Weekend thoughts: advice on finding an investing job, life call options, and starting a Substack

One of the most frequent pings I’ll get is from people asking about jobs in investing. These pings generally fall into three “buckets”:

1. People who have experience with an investing job (either on the buyside or sellside) looking for a new role.

2. People who have experience in an unrelated field (lawyers, accountants, consultants, etc.) looking to make the switch to investing.

3. College and MBA students who are interested in investing and want to figure out a way to invest full time (this is by far the largest)

While I don’t have the largest platform, I do have a small one and I’m always happy to be helpful to anyone who reaches out. But, to streamline the process, I wanted to put some advice out into the public sphere.

My advice for someone in each of those three “buckets” is generally different, but the number one piece of advice I give to anyone is the same: start an investing substack under a pseudonym (editor’s note: substack recently gave me a referral link; feel free to use that to start the substack so they know I sent you!). Stick with it, and publish one article a week for ~6 months.

Why’s that my advice?

My friend Byrne from the Diff had an analogue that stuck with me a few months ago: your life is a call option. He was using it in a different context than I am here, but I think it’s particularly apt here. If you’re looking for a career in investing, I’d suggest that starting a Substack is the best call option you can “buy”. The possibilities are endless, but they’re almost literally all good.

An old adage among value investors is that you should worry about the downside and the upside will take care of itself, so let’s start by focusing on the downside to starting a Substack. Let’s assume you’re not going to go completely off the rails with your Substack (promoting frauds, publishing things that are just completely unprofessional, etc). With that assumption, the absolute worst case scenario for starting a Substack is that, after six months, no one follows your Substack. If that happens, all you’ve done is lost a little bit of time. I’d suggest that the work you put into the Substack likely helped you grow as both a writer and an investor, so it was probably a good use of time all things considered…. and, again, that’s the absolute worst case! Plus, if no one’s responding to your Substack, there might be something worth thinking about: cream tends to rise to the top. If absolutely no one is reading your stuff after a few months, it might be worth asking about why, and the answer to that question will help you improve as either an investor or a writer (or, more likely, both).

Now let’s consider some of the bull cases for starting a Substack.

First, you’ll probably start to form a community and meet some new friends, and who knows where that can take you!

Second, you might just get a job offer out of the whole thing! I mentioned this towards the end of my recent podcast with Conor Maguire, but the unfortunate truth of Substack is many of the best writers / investors get poached to the buy side pretty quickly. There are a few recent examples of this, but I’ll just pick one and point to Plum Capital since he put out a nice post explaining why he was shutting the blog down.

But maybe you’ll find you love writing and investing and turn it into a career. Check out someone like Edwin Dorsey at the Bear Cave; he’s super young (under 25 and just graduated!), but he instantly found a niche he loved, started covering it, and now he’s one of the most successful Finance Substacks around! I would venture that his Substack let’s him make more money and have more fun than his peers who went the traditional investment banking route (how many first year IB analysts are making appearances on CNBC?). Starting a Substack will give you that type of upside optionality; if it really takes off, you can eschew the traditional path and blaze your own (or, again, you’ll have the optionality to ladder into a “traditional” finance job, and that process would likely be significant speed up by a big network of friends / fans from the Substack!).

Or the following you build on Substack might just help you launch a fund and skip the traditional job entirely. Dave Waters at Alluvial Capital / OTC Adventures launched his fund in large part with the following and track record he had built up from years of writing, and there are plenty of other examples of that happening.

So there are lots of different paths and upside a blog / substack can take, but (again) it’s all pure upside.

Bottom line: if you asked me for one piece of advice for someone looking to “break into” finance, it would be starting a Substack. Again, it costs you nothing but a little bit of time investment, and the upside is enormous. Starting a Substack is my best advice, by far…. but while I’m here I might as well give some other tips.

First, if you’re looking to “break into” finance, and you haven’t passed the CFA…. go sign up for level 1 right now. It doesn’t matter if you’re a college freshman or 10 years out of college and looking to switch fields; the CFA has enormous signaling value when applying for jobs. If you’re in college and applying for internships, I promise your resume is going to rise to the top quickly if you have “passed CFA level 1” on your resume (or, more impressively, if you’ve passed all three levels!). Plus, while a lot of the skills the CFA teaches are ridiculous (half the program is designated to making sure people know when they can and can’t use the term “CFA” and ensuring that CFA charter holders will pay their dues on time), it will give you a grounding in accounting and finance basics that are table stakes for starting out in finance.

A personal anecdote might best show the value of the CFA moniker: I know that when I was a fresh faced youngster I got several jobs that I did not have the perfect target resume for (I went to Tulane; I loved my time there but it’s not exactly the target school for top end IBs / consulting firms). The most common question I get from students from non-target schools looking to make the leap is “How did you do it?” The answer is a decent bit a luck, but I also had “passed CFA level 1” on my resume, which definitely helped get through some initial screening rounds. And I also make this recommendation as someone who realizes how ridiculous the whole CFA program is (I stopped paying my dues and let my moniker lapse years ago; I saw absolutely no value in the program. To me, all of the value was in the signal!).

Second, if you’re looking to get an investing job, you better have some stock ideas. The first thing basically anyone is going to ask you in an interview is “what’s your best idea right now”. You should be armed with a good one that you can speak about intelligentially. Why does this matter? Investing is a stressful game, and if you don’t enjoy it you’re not going to be fun to work with and you’re probably going to burn out. Having a best idea, at minimum, shows that you’ve done the minimum prep for the interview, but it also is a signal to the firm that “Hey, I actually do enjoy this stuff; I do it on my own and here’s the outcome of that process.”

Here’s a bonus tip on your best idea: you want something that I consider “a little quirky.” You probably don’t want to be pitching a super microcap (unless the firm you’re interviewing with is a microcap specialist!), but you also don’t want to be pitching the largest stocks in the world (Facebook, Google, Microsoft, etc.). The sweet spot is a firm that’s large enough that most people have heard of them / have some idea of the business but not so large that everyone has an opinion on them. It just makes the conversation much easier and free flowing; sure, you can pick a quirky company that no one’s ever heard of that does something no one understands, but if you do that most of the pitch is going to be high level. It’s just not going to be a great conversation. In contrast, if you pick a company / business that the interviewer has at least some familiarity with, you’ll be able to have a much more engaging / free flowing conversation. I’d recommend stocks and companies that are consumer facing; their businesses are simple enough that everyone can understand them but the stocks aren’t so widely known that everyone has an opinion on them. I think smaller cap retailers (one of my favorite places to look in general right now!) and restaurants are a perfect place to look; again, the businesses are simple enough that everyone can understand them, but they’re well known enough that everyone has some idea of them. Steer clear of the majors (McDonalds, Walmart, Target); their are plenty of smaller cap companies that your interviewer has heard of but probably hasn’t done insane amounts of work on. Off the top of my head: Nordstrom, Gap, Wingstop, Portillos, Sweet Green are all stocks that you can pitch from a bunch of different angles (each has some combination of spin-off potential, franchising economics, international expansion, real estate, etc.) and that your interviewer has almost certainly heard of, which should make for a really good conversation. Of course, you should absolutely tailor your pitch to where you’re interviewing: if you’re interviewing at an energy focused shop, pitching Nordstrom isn’t going to make much sense!

How do you get a “best idea” that’s a little quirky? Well, that brings me to point number three: you need to open a brokerage account and start actively investing. This is absolutely not financial advice; I’m not saying to put all of your money into an account and start day trading! But this is career advice: you should open a brokerage account with a small amount of money (so small that if you lost it all you wouldn’t even notice) and get a feel for buying and selling stocks. Nothing is going to make you focus more as an investor than having actual money on the line, and doing so is going to help you grow as an investor in a variety of different ways. It’s also going to help you determine what type of investor you are and what type of job would be a good fit for you. You might go into your account thinking you’re a buy and hold investor, but maybe you discover you like the more quick hitting nature of event driven investing more. Or maybe you’ll go in thinking that you’re a hyper-growth investor and find you like the stability of consumer goods compounders more. The most important thing is that opening an account and actually investing will help you discover what type of investor you want to be, and that’ll help you in your job search.

Three last pieces of advice before I wrap this up:

1. Let’s say you take my advice and start a substack. Awesome! What should you write about? Honestly, anything that interests you, but I’ll give one quick recommendation: similar to my advice on quirky ideas for interviews, try to go a little off the beaten path. If you’re writing about Facebook, Amazon, and Microsoft, I doubt your work is going to stand out much. Maybe you really are someone who’s just super interested in tech, but there are plenty of interesting tech companies with market caps under $10B. If you’re trying to build a brand (either an enduring substack brand or a personal brand that will get you into finance), it’s going to stand out much, much more if you’re writing about stocks and situations no one else is.

2. If you’re just starting out as an investor, you probably need to get some basics down before you start writing or interviewing. The good news is the basics of finance aren’t really that complicated. If you take my advice and sign up for the CFA, I believe level 1 should cover plenty of basics. If not (or even if you do), Value is probably the best book for the basics of finance; it’s less than 300 pages long and will give you a great overview into finance and thinking about valuation and value creation (I’ll disclose that it’s written by my old boss).

3. Other required reading? You Can Be a Stock Market Genius is the best book ever written for event driven investing; if you’re interviewing at the entry level and have read that, you’re going to have a huge edge when pitching and framing ideas.

4. On top of those reading recommendations, I’d not-so-humbly suggest that you should listen to several episodes of Yet Another Value Podcast (my podcast). Why? Each episode is a serious investor breaking down one of their top ideas. Listen to the podcast and how the investors are thinking through the situation / investment. In addition, I try to include links to my notes on the idea and anything the investor has published on that idea in the show notes; go check those out. Listen to 5-10 of the podcasts and use those links. Try to recreate and really understand the investment thesis that the person is pitching. I promise if you spend a week doing that, you’ll grow by leaps and bounds as investor. Combine that with the two books I just recommended, and you’ll be ready to start your own blog / start pitching your own ideas! Plus, I try to have a wide variety of investors on the podcast, so listening to a few will help you try to figure out what type of investing makes sense for you (value, event, etc.)

5. I said my best advice is starting a blog/substack under a pseudonym, and I just want to emphasize the “pseudonym” part is very important. Why? Because it makes the substack completely risk free; if you end up going to work for a giant bank or something, at best they don’t care about what you’ve been writing on the internet, and at worst they view it as a liability. Using a pseudonym will let you quickly and easily divorce yourself from the substack if you should ever need to for some reason!