Advice from Hedge Fund Manager – Edward Misrahi
Investing isn’t a science, it’s not about reading more books and doing spreadsheets.
The problem in investing is that there is no substitute for two things:
1. Experience: get time under your belt
2. Thinking independently: have to learn to think for yourself and understand that there is no one way of doing it. So go develop your way of doing things.
The core investing principles haven’t changed – the goal is to buy low and sell high. That’s it. The rest is over complication. So if it doesn’t work, you shouldn’t do it. Don’t be captive to a technique or philosophy. Find and do what works for you.
Finance is a place where you can be successful quickly and at a young age. But that can also create a perception that you have to do it quickly. You don’t. Think about a doctor, a surgeon.
You have to train, be patient, learn. It takes time. Don’t be in a rush. Its key to ask who you can work with, rather than what you are doing. Your teachers matter.
1. Interest and intellectual curiosity for markets
2. Independent thinking – think and come to your own ideas.
Learn to write well: this is critical in business. You have to be able to articulate yourself clearly and professionally.
Present well: 50% of being at a hedge fund is communication. Critical to success.
Become an entrepreneur. Learn big skills. Technology will dis-intermediate everything, so he would create something, for example how to use technology to do things differently. He would join a large institution just for the training program, so he could learn.
Biographies: Find the key insights from a person’s life. What made them great. Even one or two big insights from a book make it worthwhile.
1. Electronic trading
2. Mutual fund industry is changing: getting smaller & more transparent. Any mediocre product is being disinter mediated. You either provide alpha or the money goes to an ETF.
3. Technology in investing: means that markets have become more rule based. Whether its impact of ETFs, indices or ratings. Fundamental investors need to feed that into their analysis also on top of the core fundamental analysis they do.
Credit markets have grown beyond scale. Its a difficult market to understand. Its a complex, very large and less regulated market, and recent regulatory changes have made it much harder tho trade. This is very challenging.
Go ahead, see what you’ve been missing.
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