To All, Ch-ch-ch changes. I am about to accept a new gig and, for many or you, my choice will be surprising. I plan to become a stock broker, retail, not institutional. I will not reveal the name of the lucky firm as that might be considered soliciting and I don't want SI or the SEC to have any worries in that regard.
This is going to be a long note, but, first, I have to mention what it means to my participation on the thread. Basically, once I sign a contract, I will not be able to discuss investment ideas in an internet forum. I will still post here about various non-financial interests, but, let's face it, the main reason for being here is to talk investments and trading, so I do not think the thread will have a long lifespan.
I hope I am not leaving anyone hanging on previous recommendations, as I will simply not be able to post if and when I close a position.
So, why this decision? I feel a need to be involved in markets and explored many other ideas of how to do that. Here are some of them and why I rejected them. Some of this exploration happened long ago and I've mentioned it here already, so, if you are bored, skip it. It may also serve as my view of the investment employment landscape.
1. Mutual fund management. Some things have greatly improved since I was managing mutual funds. There is no gruesome Short-Short Rule, which was the bane of my existence as a portfolio manager who used options and futures to enhance his returns. But some of the stuff I don't like has become more pervasive. There is much more "stick to the category" pressure on managers now than in the 1980s, and I am nothing if not a guy who likes to color outside the lines. I have been offered fund jobs regularly since I left American Capital, and they would have been exciting as I could have started them the way I did the funds I ran at American Capital. But I just can't live with a charter where my choices are so restricted. I think large cap value funds, for example, are great, but it is not always time to limit your returns with large cap value stocks. In other words, I like to play more of a general investment role instead of a specific one. And fund cos. just can't live with someone who doesn't fit the Morningstar categories. To be fair, they are marketing these things to corporate 401Ks and they like to say that this fund does X, this one Y and this one Z. The corporate folks have enough gray matter to get that concept. It just isn't the way I like to play the game.
2. Analyst. I was an analyst long ago. I have complained much about the current crop of analysts and how I don't think much of most of them. However, to be fair, I don't really want to go back to the type of kick the tires analysis I used to do. Too much travel and too much studying about nuts and bolts of how a co. operates. I don't mind doing it once in a while, but not full time.
3. A hedge fund. A real possibility. Not as limited as a mutual fund. And I had fun when I ran a hedge fund portfolio. Negatives are that you can only deal with high net worth individuals if you want to make a living, and they are so darned cynical and tough to get into your fund. Also, the fees are not something I can live with. 2% plus 25% of the profits is mildly obscene to me. Also, since you get rich if you hit a homerun, hedge fund managers tend to take higher risks than I think they should. If they can make 15% safely, they try to stretch it to 25% and sometimes lose money during the stretch. I think anyone who has read my notes know that I am not a run and gunner. I have some great years, but my main emphasis is in not having terrible years.
4. Managed Futures Account. A real possibility, but shares many of the negatives of the hedge fund. Also, though I do futures and options on futures, it is not the majority of what I do.
5. Another partnership. Much less restrictive, but you definitely can only talk to well off folks. Also, they get to pay my fee and brokerage fees on top of that. Seems like a lot of fees to me. I got kind of upset last year when I had my best year ever and the broker who covered the account made twice as much money off of it as I did. And that was with discounted commissions. He's a nice guy and good for him, but it made me question what the heck I was doing. The same thing was true of the mutual fund I managed. My top 5 brokers all made more money off the fund than I did, and I was well paid.
6. Institutional broker. I don't know if I could ever get such a job as I am considered a wee bit outspoken. <g> But, if I could, I wouldn't want it. Some of my best friends do it and they do it well. But I don't think I have those type of social skills naturally and am too set in my ways to learn them.
7. Insurance or bank money mgt. I did the former for The St. Paul and it was a great learning experience. They had terrific people at that firm and I got to learn a lot about tax and eps strategies for corporate investors. But I needed wider scopes of interest then and I need them even more now.
8. Authorized trading accounts. I have done some of this before. Basically, somebody opens a brokerage account and gives me trading authorization. The negative are many. One is that I can't call anyone to do this sort of thing and sitting around waiting for someone to call me first is not my idea of an active career. Also, we once again have the fees on top of commissions problem. I have used discounters in the past for this, but some of the stuff I like to do they cannot do. Some they can do but do not do well, such as physical bonds and option spreads.
So, I looked and retail broker was the only thing that seemed reasonable for me. The negatives that I saw were that for the first three months, I have to get my rabies and distemper shots before I am licensed. Then there are 3 weeks on the East Coast for an intensive teaching of products, ethics and sales techniques. After that, I will pretty much be unleashed upon an unwary world.
I will announce when I sign a contract and after that, it will be all horseracing, weightlifting, and non-investment posts for me. |
