I’ve spent the last two weeks doing a lot of thinking; thinking about what the future holds. Without going into a lot of unnecessary detail, I’ll say that my employer notified us two weeks ago that they no longer want to actively manage equities within the asset management division. Our cash and positions were transferred to an external money manager to run a passive, index-based strategy. (In laymen terms, they decided that they didn’t want to pay us to invest in stocks anymore, and gave our money to someone else to effectively buy something that looks like the S&P 500). Needless to say, our entire department (portfolio managers, analysts, traders, and admin support) was eliminated.
The news came as quite a shock – none of us saw it coming. In hindsight it seems as if the decision was based on a few factors, one of which was management’s unfamiliarity with equity management overall as well as what our group specifically was doing. More frustrating is the fact that our quantitative portfolio was doing very well. However we were such a small piece of my employer’s equity pie (though the $200 million we managed is no small number) that we weren’t able to have as much of an impact on the overall portfolio as we would have liked. Anyway, having been through something similar much earlier in my career (Aaron, this went down much like what happened to us in summer 2001 – same surprise, same effect), I took the news better than most on the team. A lot were distraught, wondering what will happen next. I took the news in good stride and determined that rather than a door closing, this was actually the chance for new doors to open. Regardless of how upbeat I was, this was indeed sad news – for me personally, I loved what I did. For other members of the team, that same passion was combined with over 20 years of service to the same employer. Clearly, when you’re let go all of a sudden after working at the same place for 20 years, you’d be absolutely dumbfounded and wondering what to do when you get up the next morning.
I’ve spent most of the last two weeks since we were informed of our fates thinking about where to go from here. I continue to have the same perspective I had on day zero – this may actually be an opportunity to open some exciting doors. However, just like everything else in life, this is good and bad. One one hand there are many doors I could open – I’m grateful that I have choices; on the other hand, the many choices make it very difficult to decide what to do next. The most obvious option is to find another opportunity in quantitative equity management. My education coupled with background in software and experience in running a quantitative equity portfolio make me a good fit for such a position. The problem is that there aren’t very many such positions in the Chicago area right now. Another option would be to move into a quantitative equity research role – I can continue to use my skills and stay on top of the markets and quantitative equity. The clear downside here is that doing research alone means I wouldn’t be managing money. A third option is to try to do something independent – start my own fund. Though exciting, this option poses its own set of complications and questions.
So, I continue to contemplate what’s next. This decision, like that of getting married or having children, is one that obviously shouldn’t be rushed into. Swift decisions made with brief consideration lead to mediocre careers. A little more time thinking, doing homework, and strategizing can make all the difference between mediocre and something much, much more.