How to be Valuable In Investment Management

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On How to be Valuable in the Investment Management Business by David Merkel, CFA of Aleph Blog

I love my readers.  Here is another question from a reader:

I would appreciate your advice on how to learn more about investing and how to make myself useful to people in the business as a step towards getting in.

There are two questions here:

  1. How to learn more about investing?
  2. How to make yourself more valuable to prospective employers (so that you might be hired)?

So let’s answer them:

How to learn more about investing?

There are three main answers here:

  1. Study the classics
  2. Study areas where there are current problems
  3. Read widely

When I talk about the classics, I am talking about the writings of Ben Graham, Buffett, Munger, Phil Fisher, and notable investors who have spilled their theories to the world.  Also men like Seth Klarman, Howard Marks, Ray Dalio, George Soros, Bill Gross, Jeffrey Gundlach and other clever investors who understand the markets well.

Second, if there are current problems in the market, do your research, and try to understand them well.  This may take more effort, because current problems are not well-understood, or they would have been solved already.

The correct answer is not immediately obvious.  Prior to the crisis, it is a minority view.  After the crisis, everyone knew it would happen ;) .

Try to view the markets in a comprehensive way.  Think of the buyer and the seller, and their motives.    Look for minority opinions, and analyze them — maybe that have it right.  Most of the time, you will throw their opinions away, but in rare cases you might find something valuable.

Finally, read widely.  Try to understand the changing economy. and where value is being added where current valuations don’t reflect it.  Understand the economic world, and dedicate time to it.  I dedicated an hour par day while I was an actuary to understanding all manner of investments for ten years before I had my first job in investing at age 38.

And read economic history.  It is very valuable to understand how things worked in the past, because it offers clues to those of us in the present who don’t think “It’s Different This Time.”

How to make yourself more valuable to prospective employers (so that you might be hired)?

First, prepare yourself.  If you are not good at speaking extemporaneously, practice the things that you will say in an interview.  Think about the most likely questions, and likely variations, and have your answers ready.  Rehearse these answer in front of a mirror, and do it many times, until you have it down cold. (solid).

Second, do your research on the firm, and understand its problems.  You don’t have to have the whole answer, but if in the interview, you understand the challenges, and have some idea of how they might be addressed, you will impress those interviewing you.  You have done the homework; you are more than capable of analyzing other tough issues.

Third, be willing to question the received wisdom, and suggest solutions that are abnormal.  So long as you don’t sound like an idiot, this will do one of two things:

  1. You will come up with a clever idea that no one else has thought of, or,
  2. You will show yourself to be willing to think more broadly than most do.  Remember, it only takes one significant insight to establish a career.  Of course, more is better, but one significant insight will do a lot.

Fourth, be good with the basics.  Understand the basics of investing well.  Just as a kid should know his 100 addition, subtraction, multiplication, and division facts cold, so should investors know the basics of investing without much effort.

Fifth, give it your all.  Show dedication beyond what is required.  I’m not asking you to kill yourself, I did this while raising a family of eight children.  But whatever the situation is, give it your best, even if you have to take some of the work home.

If you do these things, you will be very valuable to the firm that you serve.  Even more, you will be valuable to many firms that might like to hire you.

So make yourself  valuable, and prosper.



About the Author

David Merkel
David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.