After 30 years in finance, David Goldburg’s dream was fading. His resume was good. Goldman Sachs prop desk. Managing money for Michael Milken. He tried to start his own hedge fund. His timing was bad. It didn’t work. David Goldburg Source: David Goldburg He couldn’t land a job. He networked. Met with headhunters. All he got was a sharp sense of his options narrowing. At 55, he was too expensive. Hedge funds, many of them hurting, could hire two or three youngbloods for the price of a Goldburg. Graybeards even created a name for the process: “juniorfication.’’ “It’s pretty brutal out there,’’ said Goldburg, who eventually found a job outside hedge funds. “If you have more than 15 years experience, and you want to transition to something else or want that next level of opportunity, there’s never been a worse time.’’ Facing ‘Headwinds’ Analysts as young as 30 are facing what they might call “headwinds’’ in a changing Wall Street. Automated trading, a world awash in data and passive investing have made stock pickers less influential. Hedge fund fees are down, making analysts targets for cuts. European regulations have put researchers out of work. And in a 10-year bull market juiced by the Federal Reserve’s low rates and bond buying, insights more expensive than “buy the dip’’ cost too much. Analysts at hedge funds, many of whom had been hired away from investment banks, do everything from grunt work to coming up with ideas for portfolio managers to trade. The lousy environment for them is a reflection of the dimming outlook for hedge funds. In the last three years, nearly 400 more hedge funds around the world have closed than opened, according to Hedge Fund Research. Read more about how hedge funds are struggling, even in volatile markets, here. That means not only are there more people looking for work, there’s little or no movement in existing jobs. Senior analysts who in years past would’ve gone on to start their own funds aren’t going anywhere, so there’s stagnation on the organizational chart. The surviving so-called single-manager firms, even the ones managing tens of billions, are running leaner, said Ilana Weinstein, founder and chief executive officer of IDW Group, a hedge fund recruiter. “If we think about the death of the analyst, I think you have to go up one level and talk about the death of most hedge funds,’’ Weinstein said. Just yesterday, Dmitry Balyasny cut at least 125 people from his eponymous firm, or about one-fifth of employees, according to people familiar with the hedge fund. Few analysts are in dire straits. Many of the senior ones were, or still are, making mid-to-high six figures, with plenty of upside in a good year. But many are also facing something worse -- the panic that comes with realizing their career aspirations will never be attained. They may never make partner or run their own firm. They’re stuck. “Everybody’s miserable and everybody’s trying to grind it out,’’ Goldburg said. “Everyone wants that better opportunity and that better job, but they don’t exist. And no one wants to leave their existing seat because if you leave your existing seat, it’s like musical chairs -– you might not be able to get another seat.’’ Analysts also have to contend with offshore competition. Software company Linedata Services has 35 former sell-side analysts based in Mumbai helping 14 clients, mostly hedge funds. Shrinking Assets “They’ve let people go due to their assets shrinking,” said Jonathan Shapiro, a Linedata senior director. “We provide them with someone who’s just as qualified and is ready and eager to do that work for a fraction of the cost.” What are the options? Big multi-manager platforms, like Citadel, are hiring (and firing) by the dozen. With the benefit of Europe’s MiFID II finance rules, boutique research firms are also growing. And some analysts mention another path: ditching their job analyzing an industry to actually join the industry. Quentin Koh, a former analyst at a macro fund, watched as data and computer scientists increasingly edged out fundamental analysts. Now he’s doing something about it. At 30, he’s got the flexibility many of his older peers don’t, and a shot to steer his career down a more lucrative path. Earlier this year, he quit his job to learn to code.
His resume was good. Goldman Sachs prop desk. Managing money for Michael Milken. He tried to start his own hedge fund. His timing was bad. It didn’t work..... Simplified - you're either on the right side or the wrong side of the market - One thing people fail to recognize is that there's a huge difference between working for others earning a comfortable salary and then going out on your own where you only eat what you kill because the bills don't stop coming in and you need money to survive. Things change when you must perform to make money and the losses are your losses and no longer absorbed by the firm. Trade on! 322170
What was his problem? He is an industry veteran and probably had 500 solid connections. Why not start with 14 clients (no registration required) with 2/20 or 2/10 fees structure, one man and secretary/assistant show, no fancy overhead at all and hope for a good performance and build from there on. This he could have done even on side to a full time job. Also, people like him are not willing to take a salary cut just to stay in the field.
They are making mid-high six figures each year and they can't get enough capital saved to start their own fund? People earn lot less and they quit their job and start their own trading career. Of course "that better job" does not exist; you have to create it yourself. And if you are good enough, once you leave your existing seat, you would get a better seat. If you can't trade, you can't trade. If you can, no matter where you are, what's your age, you will be able to trade.
I almost felt sympathy until I read this: Few analysts are in dire straits. Many of the senior ones were, or still are, making mid-to-high six figures, with plenty of upside in a good year. But many are also facing something worse -- the panic that comes with realizing their career aspirations will never be attained. They may never make partner or run their own firm. They’re stuck. That's akin so saying they have to settle for a huge home, a second home in the Caribbean, a Rolls-Royce and 2 maids. But they will never own a private jet or an island . These are the real victims!
Most people want the comfort and security of a firm when things are less than good and all the benefits when things are great. Of course mathematically this does not add up.
In the early years, the high fees and high incomes in the HF industry were a product of market beating abilities, usually with pretty simplistic techniques. Risk taking was encouraged and rewarded with 20% or 30% incentive fees. These days that magic is long gone and HF industry on average is returning single digits ROR so the traditional fee structure is looking pretty silly. The buffoon featured in this article likely was a team player all those years doing the trades everyone on his desk was doing. He probably has no independent risk taking or return generating abilities. If a HF hired him today, he might be worth $100k a year at best.
he's in for a rude awakening. Good luck trying to keep up with crack.js and cr4kc.js Love this phrase.