Quarter Life Crisis

Had a four hour interview at an Asset Management firm last Friday. Yes, four hours. It was quite a marathon. So it all started several months ago when I met the CEO of this newly formed firm at a MIT Enterprise Forum event. He happened to be a panelist for the event and happened to be sitting in the corner by his lonely self. Not having the slightest clue who he was, I went up to him to ask him about career advice. One thing lead to another and he asked me to send him my resume. So a few weeks later a portfolio manager from the firm emails me and sets up a phone interview. After that he started sending me technical papers about investing and what not that I’d read and respond with questions and comments on the papers. We’d email each other about twice a week for about a month and a half. So back to the interview. Here’s a brief excerpt of the type of stuff he asked and the type of stuff that we chatted about.

I ask questions and let the questions direct the route of our conversation:

I just asked a lot about their investment strategies. They are quant based, but not as hardcore blackbox quant as some of those hedge fund guys. They use the quant strategies to screen stocks then dive in with the qualitative research. So if you’re going into a quant interview, here’s some good questions to ask them. ( Paul gave me these before I went in for the interview.)

Are your investors mostly institutional? ( Reveals details about their risk tolerance.)

How much do you have under management? ( Reveals details of how rich they are and how big your bonus can be =P)

How much do you have in the pipeline? ( Reveals details about how much richer they will become and how much bigger your bonus can get =P)

What are the capacity limits on your investment strategies? ( Reveals how much more money they can manage in under their current products and strategies before they don’t work anymore. So if there’s still a lot of capacity left, that means they can raise more money without having to develop new products, which generally do not perform well.)

How did your firm hold up during the August downturn? (Anything less than -8% should be considered not bad. More than -8% is bad. This will reveal what kind of investors they are. Did they panic and sell off or did they hold on?)

How do you handle China? (To reveal details on how they handle bubble type markets.)

General behavioral stuff:

Talk about a time when you had to make something very unorganized, organized.

Talk about a time when you had to convince someone something was feasible.

Talk about a time when you had to overcome a huge challenge.

Talk about a time when you took a huge risk.

Thats just a snippet.. We spent a good hour on these types of questions. I wasn’t really prepared for some of these. Took me awhile to get some meh answers.

General macroeconomic questions:

What happens to US dollar if interest rates go up/down?

What happens to US business if interest rates go up/down?

What happens to Japanese company, i.e. Canon, if the Yen is strong?

What happens to Japanese company, i.e. Toyota, who has major operations in the US, if the Yen is strong?

Again, this is just a snippet. The PM manages international products, hence the currency questions. I managed to get some ok answers, but had to be walked through some of them.

Stock market questions:

Whats wrong with using ROI and margins as the sole stock screening criteria? (context: I mentioned that I had diddled with the magic formula investing.)

Quite a few more of these but I don’t recall….

Statistical questions:

What do you get when you multiply a blah blah by a blah blah? (Don’t remember what he said cause I didn’t know the answer haha.)

Heres a scatter plot showing the relationship between house size and price. What does these dots here represent?

General questions:

Why are you interested in researching stocks? (If your background is not in finance, make sure you have a clear story of how you got here from where you were.)

What I learned from this experience:

You should have a notebook full of questions ready to ask about their firm and strategies.

You should read all the material that he sends you. And have several questions and comments about each article.

Postpone your interview until you are fully recovered from jetlag.

You should read up on the latest trends and news in international markets.

Networking is key.

This pages is very helpful. Investment management interview preparation guide and bible.

I can handle 4 hour interviews with no breaks.

CFA better than MBA if you know you want to do finance.