is the people. In real corporate america, on the front lines, there are no 'episodes' or blow ups. People are exceedingly professional and politically correct.
3. Working 7 days a week is unheard of, if you're not paid for it.
I knew some go-getter audtiors who worked investment banking hours. Literally 7 days a week. And for literally 1/3 the pay of the bankers who put up with those hours.
4. There are a lot more adults.
In public accounting, I'm pretty sure the average age is 28, the partners are all retired, and those who are older, and not retired, are too busy doing the real work and winning business to show their face in the audit room.
If you follow along, you know I was able to secure myself a new position where someone pays me to do something other than accounting. This is my first winter without the busy season blues, and let me tell you first hand, its as amazing as it sounds. I love skiing and winter sports, and I essentially had to give it up to be an auditor and sit in a conference room and "tie-out" work-papers for 13 hours a day, 3 months straight.
What's also striking is how short the first quarter of the year really is. Life moves fast, and public accounting's busy season really slows it down for you. Outside of the audit room, three months is flying by, but when your life is miserable, it seems to never end.
I want to share with the auditing world some truths about the working world that really shocked me when I first sat down at my desk at my new job:
1. People deserve their own desks!
What an unbelievably depressing thing to not have your own desk. As an auditor I was a travelling workpaper output machine, and was sent to where I was needed, be it down town, cross town, or across the country. I love my desk. I have a place to sit everyday! Literally, on more than one occasion, I went home from my Big4 job beacuse I had nowhere to sit. All of the desks in the building were taken, the tables in the cafeteria had been claimed by those senior auditors more adept than I at claiming real estate, and after over an hour of stressed out searching, I decided the fastest way to get working and get to billing my time was to go home and log on my wifi. What an unacceptable way to run a business!
2. No one yells.
How many times have you heard someone yell during your accounting career? I've heard it a lot. Senior managers particularly like to yell, as they are the most stressed and most underpaid. But senior auditors like to yell too, its their first time as a manager, and most dont know the first thing about handling people. Part of the problem is busy season and the stress it creates, the other part is the people. In real corporate america, on the front lines, there are no 'episodes' or blow ups. People are exceedingly professional and politically correct.
3. Working 7 days a week is unheard of, if you're not paid for it.
I knew some go-getter audtiors who worked investment banking hours. Literally 7 days a week. And for literally 1/3 the pay of the bankers who put up with those hours.
4. There are a lot more adults.
In public accounting, I'm pretty sure the average age is 28, the partners are all retired, and those who are older, and not retired, are too busy doing the real work and winning business to show their face in the audit room.
I Escaped!
Well, I did it! If you couldn't tell from the abrupt end to the blog posts last summer, I actually got a new job!
I successfully transitioned my career from the depths of the windowless staff room in a big 4 public accounting firm to a front office role, sitting on the trading floor of a buy-side asset management firm. In the spirit of full disclosure, I'm still qualified as a CPA after all, my job is not as glamorous as my fancy new title sounds, but it's infinitely better than public accounting. If I could give anyone who is dissatisfied in accounting any advice, it's to interview and expand your world of opportunity.
Time for a brief postmortem:
How I got the job:
The sad truth about leaving accounting is that it's an uphill climb, the happy truth is that it is possible. You need to have a great story, and, in every interview, you need to answer the question "why should I hire an accountant?", I had to at least. Applying to jobs is a numbers game. The more resumes you send, the more the chances you get to interview. Also, the sooner you submit your resume to the new job posting, the better the probability it actually gets looked at. Applying the simple expected value theory will give you the secret strategy: apply to as many of the fresh job postings as possible.
Practice, practice, practice interviewing. Take as many interviews as you can get, even if you're not crazy about the position. The interview allows you to practice your interviewing skills, better hone your answers, and you get the absolute best networking experience imaginable: you get the opportunity to explain your resume and story to someone looking to hire. In some cases, even when I didn't get the job I had interviewed for, the hiring managers recommended me for other open positions in which I was interested! Talk about effective networking!
The more interviews I went on, the more confident I became, and I think it's ultimately is just a confidence game. I was absolutely destroyed on my first interview: nervous and jittery answers, poor eye contact, low volume and unsure tone of voice. I actually cracked under the pressure of that first quantitative brain teaser and incorrectly answered what would be the easiest of all the brain teasers I would get asked during my job search. With each successive interview, my answers to the standard questions became more smooth and my delivery became dialed in. "Why are you looking to leave accounting? What do you actually do on a day to day basis? Why is your experience applicable to this new role? Tell me about a time when X happened and how you dealt with it." I was getting really good at answering the quantitative questions, and I had my story down pat.
One memorable question was "How do you deal with making mistakes and how do you feel about having to ask for help?" In the swagger of my interviewing confidence, my response was: "I think I'm a pretty smart guy, and I'm able to figure most things out relatively quickly. If something doesn't make sense to me, a lot of times it means something is missing in the communication, and so I'm not worried about asking clarifying questions." I literally told the interviewer I was a "smart guy" and if I don't understand it means something actually doesn't make sense. It doesn't sound too smart prima facie, but given the right tone and context, it made me sound like a boss.
What I expected on the job:
Honestly, I had no idea what to expect. When I asked in the interview what the day to day was like, the spoke in their industry terms that made no sense to me. The same way I got blown away by the audit staff when I was interviewing for my first job, I got blow away by the quality of these people as well. I interviewed with portfolio managers, assistant portfolio managers and research analysts, who spoke about yield curves, spreads, duration and convexity analysis, and credit ratings. The spoke of interesting work like trade allocations and making investment decisions. The same way the idea of preparing financial statements and interacting with valuation experts appealed to me in auditing, the asset management industry's decision making prospects called to me.
As with all jobs, its not a cool as it sounds. There's a reason that someone is paying you to do it: there's going to be shitty parts.
Where to go from here:
The best part of this job is the exposure to all aspects of asset management and the buy-side of the capital markets. On a daily basis I'm exposed to everyone from our traders, the investment bankers, ratings agency analysts, our internal analysts, the quant team, middle office and operations professionals, financial advisers who's clients capital we manage, and the senior portfolio managers who call the shots.
I successfully transitioned my career from the depths of the windowless staff room in a big 4 public accounting firm to a front office role, sitting on the trading floor of a buy-side asset management firm. In the spirit of full disclosure, I'm still qualified as a CPA after all, my job is not as glamorous as my fancy new title sounds, but it's infinitely better than public accounting. If I could give anyone who is dissatisfied in accounting any advice, it's to interview and expand your world of opportunity.
Time for a brief postmortem:
How I got the job:
The sad truth about leaving accounting is that it's an uphill climb, the happy truth is that it is possible. You need to have a great story, and, in every interview, you need to answer the question "why should I hire an accountant?", I had to at least. Applying to jobs is a numbers game. The more resumes you send, the more the chances you get to interview. Also, the sooner you submit your resume to the new job posting, the better the probability it actually gets looked at. Applying the simple expected value theory will give you the secret strategy: apply to as many of the fresh job postings as possible.
Practice, practice, practice interviewing. Take as many interviews as you can get, even if you're not crazy about the position. The interview allows you to practice your interviewing skills, better hone your answers, and you get the absolute best networking experience imaginable: you get the opportunity to explain your resume and story to someone looking to hire. In some cases, even when I didn't get the job I had interviewed for, the hiring managers recommended me for other open positions in which I was interested! Talk about effective networking!
The more interviews I went on, the more confident I became, and I think it's ultimately is just a confidence game. I was absolutely destroyed on my first interview: nervous and jittery answers, poor eye contact, low volume and unsure tone of voice. I actually cracked under the pressure of that first quantitative brain teaser and incorrectly answered what would be the easiest of all the brain teasers I would get asked during my job search. With each successive interview, my answers to the standard questions became more smooth and my delivery became dialed in. "Why are you looking to leave accounting? What do you actually do on a day to day basis? Why is your experience applicable to this new role? Tell me about a time when X happened and how you dealt with it." I was getting really good at answering the quantitative questions, and I had my story down pat.
One memorable question was "How do you deal with making mistakes and how do you feel about having to ask for help?" In the swagger of my interviewing confidence, my response was: "I think I'm a pretty smart guy, and I'm able to figure most things out relatively quickly. If something doesn't make sense to me, a lot of times it means something is missing in the communication, and so I'm not worried about asking clarifying questions." I literally told the interviewer I was a "smart guy" and if I don't understand it means something actually doesn't make sense. It doesn't sound too smart prima facie, but given the right tone and context, it made me sound like a boss.
What I expected on the job:
Honestly, I had no idea what to expect. When I asked in the interview what the day to day was like, the spoke in their industry terms that made no sense to me. The same way I got blown away by the audit staff when I was interviewing for my first job, I got blow away by the quality of these people as well. I interviewed with portfolio managers, assistant portfolio managers and research analysts, who spoke about yield curves, spreads, duration and convexity analysis, and credit ratings. The spoke of interesting work like trade allocations and making investment decisions. The same way the idea of preparing financial statements and interacting with valuation experts appealed to me in auditing, the asset management industry's decision making prospects called to me.
As with all jobs, its not a cool as it sounds. There's a reason that someone is paying you to do it: there's going to be shitty parts.
Where to go from here:
The best part of this job is the exposure to all aspects of asset management and the buy-side of the capital markets. On a daily basis I'm exposed to everyone from our traders, the investment bankers, ratings agency analysts, our internal analysts, the quant team, middle office and operations professionals, financial advisers who's clients capital we manage, and the senior portfolio managers who call the shots.
An Update
Reading back over this little blog, I'm a little nostalgic about how introspective and serious I was in learning about myself. I'm definitely not nostalgic about how much I hated my old job, though! I like helping people, and if anything about my short career thus far is useful, or if you want more details on my job search, please don't hesitate to ask. I'll try to update the ol' blog with more of my musings on the accounting world, and maybe you'll find them slightly more interesting coming from my new perspective as a public accounting alumnus.
In that spirit of nostalgia and working on myself, I'll be posting a bit more for my own sake as well; I really enjoy the challenge of organizing and recording my thoughts and theories, and, looking back, I'm actually a bit impressed with the maturity of the ideas I recorded here.
I'll start off this latest blogging kick with a post about the new role and how I landed it.
In that spirit of nostalgia and working on myself, I'll be posting a bit more for my own sake as well; I really enjoy the challenge of organizing and recording my thoughts and theories, and, looking back, I'm actually a bit impressed with the maturity of the ideas I recorded here.
I'll start off this latest blogging kick with a post about the new role and how I landed it.
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