Could you work for a hedge fund?

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tomas123
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Could you work for a hedge fund?

Post by tomas123 »

I study geophysics, but have been offered a summer internship at a large hedge fund. I've also received several offers from oil & gas companies, so it's not like the hedge fund is my only option.

Initially I didn't even consider working for the hedge fund, but they offered me $10,000 a month :moneybag :confused versus the oil companies offering between $3000 - $5000.

Haha, I feel like I'm being lured into working for 'the bad guys'.

I honestly don't know why they even offered me a job... I don't know anything about economics. I even had to google 'hedge fund' to find out exactly what they do.

So, could you ever work for a hedge fund?

Edit: Maybe I should add that I'll be working in London, for an american hedge fund, if I take the job. All my oil & gas offers are for norwegian oil companies.
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mhc
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Re: Could you work for a hedge fund?

Post by mhc »

For $10k/mo for an internship, you bet. As long as it was legal.

You have to decide what your career path is going to be and see how a hedge fund would fit into that. The short term money could hurt you in the long run as far as developing your career in geophysics.
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Re: Could you work for a hedge fund?

Post by HongKonger »

Yes. I used to prepare pitch documents for hedge fund managers. I didn't study economics - I work in PR. What does that tell you.
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SSSS
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Re: Could you work for a hedge fund?

Post by SSSS »

Doing what?
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Re: Could you work for a hedge fund?

Post by Renaissance Man »

I don't think hedge funds are "bad," and if they are going to double your monthly income I would take it in a heartbeat. Just because you work there doesn't mean you have to buy the product.


EDIT: Plus I love London, and the Olympics!
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Re: Could you work for a hedge fund?

Post by ryuns »

mhc wrote:For $10k/mo for an internship, you bet. As long as it was legal.

You have to decide what your career path is going to be and see how a hedge fund would fit into that. The short term money could hurt you in the long run as far as developing your career in geophysics.
+1. Worth a try if it's lucrative BUT ONLY if it won't set you back in your "real" career. I always thought that, given the opportunity, I'd love to make 7 digit bonuses for a year or two and then retire, but it doesn't seem like people ever actually do this. I have noticed that the occasional dot com millionaire who now owns a winery in Napa.
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Lone-star
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Re: Could you work for a hedge fund?

Post by Lone-star »

Sounds like you have a once in a lifetime opportunity to experience a new country/continent (assuming youre from the US) and have enough cash to enjoy it. I'd go for it.
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tomas123
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Re: Could you work for a hedge fund?

Post by tomas123 »

SSSS wrote:Doing what?
I'll be doing research. They said that I'll do stuff that isn't hard, but it might take time, so they don't want to 'waste' their other employees time by making them do it.


I didn't apply for the job, I was at a career fair and somehow ended up talking to a recruiter for the company, who offered me the job a few days later.
Random Poster
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Re: Could you work for a hedge fund?

Post by Random Poster »

Does the $10K a month include housing? If this is sort of a mini-expat offer, get housing paid (either outright or via a stipend) and, if you are a US citizen, get your taxes grossed-up (and your US and UK taxes prepared at company expense). Would you get paid in USD or Pounds?
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Re: Could you work for a hedge fund?

Post by diasurfer »

If it doesn't significantly set you back in regards to your oil/gas career, I'd say go for it. Extra cash goes a long way when you're a student. Plus, you'll be exposed to a different industry, even if it's just grunt work. You don't want to look back 20 years into an unhappy career in oil/gas and wonder why you didn't look into that hedge fund thing a bit more when you had the chance. If you are happy in oil/gas in 20 years, you'll still probably be glad for a wider experience of places and things along the way.
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tomas123
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Re: Could you work for a hedge fund?

Post by tomas123 »

Random Poster wrote:Does the $10K a month include housing? If this is sort of a mini-expat offer, get housing paid (either outright or via a stipend) and, if you are a US citizen, get your taxes grossed-up (and your US and UK taxes prepared at company expense). Would you get paid in USD or Pounds?
I'm norwegian, not american. They'll pay for housing. I'll be paid in pounds, but my 'salary' will be in norwegian kroners. I'll receive the equivalent of 60,000 kroners/month in pounds, which is a little more than $10,000 at the current rate.
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Re: Could you work for a hedge fund?

Post by Fallible »

tomas123 wrote:I study geophysics, but have been offered a summer internship at a large hedge fund. I've also received several offers from oil & gas companies, so it's not like the hedge fund is my only option.

Initially I didn't even consider working for the hedge fund, but they offered me $10,000 a month :moneybag :confused versus the oil companies offering between $3000 - $5000.

Haha, I feel like I'm being lured into working for 'the bad guys'.

I honestly don't know why they even offered me a job... I don't know anything about economics. I even had to google 'hedge fund' to find out exactly what they do.
...
Although it's not quite the same, your comment above reminds me of Michael Lewis's great book, "Liar's Poker," in which he goes to work as a bond salesman for Salomon Brothers in London even though he knows little about that business. He eventually quits and becomes a financial journalist, and one of the best. If you haven't read 'Poker," now may be a good time. Good luck in whatever you decide. I would go for the hedge fund just to have the experience.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Could you work for a hedge fund?

Post by Rick Ferri »

I'm doing my civic duty as an index fund guy in this life time. In my next life, it's going to be all about me. I am going to come back as a hedge fund manager!

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reggiesimpson
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Re: Could you work for a hedge fund?

Post by reggiesimpson »

Its the "physics" thing with the hedge funders. "Renaissance" run by Simon in Stonybrook N.Y. (3rd most successful hedge fund at one point) typically hires Phds in physics and other hard sciences for the mental mind set. I believe the starting pay was $350,000?
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Re: Could you work for a hedge fund?

Post by livesoft »

I have a fund of Highly Esteemed Dividend Growth Equities. It's my HEDGE fund.
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Re: Could you work for a hedge fund?

Post by stratton »

Rick Ferri wrote:I'm doing my civic duty as an index fund guy in this life time. In my next life, it's going to be all about me. I am going to come back as a hedge fund manager!

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Dealmaster00
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Re: Could you work for a hedge fund?

Post by Dealmaster00 »

I personally wouldn't, as a software engineer. From everything I've heard software engineers get burnt out quickly working for hedge funds/trading companies. Sure, I might make more, but I'd be living in a higher cost of living area which would even things out, and I love the work-life balance I have now. I save more than 50% of my current income so I don't need more money anyway.

However, your situation is different. You aren't working full time, just an internship, and you aren't a software engineer. I'd go for it. Plus London is a cool city if you haven't been there before.
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Re: Could you work for a hedge fund?

Post by GregLee »

Sure, no problem. Sounds like a gas. Please let us know how it goes (to the extent that is ethical).
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Re: Could you work for a hedge fund?

Post by xerty24 »

Dealmaster00 wrote:I personally wouldn't, as a software engineer. From everything I've heard software engineers get burnt out quickly working for hedge funds/trading companies.
Are you sure they were burned out instead of (or in addition to) retired? Top notch financial software engineers can make $500k+. I know some people who wouldn't mind burning out on that after a few years.
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Re: Could you work for a hedge fund?

Post by crinkles »

I am sure geophysics would be much more satisfying than working at a hedge fund, just by virtue of you being at bogleheads! :sharebeer

job satisfaction is worth more than the money.
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Re: Could you work for a hedge fund?

Post by dad2000 »

I can because I have. If you're intrigued, try it. You'll learn a lot.

It's certainly not for everyone, and you will sacrifice elements of your personal life if you make it a career.
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market timer
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Re: Could you work for a hedge fund?

Post by market timer »

I'd definitely take the offer. Try something new in a new city. Oil and gas will still be there if you find finance boring.
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Re: Could you work for a hedge fund?

Post by sscritic »

I can think of lots of places/industries that I would rank below hedge funds on the good guy/bad guy spectrum. I won't name them, because we probably have lots of posters who belong to one or the other. They may be good guys as individuals, but I think their industries stink. So maybe that's your answer. If you want to be a good guy, it is up to you to be a good guy.

P.S. Who said oil and gas companies were good guys? Try reading the comments following any stories about gas prices on the web. Or do you believe that oil and gas companies have nothing to do with energy prices, that it's all a conspiracy controlled by hedge funds?

P.P.S. I don't.
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Re: Could you work for a hedge fund?

Post by ge1 »

This whole good guys vs bad guys discussion makes me laugh. Do people seriously think everybody working at a hedge fund is an evil trader whereas everybody at Vanguard is a saint?

Sounds like a fantastic offer, what are you waiting for?
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Re: Could you work for a hedge fund?

Post by Valuethinker »

sscritic wrote:I

P.S. Who said oil and gas companies were good guys? Try reading the comments following any stories about gas prices on the web. Or do you believe that oil and gas companies have nothing to do with energy prices, that it's all a conspiracy controlled by hedge funds?

P.P.S. I don't.
i think you are speaking rhetorically, but excuse me whilst I am going to answer this 'straight'.

Oil & gas companies are bad guys for environmental reasons, potentially, and how they lobby government policy on same.

Whilst there are nice bits of history where they did effectively collude to control oil prices (Standard Oil, and then the 7 Sisters) and to supply oil to the enemy at various points (WW2 and sanction busting against Rhodesia and South Africa, etc.)..

I doubt they have any control over oil prices now. And limited control (if any) over retail gasoline prices.

On the former the privately owned oil producers are a tiny fraction of world production: even Exxon, the largest, is barely in the top 10. We are in the era of the National Oil Companies (NOCs). The 7 sisters and their children are bit players. They are suppliers of technology and skills to the NOCs.

On gasoline they neither make good margins/ return on capital from their oil refining and petrol retail businesses. In fact many investors want them to separate out those less proffitable activities from Exploration and Production and spin them off.

As to hedge funds if they have any influence on oil prices it's brief and transitory. Hedge Funds going long tends to attract short sellers, and vice versa. They don't control enough storage to meaningfully change global oil prices (they may be able to arbitrage and or manipulate benchmark prices and/or localised markets).

So who controls oil prices?

OPEC? Almost certainly not, because countries ruthlessly cheat on their quotas.

Saudi Arabia. One is on stronger ground here, but the assumption that the Saudis can, geologically, physically or in terms of their own government fiscal position, flex oil production by large amounts is probably wrong. Despite record prices production has hovered around 10.5m b/d ie their maximum ever. They don't seem to be able to produce more.

The power Saudi Arabia once showed in the 1970s and 80s to flex world oil prices just is not there any more, on the evidence.

So the culprit?

Supply and demand. In an environment where demand is short term price inelastic, and even in the medium to long term still in structural growth (China and other emerging markets). Gasoline is still cheaper than Coca Cola or bottled water in most places, and so western societies are still built around relatively cheap oil.

New supply, when it comes, comes in huge lumps after heavy investment. So short run almost completely price inelastic.

Inelastic supply and inelastic demand means big price jumps. *really big* price jumps.


Explanations which seek to personalize the culprit for high oil and gasoline prices are a classic case of externalization of what is, in fact, a symptom of a hydro carbon dependent civilization that treats oil as being less precious than it is. Rather than admitting that, in the immortal words of Pogo, 'We have met the enemy. And he is us'.
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Re: Could you work for a hedge fund?

Post by Valuethinker »

tomas123 wrote:I study geophysics, but have been offered a summer internship at a large hedge fund. I've also received several offers from oil & gas companies, so it's not like the hedge fund is my only option.

Initially I didn't even consider working for the hedge fund, but they offered me $10,000 a month :moneybag :confused versus the oil companies offering between $3000 - $5000.

Haha, I feel like I'm being lured into working for 'the bad guys'.

I honestly don't know why they even offered me a job... I don't know anything about economics. I even had to google 'hedge fund' to find out exactly what they do.

So, could you ever work for a hedge fund?

Edit: Maybe I should add that I'll be working in London, for an american hedge fund, if I take the job. All my oil & gas offers are for norwegian oil companies.
Yes give it a try.

But be sure and constantly ask yourself, and at least mentally of the people around you:

'do they really love this stuff? Or is it just the money?'

because with a graduate degree in geophysics you will never want for a job, and you will have an interesting and remunerative career-- you'll own a home (even at Norwegian tax rates ;-)) travel the world etc. In finance you could make far, far, far more, but it also has certain sacrifices.

if you really love it and can tolerate the people, then great. At this stage in your life and career, even negative information is a very good thing.
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tomas123
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Re: Could you work for a hedge fund?

Post by tomas123 »

Thank you all for the responses.

I'm probably going to take the job. Will be fun to try something new!
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Re: Could you work for a hedge fund?

Post by Muchtolearn »

I have had recently many interactions with hedge funds. You basically get full disclosure at hedge funds. They admit that the ONLY purpose is to make money. Now admittedly that is the purpose of all businesses but these guys do not even attempt to indicate some type of societal good unilike the other companies that at least say they do. I could never and would never work for one of these groups.
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Re: Could you work for a hedge fund?

Post by market timer »

Muchtolearn wrote:I have had recently many interactions with hedge funds. You basically get full disclosure at hedge funds. They admit that the ONLY purpose is to make money. Now admittedly that is the purpose of all businesses but these guys do not even attempt to indicate some type of societal good unilike the other companies that at least say they do. I could never and would never work for one of these groups.
Efficiently allocating billions of dollars of capital is a social positive.
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Re: Could you work for a hedge fund?

Post by Jack »

market timer wrote:Efficiently allocating billions of dollars of capital is a social positive.
Ah, yes, because the financial sector has done such a bang up job efficiently allocating capital recently. One could argue that the financial sector has destroyed more wealth than it has created in the last couple of decades. With 40% of all corporate profits accruing to the financial sector, you could call Wall Street the biggest tax on business and a net drag on economic growth.
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Re: Could you work for a hedge fund?

Post by Nathan Drake »

market timer wrote:
Muchtolearn wrote:I have had recently many interactions with hedge funds. You basically get full disclosure at hedge funds. They admit that the ONLY purpose is to make money. Now admittedly that is the purpose of all businesses but these guys do not even attempt to indicate some type of societal good unilike the other companies that at least say they do. I could never and would never work for one of these groups.
Efficiently allocating billions of dollars of capital is a social positive.

Is it truly efficient when they have had worse returns than US treasuries over the past 16 years, net of fees? Their investors have been fleeced.

The only thing that they've been efficient at is allocating that capital to line their own pockets with 2% fees and 20% of profits.
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Muchtolearn
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Re: Could you work for a hedge fund?

Post by Muchtolearn »

market timer wrote:
Muchtolearn wrote:I have had recently many interactions with hedge funds. You basically get full disclosure at hedge funds. They admit that the ONLY purpose is to make money. Now admittedly that is the purpose of all businesses but these guys do not even attempt to indicate some type of societal good unilike the other companies that at least say they do. I could never and would never work for one of these groups.
Efficiently allocating billions of dollars of capital is a social positive.
Whatever you say. I am no leftist by any means. There is maximally efficient allocation that hedge funds do: take over businesses, cut to the bone and sell. A little less efficiency in the original businesses might yield slightly lower profits but keep more people employed. But you have a stake in this game, I don't.
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Re: Could you work for a hedge fund?

Post by fareastwarriors »

Do it. Sounds like a good experience under the belt.

I associate it to like working at Goldman Sachs for few years and then going on to doing whatever you want.
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Re: Could you work for a hedge fund?

Post by xerty24 »

Muchtolearn wrote: There is maximally efficient allocation that hedge funds do: take over businesses, cut to the bone and sell. A little less efficiency in the original businesses might yield slightly lower profits but keep more people employed. But you have a stake in this game, I don't.
Sounds like PE or hostile takeovers more than typical hedge fund tactics, but that's just semantics. I don't see why efficient capital allocation or business practices should be trying to preserve jobs. If you can crank up the ROC/ROE metrics and stock valuation by firing a bunch of people and over working the rest because the labor market sucks now and the employees will take it, that's what should happen. Maximizing employment is some weird Fed/socialist goal that has nothing to do with efficient markets - get those people fired and retrained for something else useful instead of sitting around taking it easy in their present job.
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Re: Could you work for a hedge fund?

Post by Valuethinker »

fareastwarriors wrote:Do it. Sounds like a good experience under the belt.

I associate it to like working at Goldman Sachs for few years and then going on to doing whatever you want.
Getting out from that is harder than it looks.

Partly because one gets socialized to the money and the 'importance' of it all. A bubble full of very smart people.

Partly because the outside world does not necessarily value the skillset. Most jobs in finance are quite specialized. Yes, great, if you can make MD, last to 50, avoid the expensive divorce, retire on the money you have earned. Then you still have to fund yourself for another 35 years, though.

A B School you have 2 groups of people at the start:

- those who have worked for investment banks, and vow never to work for them again

- those who want to get jobs at investment banks via the MBA

Many of Category One find themselves 'bank to banking' because it turns out to be quite hard to get a job at Google or GE or whatever post ;-). ;-).

The M&A departments of big corporates (ie people who work for companies and have in some sense admitted defeat on Wall Street) are full of ex investment bankers who wanted to see their kids. But it's something of a career trap.

Of course lots go into Private Equity. But that door is probably closing a little: most M&A/ Leveraged Finance bankers probably want to work in PE, but the funds are probably not going to grow at the rate that they have, and a lot of firms will shut up shop.

Generally if you are young and very bright, I would suggest 2-3 years at McKinsey, Bain etc. is more likely to serve you well in your future career. Rightly or wrongly, a management consulting experience is seen as broader than a finance one. Does depend on what projects you get staffed on, though.
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Re: Could you work for a hedge fund?

Post by House Blend »

Valuethinker wrote:
fareastwarriors wrote:Do it. Sounds like a good experience under the belt.

I associate it to like working at Goldman Sachs for few years and then going on to doing whatever you want.
Getting out from that is harder than it looks.

Partly because one gets socialized to the money and the 'importance' of it all. A bubble full of very smart people.

Partly because the outside world does not necessarily value the skillset. Most jobs in finance are quite specialized. Yes, great, if you can make MD, last to 50, avoid the expensive divorce, retire on the money you have earned. Then you still have to fund yourself for another 35 years, though.

A B School you have 2 groups of people at the start:
Maybe, but I don't think any of this is relevant for the OP. S/He is trained in geophysics. For the kind of work s/he would be doing, an MBA would be a disqualification.

I know quite a few academics who answered the siren call of quant work on Wall Street, only to return a year or two later with a renewed appreciation for the ivory tower. (Granted, the academia <-> quant pipeline may not be relevant for the OP either.)
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