I have been working in finance for two decades. Along with achieving whatever success and (internet) fame comes regular inquiries from the young’uns seeking advice on how to break into the field. On occasion, I have shared whatever small insights I might have with them.
Along those lines, Tom Brakke of the blog The Research Puzzle came up with an interesting idea. In the past, he has written a series of “Letters to a Young Analyst.” He gathered these all together, along with contributions from other folks in the industry, to created a unique volume:
“Based upon Tom Brakke’s popular “letters to a young analyst” series, this book starts with those letters and includes much more great material for the aspiring investment professional.
A dozen top industry veterans offer advice and commentary about the investment world. Plus, Tom unveils a new letter about the state of the industry and the qualities that will be in demand during the next few decades.
The last part of the book is a treasure trove of great resources, including sections about books, periodicals, websites, Twitter feeds, and movies of interest to those in the investment world. In addition, there is information about credentials and career resources. In all, there are more than a hundred links to online resources and plenty of advice on how to use them.”
I thought this was a splendid idea, and I was thrilled that my Advice to a Young Market Participant was included in Tom’s book.
Tom and I were discussing this subject recently. I mentioned those inquiries, and how I never know how to respond to them. People ask for my advice about breaking into the business (some even ask about my bizarre academic career). Given that my career path was less than typical, I hardly think of myself as the ideal person to give career advice. But Tom suggested that perhaps this trait makes me uniquely qualified. Perhaps I may be the ideal person to offer up some suggestions. Why not use the new book as an opportunity to share my sordid tale with the world, and to make a few suggestions to potential newbies?
Good idea: My first suggestion is to click over to see Tom’s e-book; The second is to mine my experience, pulling out whatever lessons there are to be derived from my somewhat unusual career history.
The thinking is that if I did it, you can, too.
I have always been interested in a great many things — not just Finance: Science, Technology, Psychology, Music, Statistics, Film, Logic, Media, Rhetoric, Philosophy, History, Law. What made Finance so fascinating to me is how it crosses over so many of these disciplines. It is perfect for someone interested in everything. This is likely what led to my perspectives on The many hats of great investors. But I am getting ahead of myself.
If you read this, you learned I originally thought my destiny lay in Mathematics. My thinking shifted after three years in College, and instead of pursuing a PhD in Applied Mathematics, I went to law school. Did real well, excellent grades, graduated cum laude (loved classes, research, writing and moot court; hated Law Review). After passing the New York and New Jersey Bar Exams in 1989, I practiced for a few years. Can’t say I loved it. The stats are half of all graduates no longer practice law after 7 years – it took me less time than that to figure out I was bored silly with being a lawyer.
When an opportunity arose to join an up and coming trading shop, I jumped at it. The firm sponsored me for the series 7, which (like the Bar) I took once and passed. I joined the other half of my fellow graduates, leaving the law behind simply by letting my legal license lapse.
Here is where things get funky: On my first day on the job as a licensed finance professional, I was fired. To be more precise, the firm announced they were closing all regional offices, and were rolling out this new online trading thingie at the new company, which was to be renamed E*Trade Group. Employees could relocate to company headquarters in California if they so chose.
I couldn’t. I had recently gotten married, just lost my dad, had family responsibilities on the East Coast. Those who went to California did swimmingly well, made a fortune in EGRP stock options. A few other guys in the office with similar situations to me also had to pass on the opportunity. We all joined a prop trading firm, running money for our own accounts as well as for clients.
It was tough work, very different from what I had originally signed up for. The training consisted of pushing us into the deep end of the pool and yelling “swim.” A few drowned right away. Some of us showed aptitude. I learned quickly, and was soon aware that I was made to trade. I loved it, perhaps too much. But I was good at it, and for the first time in my life, started to make some real money.
Lots of volatility and erratic returns were a great motivation to figure out why some traders made money and others did not. Beginning in 1995, I started a lifelong pursuit into understanding why traders and investors make the sorts of financial decisions they do. You could say I was into behavioral economics long before it was cool. That research into why traders do what they do has paid massive dividends for me over the years. It is still an ongoing study for me, a never ending quest to figure out why we do what we do in the capital markets.
Around that time, I decided I wanted to make my trading more rigorous and disciplined. As a step towards that, I began writing my thoughts down in a daily morning commentary. Daniel Boorstin, Librarian of Congress, once said “I write to discover what I think,” and I agree. Jotting down some ideas each morning as a market preview was a helpful way to organize my thoughts for the trading day ahead.
As it turned out, I had a knack for it. Perhaps it was due to the rigors of Law School, where one learned rhetoric, rules of debate, and how to cogently present ones’ arguments. Having an ability to simplify complexity, hone in on key issues of economics and markets, tease out what did and didn’t matter, was hugely helpful. It wasn’t very long after I started writing down my notes that other traders in the office had noticed. Soon, they were asking for copies of my daily briefing, and not too long after that, it started getting faxed around town, finding its way to other traders at different firms.
These first four years of my career as a trader were a helluva lot of fun. Maybe I enjoyed it a little too much. Despite the volatile, inconsistent, and random outcomes, I consider myself fortunate to have identified the ascendance of emotional highs over financial remuneration as problematic. Prior to this, enlightened self-awareness was not my strong suit (Mrs. Big Picture suggests the correct word is “Clueless”).
Recognizing that my research and writing skill set might be marketable, I applied for several analyst jobs. I ended up working at Prime Charter (now part of Oppenheimer & Co). There, I was the Research Assistant to the legendary Lawrence Hart, the firm’s Chief Technology Strategist. Larry started as a software designer for AT&T’s Bell Labs (now Lucent-Alcatel) in the 1950s. He understood both Technology and its market value better than nearly anyone in the world. The work included taking his ideas and work product, and turning them into usable research reports, investment themes, and strategies for the retail brokers. I was also encouraged to take the MTA course, which I did, with the one and only Ralph Acampora as my instructor.
All along this time, my morning “Big Picture” report gained more followers.
The writing and analytical part of my career expanded as I moved more into the role of a Market Strategist. I bounced around a few small firms, never quite finding the perfect fit. All the while, I kept publishing my commentary for a select audience. In those early pre-blogging days, I taught myself HTML so I could take the daily “Big Picture” research notes to Yahoo’s Geocities.
Some years later, I became the Chief Market Strategist for the South African bank Investec. I joined the firm months before a big merger was completed with Herzog & Company (Royce and Ernst & Co. were already rollled up in the firm). The new company was renamed Maxim Group, a firm that managed over $5 billion dollars. They were (and still are) a great group of guys. I made friends and established professional relationships there that are still strong today.
During the five or so years I worked for them, I continued to publish research and commentary every day.
In the summer of 2003, I was invited to Beta Test “Typepad” – this thingie called a “blog.” That helped shift my publishing from Geocities to The Big Picture. I cranked out a daily (and sometimes twice daily) commentary for 6 years. In 2008, I moved that to WordPress and my own domain where you are reading this: Ritholtz.com. I still wake up early everyday to jot my ideas down; I publish regularly and relentlessly on the blog — my 30,000th post is coming up this year. I also began publishing at various “real” outlets, like MarketWatch (now part of Dow Jones), TheStreet.com, Barron’s and The Wall Street Journal.
Media appearances followed – first quotes in print, then radio, and eventually television. I appeared on CNBC, Bloomberg, CNN, Fox, PBS, etc. and most recently, The Daily Show with Jon Stewart. I became a regular on CNBC’s Kudlow & Co, appearing once or twice a week for several years. I also appeared in several documentaries, including the the award winning film on the Federal Reserve, Money for Nothing.
The popularity of the blog during the financial crisis was a big surprise. TBP was generating 3 million page views per month; my real time coverage of the crisis was eventually turned into the book Bailout Nation, published by Wiley in 2009. (There are several other book projects in the works). In 2011, I started writing a regular twice monthly column on Finance and Policy for the Washington Post. Last year, I joined Bloomberg View. And in the spring of 2014, I began a new project for Bloomberg Radio show. It is a new long-form interview show, and it launches later in 2014.
History class over, now onto the lessons:
Let me point out that I did not attend any Ivy League schools, nor was I a member of top tier banks. Whatever advancement, success, and/or recognition I achieved, I earned thought grit, hard work, brains, and determination. Some people might have been members of the old boys club and others might have been legacies at elite institutions, but I had to make it happen on wits and sheer force of will.
I consider myself very fortunate that my chosen field is a meritocracy. My work product has been well received by a variety of financial institutions and media, and that created a huge set of opportunities for me professionally. Most recently, that meant launching our own financial planning and asset management firm, Ritholtz Wealth Management, in September of 2013. (I expect that name will change in the future as we add new partners).
I know to some folks, it appears that these are all wildly disparate and unrelated jobs. Trading, Washington Post, Asset Management, Bloomberg View, the blog, and now the Radio. However, they are in actuality the exact same job I have been doing for the past 20 years: Trying to make sense of a variety of conflicting and overlapping inputs.
I wake up each morning around 4:30 am, do my research and reading, then organize my thoughts by jotting down some ideas. In 1996, that was a 1-page fax circulated around trading desks on Wall Street. A few years later, an HTML coded Geocity site; then an email list in 2001, a blog in 2003, and my own site in 2008. Today, it is disseminated via the Bloomberg terminal and on Bloomberg.com.
That’s my strange but true tale. The professional lessons therein are pretty straightforward: Find something you really enjoy doing, and then own it. Work harder than anyone else. Make yourself smarter by becoming deeply knowledgeable, especially in related secondary and tertiary fields (i.e., quantitative statistics & behavioral economics). When on those rare occasions, a little luck shows up, make sure you are ready to take full advantage of it.
Thats good advice for any field: When you get lucky, you best be ready to make the most of that opportunity.
Since this is the internet, a list is mandatory:
How to break into and succeed in finance
1. Be multi-talented; Be genuinely interested in many things, including those that may not be related to your career;
2. Work harder than everybody else (Coaches know that hard work beats talent most of the time).
3. Find something you are good at, then hone that skill until its razor sharp;
4. Read voraciously. Build a library, learn from the masters.
5. Your academic background matters less and less the longer you are out of school.
6. Create something of value that others want — and are even willing to pay for;
7. Meet as many people in your field as you can. Learn from them, and when possible, be genuinely helpful.
8. Develop a specialty.
9. “Once in a lifetime” opportunities come along more frequently than you imagine; Be prepared for when those opportunities presents themselves;
10. Be lucky.
This is what has worked for me. I hope these ideas will work for you . . .
UPDATE: August 30, 2021
From a slightly different perspective, see Wisdom I Wish I Knew 30 Years Ago