Starting Your Career at a Hedge Fund

Your First Year

Chapter 3/5

January 14, 2020

In any industry, the most challenging part of building your career is always the first step and the first decisions made once you start your career. To help, Citadel is launching its first Ultimate Career Guide to provide career advice and checklists to help you prepare for this transition no matter where you are in your career. Through this Guide, we’re offering you an inside look at the advice our associates and recruiters give to candidates and peers.  While this Guide is intended primarily for investment and trading professionals, we believe much of the advice and perspectives provided are of value for professionals in other disciplines, such as software engineers and quantitative researchers. Each week this month we’ll publish a new chapter to this Guide. In this chapter, we dive into what you should focus on between your first six months and the end of your first year at a hedge fund.

Familiarize yourself with the team’s investment process

Your team’s investment process should start to come into focus after a year of soaking up knowledge and experiences. Take the time to review the methodology that you’ve been through over the last year and prepare questions for your manager as well as others on the team.

Improve the team’s infrastructure

As you approach the end of your first year, you should understand how people, processes, and technology come together to drive decisions. As a relatively new team member, the end of your first year is a time to reflect on what has led to the team’s success. We all have a responsibility to improve the efficiency and productivity of the team. No doubt after spending a year with the team, you have likely identified opportunities to enhance the team’s infrastructure, including processes to take in and analyze data, to build models, and to present and communicate output to analysts and portfolio managers. Bounce these potential improvements off of colleagues and your manager to see if they’re worth pursuing.

Build a “Career Board of Directors”

Just like you did in school, continue to make efforts to network with those who can cultivate your career path. Set up meetings with people on your team as well as with others across the firm with whom you would like to collaborate – establish this group of people as your “Career Board of Directors.” Beyond your manager, they should be your most trusted advisors and an important resource when charting the path for your career.

Meet with these individuals regularly to review and track your career progress as well as to identify milestones. Ask them how they handled obstacles in their careers when they were in your place. Developing this feedback loop will push you to understand the opportunities and challenges ahead.

It’s important to initiate conversations with your manager about the skills you should be developing over the coming years. If you don’t seem to be making headway in developing particular skills, talk with your “Career Board of Directors” about what resources you should tap into to get back on track.

Develop a system to dissect your failures and successes

Across the industry, everyone fails some of the time but those who excel ensure they take away specific lessons from their failures and proactively infuse those lessons into the investment process. To do so, you must be ready to proactively learn from your mistakes by analyzing what caused the unwanted result. This means finding a way to look at your errors objectively rather than personally to build your resilience. The six steps below can be used as a guide to learn from your experiences

1. Describe the Desired Result

To understand whether you succeeded on an investment idea or a career goal, you need to be able to describe the desired result in clear and measurable terms.

2. Objectively Describe the Actual Result

Emotions can cloud our view of what happened. Try to document the facts of the result. This could mean re-visiting the inputs to your financial model or feedback you received from your portfolio manager on your communication skills.

3. Make a Hypothesis About Causation

Throughout the investment process, we develop and test hypotheses. The same process should be leveraged to analyze the major milestones in our career. Develop a hypothesis about why the desired result was different than the actual result and take a step back to try to evaluate what led to the alternate result.

4. Ask Questions About What Could Have Been Done Differently

Evaluate the alternate choices you could have made to lead to a different result. What would have happened if you made different decisions along the way?

5. Document the Lessons Learned

Beyond discussing these lessons with your manager, you should also keep a personal log or journal with them recorded. This will enable you to look back on them in the future and reflect on the process you went through when you encounter a similar circumstance.

6. Outline How You Will Make Decisions Differently Moving Forward

Do not let these lessons go forgotten. Use them to inform your thought process in the future to avoid making the same mistakes again. Write down specific actions you will take on a consistent basis based on the lessons learned.

“Human beings naturally focus on thinking about their successes,” explains Melinda Urban, Senior Recruiter at Citadel. “We often fail, ironically, to spend as much time thinking about our failures. However, analyzing our failures today leads to success tomorrow.”

Chapter 3 of 5
Your First Year