What Jobs Prepare You for Running a Value Fund? – Geoff’s Advice to a College Senior

https://www.gannononinvesting.com/blog/what-jobs-prepare-you-for-running-a-value-fund-geoffs-advice.html

A reader sent me this email:

I am currently a senior in college and well underway with my job search. I have, since grade school, been devoted to the works of those prominent within value investing…Since about the same time I have managed a personal portfolio geared toward their ideas. Ideally, I see myself within the next ten years starting a value-oriented hedge fund. The issue that I have been pressed with lately is what type of job to get now, knowing… managing people’s money through a fund is eventually what I want to be doing…do you have any perspective or advice in terms of the types of jobs that would better prepare me for eventually running my own fund?

It’s hard to know what experience will be worthwhile.o

Graham started as a bond salesman. He was a terrible salesman. But he learned Lawrence Chamberlain’s bond book. You can read Graham’s early writings and see that all Graham really did was apply the ideas of bond investing to common stock investing. That was revolutionary. If Graham had learned stock investing the way it was practiced in his day, would he have taken the same revolutionary approach?

Probably not.

Peter Lynch was an analyst. That probably taught him how to run a fund his way. Lynch was big on meeting with management and finding the exact moment when a company’s fortunes were turning. That’s analyst stuff.

Charlie Munger was a lawyer. Michael Burry was a doctor. What does this tell us? Nothing really.

The important thing is that at some point you get completely and totally focused on investing. What you did professionally – even if it was in finance – is often very secondary. It might be meaningless. A lot of investors learned more in their off hours than at their job.

But can you combine learning investing and a career?

You can certainly try.

Here’s how…

Find people you respect. Phil Fisher was not a value guy. Warren Buffett had a lot of respect for him. Try to work for someplace you think does what they do well. 

My other advice is to choose someplace smaller and younger.

You can always go to a bigger place later. If you have a choice, pick someplace where they might actually let you do something. Go someplace where there’s more work than workers.

And then just stay in touch with all the value people you meet. Don’t just send me one email. Keep emailing me whenever you have an idea.

Write down the names of any bloggers, analysts, reporters, fund managers, anyone you come across that you respect. You like an insight of theirs or whatever. Write the name down and keep the name. Contact them. If you can make it about a specific stock and tell them something they don’t know, they’ll listen. Keep talking. Do the maximum amount of socially acceptable conversing about stocks.

Make it a rule to never say “no”. If someone asks you to do anything investing related – whether it’s for pay or not – always say yes. You’ll learn something. They’ll remember your name.

Your best bet in any industry is to find people you respect and then figure out a way to do them a favor. Repeat that over and over while working at whatever job pays the bills. Write an investing blog. Manage your own account. You’ll do fine.

By the way, the most important thing you did was get into stocks at a young age. If you’ve been reading about Buffett and Graham and buying stocks for yourself since before you were in high school, you will be successful as a professional value investor.

How skilled you are at investing is mostly a result of how long and intensely you’ve practiced. A lot of great value investors were very good when they were very young. They just weren’t recognized at the time.

 


Hi Geoff,

…I’m a 33 year old Italian guy (so please excuse my English) and I have read your articles on Gurufocus since years.

…I’ve a question. I started to have an interest in stock market in 2007, and immediately I understood that the best approach was value. When I’ve read Graham I understood that stock market is job for my life and in 3 years I took a degree in economics… I would like (to) ask… you if in your opinion there is a place where a 33-year old guy could work as analyst to make experience and, why not, start my own hedge fund?

Thank you so much,

Mirko

 

That’s a hard question to answer. There are lots of places out there. But there are also lots of would-be analysts looking for places to work.

I could give you a list of names of value-oriented investment firms. But it wouldn’t do you much good. For one thing, my guess is that if you do end up getting a value investing related job sometime in the future it’s as likely to be with a fund that doesn’t yet exist as it is to be with someplace I could name now.

Your best chance to get seriously considered for the kind of job you want is if someone you know needs to build a research team from scratch. In fact, I witnessed this exact scenario happen last week. Somebody utterly unknown ended up at the top of the pile for an analyst job, because the guy heading the team knew him and thought he was good (great actually). Without that personal connection, there’s no way he’d even have been considered for the job. And he would have had a much harder time filling an existing position. The lucky combination for him was that the position was brand new and he really impressed the right person ahead of time.

Of course, he didn’t know that was the right person to impress when he impressed him. When he impressed the guy, there was no position. Because the guy he impressed wasn’t even at that firm yet.

You see my point. People move around. It’s easy to think you should focus on some place specific. But it’s more effective to just go around impressing people with your amazing work regardless of who their current employer is and whether there’s any hope of them hiring you right now. If you’re really good, they’ll remember you. And if they’re really good, they’ll get the chance to hire someone at some point.

Do you have any research to show people?

Your best bet is to do lots and lots of research for free and then let it get into the hands of someone who can hire an analyst. Are you reading a lot of value investing blogs – or just articles like mine?

Make sure you are reading blogs.

Try to talk to everybody whose work you respect by sending them an email. Share your best ideas with them. Send them research reports you’ve written that you know they’d be interested in reading. At first, they will be interested because you will send them a research report on a stock that you know is the kind of stock they’re interested in. But, later, if your research is good they will want to read whatever you send them regardless of the kind of stock you choose to write about.

Do you have a blog? If not, you should definitely start a blog of your own. Write it in English. Just put a little “about me” section in the corner that mentions you’re Italian. Readers will understand. They’re more interested in your ideas than your grammar. Keep your ideas simple, clear, etc., and any problems with language will be a minor obstacle for readers to overcome. Obviously, you can write research in Italian. But, frankly, English is the lingua franca of stock research. You know English. So you should definitely write in English. That will help you get your research read by people who can help you out.

Having said that, you should take advantage of the fact that you are not just another American writing about stocks. The world has enough of those. You live in a place and have experience with places that most stock analysts do not have. If you know of interesting Italian companies – focus on them. I would say you should split your time evenly between Italian companies and companies that would interest anybody around the world. Switch off writing reports from one category to the next. Alternate from writing about Italian stocks and non-Italian stocks. You will attract readers from all around and you will become known specifically for writing about Italian companies – most of which will be new to your readers.

You should be on Twitter. Follow bloggers, article writers, etc. Tweet each article, report, etc. you write. Because of your concerns about writing in English and your interest in research, I would suggest only writing research-heavy articles. Stick to specific stocks. Include lots of tables. Make your points in bullets, lists, etc. And then proofread what you’ve written as best you can.

If you try to write more general articles about investment philosophies, how you think about investments, etc., you might feel your English is not good enough and it’s hurting those kinds of articles. But, over time, you will feel comfortable putting your writing out there – in English – on any topic. So, eventually, you can write about any topics you want. But I’d start with specific stock research first. This is the best kind of writing for showcasing your skills anyway.

When you have a report about a specific company that might interest someone you should send them the report as a PDF attachment to an email. Start your email by (quickly) introducing yourself. Then flatter them a bit about how much you like their blog, articles, something they wrote, etc. Don’t ever say anything untrue. Just omit references to anything you didn’t like. The more personal and honest you can make this (very brief) intro about who you are and how you know them – the better. Okay. Then attach your report as a PDF. Say a few words about the stock and the report. Just enough to get them to open the report. It’s not necessary to “sell” the report very hard. If you sounded like a sane and interesting person and they’re interested in the stock – they’ll open the report. If you came off as a wee bit crazy, a tad boring, or you wrote about some stock they have no interest in – they won’t read the report. So don’t be a salesman. Just be yourself.

The two most important parts of all this are to interact as much as possible with the people you respect most and to keep putting out good work of your own.

If you do those two things, you’ll have done everything you reasonably could to land your dream job.

Now, all of this is meant as a suggestion for your particular situation. I made these suggestions because I know you’re:

1. A value investor

2. Interested in the stock market as your “job for life”

If you’re just interested in finding any job related to Wall Street (and maybe making a lot of money) I’d probably have a different set of suggestions. My assumption here was that you’re only interested in value investing. And you’re interested in actual research and stock picking. That narrows the number of opportunities a lot.

On the other hand, the Internet is a very good place to learn about value investing and to connect with other value investors. Try to do both.

Don’t quit your day job. Just set aside time to writing and reading about value investing every single day. It doesn’t have to be a lot of time. You’ll find you are extremely productive working just one hour a day writing about stocks if you really do put in an hour every day and you keep that time sacred and untouchable no matter what else is going on in your life. If you can do that, you can produce a ton of written material. Assuming you are good at the actual research part of the work, the stuff you write will be good. And people will be interested in the ideas you have. Anytime someone encourages you, keep sending them your stuff. And keep writing a blog of your own.

Try to spend all your time online at value investing sites. Don’t waste time at other sites. You can spend your time here at GuruFocus or at the many excellent value investing blogs around the web like:

Whopper Investments

Value Uncovered

Oddball Stocks

Variant Perceptions

Interactive Investor Blog

And so on…

There are many, many excellent value investing blogs. Use a service like “Netvibes” to keep track of all the blogs you read. Read them whenever you get a chance. And then email the authors of the blogs you like best. Send them something that is impressive, thought out, etc. Do in-depth research on one of the stocks they wrote about. Or send them one of your own very best ideas. Don’t send them your casual thoughts. You don’t want them to think of you as someone to chat with. You want them to think of you as a thorough, insightful researcher.

Okay. Now how do you get a job?

Probably not the way you think. I’ve gotten several value investing-related job offers over the years – and none of them came from me actively seeking a particular position. Basically, I was referred by someone each time. There was probably a conversation where someone mentioned they really need another writer, analyst, fund manager, etc. and they didn’t know where to find one. Someone else said: “I know.” And they looked around for someone. In each case, the position was extremely specific. That’s why they weren’t looking to interview a hundred people. Two offers were from people specifically interested in someone who could invest in micro-cap stocks. Especially net-nets. And possibly worldwide. I’ve written about lots of micro caps, some net-nets, and I’ve mentioned that I’ll buy them worldwide. I’m sure that’s why I was considered for those jobs. Basically, it’s just a really, really tiny pool of people who have dealt in stocks like that. So they couldn’t have had very many people to choose from.

But to be honest, the biggest reason is obviously the writing. When people read a lot of things you write, they start to think they know you. There’s a tendency to believe the kind of writing I do a lot more than you believe a resume. There’s just a feeling that you know the writer better.

Finally, because you’re Italian you should look for anyone in Italy who is value oriented. It’s a small group. Learn what you can about them. Strike up an online correspondence if you can. And, if you can’t, follow everything they do. Become an expert on Italian value investors. It can’t hurt.

Now, I’m sure there’s some people reading this thinking I’ve just given you some very dumb advice. This is not the way to get hired.

That might be true. They’re might be quicker paths.

But I do know some people who went from “didn’t even know value investing existed” to being an analyst at a value-oriented firm in just a few years. What you did before you caught the value investing bug is not important. I know people with backgrounds ranging from math to law to engineering who became research analysts and – in one case – a fund manager.

So don’t worry about your past. Just worry about doing best work you can and sharing it with the best value investors you know.

The important part is having good ideas. And sharing them.