Another letter from a reader:
Warren Buffett’s 2018 Activist Investment
Most investors are aware of Warren Buffett's most high profile long-term investments. However, there is one long term investment that is often overlooked. Q2 2020 hedge fund letters, conferences and more This is building materials maker USG, which was owned by Berkshire Hathaway for more than 17 years before it was acquired in 2018. If Read More
I am an avid follower of your blog and find your insights tremendously helpful in aiding my own decision-making framework.
An opportunity was recently offered to me, and I hope you can provide some guidance, given your vast experience in both the fixed income and equity fields.
As background, I am 29 and have been in the finance-investment industry for just over seven years. The first couple of years were spent at a discount brokerage, primarily in a trading role. After that I joined a group called the ZZZZZZZ, which provides advice to the 1,500 investment advisors in the YYYYYYY channel. Over the last several years, I have worked as an associate on the NNNNNNN Equity Team and later moved on to a role that provides coverage for ETFs, mostly from a product perspective but also increasingly from an asset allocation standpoint (i.e. portfolio construction, macro commentaries on major and sub-asset classes).
Several positions have recently opened up on the Fixed Income Desk. My understanding is that the job will involve a lot of relative value analysis of individual securities, including preferred shares. I have spoken to several people regarding the potential opportunity, and the main theme that has emerged is that fixed income is generally less exciting and more technical, whereas equities is more of an “art”, which I don’t necessarily disagree with. Having said that, the fixed income position would offer what I would consider valuable experience in looking at debt instruments and some exposure to bond trading, which are areas that I have close to zero knowledge.
In any case, you probably have fielded similar questions in the past, and with your experience, likely have some invaluable insights to share. Any guidance on the potential switch from equities/ETFs to fixed income would be much appreciated.
It is easier to move from bonds to equities than vice-versa. The mindset that embraces risk does not easily embrace a more risk-constrained setting.
That said, I would encourage you to pursue the opportunities on the fixed-income desk. It will broaden you. My years in fixed income prepared me for what I do now. Understanding fixed claims and variable claims creates a robust investor.
Think of it as a 3-5 year stint in fixed income, which will make you a richer candidate for other roles in investment banking.