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Your Turn to Be a Portfolio Manager – Part 2: The Winning Interview Candidate

Your voices have been heard! In Part 1 of “Your Turn to Be a Portfolio Manager,” we read about two interview candidates, Peter and Dale, who were vying for the open equity analyst position at our fictitious hedge fund, LBS Capital.

Today we'll crown a victor because, well, there can only be one winner. We’ll save the politically correct “everyone’s a winner, yeah!” mindset for someplace other than Wall Street.

In this post we tackle some very serious issues, including:

  1. Why LBS readers are so smart,
  2. Why I’m an idiot and rich man’s problems,
  3. Why the passion is mightier than the pretty,
  4. How to demonstrate your passion through your PA, and
  5. Why you need to make your voice heard once in a while.

These bullets might seem a bit esoteric and unfit for the subject of finding a job on Wall Street, but I promise that these will help your search. Now, without further ado, the winner of the equity analyst position at LBS Capital is …

Peter Wins By a Landslide

Perhaps I was too obvious in my first post, or perhaps I have taught you well. Peter won the Facebook poll by a landslide, and that’s what I expected. Rather than admit I was too easy, let’s go with “You are all geniuses” and call it a day. (A little ass-kissing of loyal blog readers never hurt anyone.)

As the cliché about real estate goes, there are only three things that matter when trying to break into investing:

  1. Passion for investing.
  2. Passion for investing.
  3. Passion for investing.

If you possess all of the above, then you will stand out above the other candidates, ceteris paribus. Of course, the “ceteris paribus” part can be blown to bits with a strike against you, such as a horrific GPA, a lengthy prison rap sheet, or the fact that you wear skinny jeans and are a Twilight fan. But more on that later …

“You’re an Idiot. I Picked Dale and I’m Sticking to It.”

Choosing between two high-quality candidates is what we call a rich man’s problem. Both candidates have excellent credentials and both would be able to serve the equity analyst role in a heartbeat. We aren’t beggars, though, which means we can be choosers.

If you ever find yourself in a situation where it’s Dale and you in the final round of a job search, remember that passion trumps pretty every time. If you believe the forums, then you think the only way to get a job on the buy side is to go to a top tier school and then get some prestigious investment banking experience. All others are doomed.

Wrong. Wrong. Wrong.

Pretty helps, but it’s not sufficient to land a job managing money. Take a look at any job ad for buy side analyst positions and almost everyone will list “Passion for investing” as an applicant requirement. This is not there for filler, it’s true.

It’s unclear from the interview or his resume that Dale is passionate about investing. He has all kinds of shine emanating from him, but if he can see himself doing investment banking or private equity instead of public markets investing, then why should we take the chance that two years from now he decides he’s bored with the public markets and wants out?

Dale has the skills. It’s just not clear that he has the passion.

Why Passion Trumps Pretty

Jobs are scarce on the buy side and in equity research. These businesses are not churn-and-burn finance factories like entry-level investment banking programs are. Personnel turnover is bad for business. The institutional and retail investors that give you their money must trust you.

Ask yourself these two questions: Would you trust your money to a shop that has three analysts, each with one year of experience? Or would you trust the shop with three analysts, each with 10 years' experience?

The answer is easy.

If you break into the business, one reason will be because the person hiring you expects you to be in the business for a long time. This is where Peter wins over Dale.

Dale might turn into a fantastic investor one day, but if we hired him we’d always be wondering if he’s tired of investing and is looking for his exit opportunity. With Peter, the odds of him staying and working hard to advance are much, much higher.

Minimum Standard Applicants Only

Peter wins in a landslide because his other attributes classify him as “good enough.” Now, suppose Peter had one of the previously mentioned maladies—perhaps a clinical obsession with Bieber—then even a passion for investing wouldn't bail him out.

If you want to make the big bucks on Wall Street, then you need to prove you belong. If one part of your resume is bad (e.g., your GPA), then you damn well better make up for it somewhere else (e.g., with your internship experience or investing experience/activities).

Don't expect to land a position managing money with a resume full of Fail. If you've failed somewhere, go out and find a way to succeed somewhere else to make up for it.

Passion for investing is the secret ingredient that will win you the job in the final round, but it won’t get you to the final round on its own.

No One Gives a Shit About Your PA ...

Here’s a bit of industry lingo: PA = Personal Account.

Here’s a bit of unfiltered advice: No one gives a flying monkey’s shit about your PA. Day-trading your $2,000 account does not qualify you to manage a $2B fund. And without any analysis to support your trades, the PA just shows you are an adrenalin trading junkie who is no doubt a fan of casinos.

These are not the coveted traits of an aspiring hedge fund manager, despite what the popular press says. If you want to prove your passion for investing, then you are going to need to do more than day-trade your brokerage account.

… Unless You Can Back It Up

Now, the perception surrounding your PA changes the moment you can produce a well-analyzed investment thesis for every trade you’ve made in your PA. This works from multiple avenues:

  1. It Proves your Passion for Investing – Only a person with a burning passion for something will do hard work for free. If you are willing to do stock analysis in your spare time, it goes a long way toward proving your passion for investing. Look at it from a portfolio manager's perspective: If you aren't willing to do even a cursory analysis of the trades in your PA, why would we hire you to do stock analysis full-time?
  2. It Showcases Your Analytical Skills – Portfolio managers use the interview process to determine if you can analyze investments and generate alpha. What better way to prove you can than by presenting real analysis with real financial models? Don't worry about whether the trade worked out or whether you arrived at the “right” answer, a good shop will be able to recognize good analysis from bad.

At this point, you should realize that you don't even need a PA to prove your passion. You just need to demonstrate your analysis skills. Participating in stockpicking competitions for school is an excellent way to gain skills and demonstrate your desire.


Because having your stock pitches critiqued is exactly what your job will entail. Think of it as a developmental league for aspiring superstar investors. Expert performance does not happen overnight; you need to practice.

Coffee Is for Closers Only

“Close and it’s yours. If not, you’re going to be shining my shoes.”

When I was in university, I had a job working for the school, soliciting donations from alumni. My job was to cold call alumni and beg for money.

Not fun.

It was rapid-fire rejection, one after another. It was like a Groundhog Day of rejection. But every once in a while, someone I called decided to donate money. That positive result was so rare that I would often fumble with what to do next.

While the job sucked worse than a direct-to-DVD movie, I did learn one valuable lesson: I couldn’t make a sale if I didn’t make a call first. Alumni weren’t sitting at home thinking of ways to get in touch with me to donate money.

There’s a reason the proverb “nothing ventured, nothing gained” has been around in various forms for hundreds of years.

The same is true of finding a job in finance. Portfolio managers don’t sit around their offices dreaming up new ways to hand you a job. If you want a job in investing, you’re going to have to make that call.

There is good news, though. Your average competitor is not going to make that call. Out of the hundreds of people who read the first article in this series, only a handful followed through on my request to leave a comment supporting your chosen candidate.

In retrospect, I should have offered a prize so I could have a story like Brian over at M&I. When he was promoting one of his new products a long time ago, Brian offered a free product to five random people who wrote to him. To make it easy for Brian, he decided not to take five random people … instead he offered free products to the only five people who responded!

The average person is so timid, so afraid to stand out that they sabotage their chances at success. Remember this very important phrase:

Success is not inconspicuous.

Get out there, network like crazy, and be noticed. If you need a little motivation to get off your ass, check out this clip from a movie you might know:

Boiler Room - Group Interview

Act as if ...

{ 18 comments… add one }
  • Bowser

    “If you believe the forums, then you think the only way to get a job on the buy side is to go to a top tier school and then get some prestigious investment banking experience. All others are doomed.”

    THANK YOU! I work at a value fund, and candidates that are clearly passionate about value investing always go to the top of the list.

    It’s great to see a knowledgeable blog dedicated purely to IM. Keep up the great posts.

    • Thanks!

      Once you are in the business, it’s easy to spot the non-experienced know-it-alls in the forums. Unfortunately, for people not in the business, it can be difficult to spot the fakers.

    • BUD


      Any chance I could PM you? I’m applying to a value firm in the next couple weeks that has been a year or two in the making. Would love to get additional perspective from someone who is already where I’d like to be.

  • Saran

    simply awesome post \m/ . you rock.

  • Nikolay

    Awesome blog, keep up the good work. Maybe we’ll have a game with prizes at LBS too 🙂
    Meanwhile, why not a post on stock pitching with a sample presentation/model attached, for example? Personally, I would enjoy a dig in the more technical part of the business.

    • It’s on my list of items to tackle, but I’m working behind the scenes with a certain colleague (I’ll give you one guess) on a full-scale product that covers all of that and more. Unfortunately, it’s going to take a lot of time to finish. Meantime, I’ll see what I can do about including some bits and pieces in future posts …

  • Excellent post! And I agree with Nikolay’s comments. I am off to read more.

    -Amateur passionate investor.

  • Warren Brofett

    This post is stellar.

    I went to a tiny undergrad school few outside of my state have heard of. Then did an MBA at a lower ranked school. My conclusion: who cares.

    I think we get trapped into thinking that “non Ivy” means “non Investing business”

    I took the same approach as the hire in this piece, and that is singled out as the reason I got my first job on sell side and the one I am moving to on the buyside.

    Also, great point on the longevity in Public markets argument. Passion is necessary for longevity.

  • Warren Bobbafett

    Then how do you explain that all top managers are Ivy League people?

    • Ivy League helps, don’t get me wrong. It’s just not a prerequisite.

  • Canucks

    I am heading into the second year of my undergrad commerce degree at a small undergrad-only school in Canada. I am looking to get into investing right after school. I’ve got a good GPA, landed an internship this summer and am trying to load up on extra-curricular that demonstrate my leadership skills and my interest in business/finance/investing. Nonetheless, I sometimes feel like they are thousands of students who have good GPA’s, good experience and good extra curricular.

    What would you suggest to differentiate myself? I definitely have the passion, but I sometimes feel, like you said, that that alone will not get me my dream job.

    I would appreciate any tips/pointers on how to improve myself and better my chances at getting a job in investing.

    Great post! Thanks

    • Network. Everybody knows that’s what they need to do, but nobody ever does it.

  • Shea

    Thanks for the great post! I have just recently discovered this site and have really enjoyed reading through it.

    If you could provide a quick clarification on your PA comments. I am a currently a student and trade using a standard $100,000 mock account (as a student I don’t have excess funds to invest). I have a strategy to my portfolio that is based on my own analysis and would be able to explain it simply but does anyone care? It is only a mock account. Also, I assume that no one would really care unless I beat the various markets in which these equities trade, also true? If it makes any difference I am applying for internship opportunities as opposed to full-time employment.


    • No one cares if you beat the market or not. The key is to be able to back up your decisions with sound analysis.

      • Anatol

        “The key is to be able to back up your decisions with sound analysis”

        I trade my own account in stocks and futures. So I know that it’s really simple for me to create a pitch, explained why that stock should go up if I know that this stock has grown. I think the key is an interviewer’s convintion that you really did this deal, you really bought the stock. That’s why I’m convinced you have to say about future, about current deals only.
        Maybe I think so because my domestic market is much more wild than american (I’m from Russia) and many people here love to lie, but I will be pleased to read your opinion.
        With respect, thank you for your site.

  • Shaun

    One question- If you are a recent graduate are there any stock picking competitions that you can participate in or would there be another way to showcase analysis without having to use PA (personal account)

  • Sharmila Rao

    Greatly helpful article!!!

    I have a question….Can you give me a bit of more insight in demonstrating passion for investing and analytical abilities in my resume / cover letter? As in, do i outright mention my portfolio returns and such?

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