Saturday, June 30, 2007

What has Bar Mitzvah to do with investment and finance?

Michael Steinhardt
Retired hedge fund manager, current philanthropist

Today I am going to introduce Michael Steinhardt, who is a generation older than Tim Sykes. However they have one thing in common. They both are traders who get started in finance and investment with their bar mitzvah gift money.

Remember last time I asked you what is bar mitzvah? Let’s take a look at it.

Bar Mitzvah
On bar mitzvah day a Jewish child becomes an adult fully responsible to God for becoming a better person.

According to Jewish law, a boy is deemed a "bar mitzvah" when he turns 13 and achieves the status of adulthood. A Jewish girl becomes a "bat mitzvah" when she turns 12.

Bar and bat mitzvahs are typically celebrated with a festive meal, with the family and friends of the bar mitzvah boy or bat mitzvah girl on hand to celebrate their entrance into adulthood.

The meal is often accompanied by speeches from friends and relatives who encourage the bar or bat mitzvah to undertake their new role as a full-fledged Jewish adult with joy, and to strive to add spirituality to their lives.

When I was first invited to a bar mitzvah, I had totally no idea what it was. No matter what, with a well-designed sophisticated invitation card, I knew it must be something serious. I dressed up for the ceremony and got ready a gift. When I asked the bar mitzvah boy’s mother what to give, she said ‘cash’. After all, I found that cash and stocks were the most popular bar mitzvah gifts. Perhaps “financial management” is one of the most important roles of an adult.

Bar Mitzvah vs Wealth
That’s why Tim Sykes got $12,415 to start his online trading business at the age of 17. Michael Steinhardt received from his father 200 shares of Penn Dixie Cement and Columbia Gas System stock, valued $5,000 for his bar mitzvah. Since then he started studying brokers’ reports and parlayed his bar mitzvah gift into a multi-million dollar hedge fund.

All about bar mitzvah

Michael Steinhardt - Bio
1940 – Born
1953 – Began studying brokers' reports
1960 – Graduated from University of Pennsylvania's Wharton School of Finance
1967 – Founded hedge fund company Steinhardt, Fine, Berkowitz & Co
1979 – Rename as Steinhardt Partners, after Berkowitz and Fine withdrew their partnership
1995 – Retired
2000 – Made historic gift of US$10 million to NYU's School of Education
Now – Philanthropist

Conversation with Michael Steindhart

More about Michael Steindhart

Start Young – if you want to retire young and retire rich
How young shall I start investing? Well, as young as 13 or 17, like Michael and Tim did.

If you are not from a Jewish origin and don’t have bar mitzvah gift to be your investment capital, build an investment banking career at any of the Wall Street firms, and see if you can outperform Michael or Tim.

Chinese Wealth Management Philosophy
Take care of yourself when you are poor, take care of the world when you are rich.
Liang Qichao (1873 -1929) - a Chinese scholar, journalist, philosopher and reformist

Michael and Tim are outstanding executors of Liang’s philosophy. Mike dedicates most of his life to philanthropy and keeps giving what he has. Tim is only 26, his Daytrading Award is just a start.

The Timothy Sykes Daytrading Award for the Talented

Michael Steindhart’s historic gift of US$10 million to NYU

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Friday, June 22, 2007

Retire Young Retire Rich - 30 Under 30 – Tim Sykes

Timothy Sykes, Cilantro Fund Partners, New York
Age: 26
Trades: Equities – small-cap; micro-cap

If you want to retire young and retire rich, you have to plan or start an investment banking career while at school. I have reiterated this in my blog. Tim Sykes is a young man who has successfully executed this idea. If you recall, he’s number 26 (alphabetically) on the list of 30 Under 30 top traders. Let's get to know more about him.

Timothy Sykes - Bio

1981 – Born
1999 – Started day trading while at high school
2003 – Founded Cilantro Fund Partners

2003 – Established The Timothy Sykes Daytrading Award for the Talented
2003 – Graduated from Tulane University, New Orleans
2006 – Nominated 30 Under 30 Top Traders

Timothy Sykes, 26, runs a top-ranked, short-bias fund called Cilantro Fund Partners, which he founded in 2003 in his senior year at Tulane University in New Orleans.

At the age of 22, Tim started his $3.2 million Cilantro Fund Partners before graduating from Tulane University. He began with $100,000 from his parents and $900,000 of his own money. Sykes says he amassed his share from successful day trading during high school and college, having started at age 17 with $12,415 saved from bar mitzvah gifts. Trading, he says, "is basically like a video game for me."

How is Tim’s Cilantro Fund doing?
With AUM $3 million and four fund-of-fund investors and a 21 per cent three-year annualized average return, Cilantro was ranked the top short-bias fund in the Barclays Fund Rankings, released in early 2006.

How did you get your first job in finance?

Here’s what Tim says: My parents gave me permission to open an online brokerage account with $12,415 of my Bar Mitzvah gift money during my senior year of high school thinking I would lose it all and that it would be a great lesson about money. It turned into a great lesson for me as I turned it into a fully audited pretax sum of $1.65 million from 1999 to 2002. After that feat, friends and family wanted me to trade on their behalf so I created a hedge fund. Source: DealBreaker Read the full interview

The Timothy Sykes Daytrading Award for the Talented

Whilst some young guys had to seek financial aid to further their studies, Tim was actually contributing to the Tulane University, at the age of 22. In 2003, he endowed this cash award which honors members of the Tulane community pursuing non-traditional academic endeavors. Read more

Quote from Tulane University:
The award was endowed in 2003 by Timothy Sykes, a Tulane College graduate who built his talent for daytrading on the stock market into a lucrative business and who wanted to encourage others to pursue their interests and talents. Sykes now lives in New York City, where he started his successful Cilantro Fund Partners LP before his Tulane graduation.

Answer to my previous question: What’s the difference between a CV and a resume?

Nowadays few people care to differentiate the two terms. However if you are hiring a resume writing service, you’ll notice that writing a CV costs far higher than writing a resume. So there must be a difference between the two.

A resume is usually one or two page in length, summarising your skills, experience and education. A CV (Curriculum Vitae) is usually longer and with more detailed history of your educational and academic backgrounds as well as teaching and research experience, publications, presentations, awards, honors, affiliations and other details.

Both documents are aimed for job hunting. Not until you are looking for a very senior managerial role, a CV is not necessary. Therefore my blog title is Investment Banking Resumes, as my target audiences are young bankers and undergraduates.

Test of your general knowledge:
Tim Sykes started his day trading with his bar mitzvah gift money. What is bar mitzwah?

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Monday, June 18, 2007

The Golden Rule of Resume Writing – HONESTY

June 14, 2007, IHG Asia chief quits after CV review
This news does not directly relate to investment banking, but it is important to anyone who needs to write a resume. Let’s keep this as the golden rule of resume writing: HONESTY.

As my blog reader, I request your reading this news seriously in detail.

On June 14, 2007 (Thursday), Patrick Imbardelli, chief executive of Asia Pacific of the InterContinental Hotels Group (IHG), was forced to resign just days before he was to join the main board of the world's biggest hotel company.

“…IHG said on Thursday that Mr Imbardelli had told it that he had three qualifications: a bachelor of arts from Victoria University in Australia, a BSc from Cornell University in the US and a masters of business administration, also from Cornell. But an IHG spokesman said he had only attended classes at all three colleges and had not graduated from any of them…” Source: Financial Times – read full story

When a CV leads to a resignation
According to Financial Times, Patrick Imbardelli is not the first top executive to leave his employer over his CV and he will not be the last.

…The chairman and chief executive of Bausch & Lomb, had to forfeit his annual bonus for 2002 after he admitted misrepresenting his educational record….

…Richard Li, son of Hong Kong billionaire Li Ka-shing, was embarrassed six years ago by the revelation that he did not complete the degree in computer engineering at Stanford University cited by publicity material produced by his company Pacific Century Cyberworks…

…In 2005, a former health service chief executive from Solihull was given a 12-month prison sentence suspended for two years for faking qualifications to get the £115,000-a-year position…Read full story

As my blog reader, you can be an entry level analyst today. In 20 years time, you can be the CEO of an international investment bank. The higher you rise in a hierarchy, the greater burden of trust you bear. Lying would only work against you. Don’t let the lies on your CV kill your career.

Anna Maria D’Souza’s mantra: practice ethical resume writing, plain facts, no exaggeration, no misleading.

Test of your general knowledge:
What is the difference between a CV and a resume?

Check my next post for an answer.

Recommended career tools:

Amazing Resume Creator
A DIY resume is good enough for an entry level job. Investment bankers always want the best out of the best. To stand out from the crowd, get Jimmy Sweeney’s help to craft a best resume for yourself.
Amazing Cover Letter
A powerful cover letter is the perfect partner of your resume. Personalize and customize your amazing cover letter with Jimmy Sweeney’s help.

Resume writing

Saturday, June 16, 2007

Retire Young Retire Rich - 30 Under 30 – Top Traders (21-30)

30 Under 30 - age as of September 2006

A continuation of traders who qualify to retire young and retire rich.

21. Jennifer Pomerantz, Sandell Asset Management, New York
Age: 26
Trades: Equities – energy, natural resources

22. Paul Redmond, Elite Derivatives, London
Age: 27
Trades: DAX futures

23. Scott Shleifer, Tiger Global Management, New York
Age: 29
Trades: Equities – emerging markets and technology

24. Josh Slavitt, BNP Paribas, New York
Age: 30
Trades: Equities derivatives

25. Paul Sohn, Kingdon Capital Management, New York
Age: 28
Trades: Equities – technology

26. Timothy Sykes, Cilantro Fund Partners, New York
Age: 25
Trades: Equities – small-cap; micro-cap

27. Andrew Warford, Maverick Capital, New York
Age: 29
Trades: Equities – technology

28. David Wertentheil, Carlin Financial, New York
Age: 27
Trades: Event-driven equity, spreads

29. Travis Williamson, DCF Capital, Greenwich, CT
Age: 27
Trades: Equities, options and fixed income - biotech

30. Benjamin Zorrilla, HLV Capital, New York
Age: 25
Trades: Equities

Read the full stories of the 30 Under 30

Answer to my previous question: What is ETF?
Exchange-Traded Funds

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Thursday, June 14, 2007

Retire Young Retire Rich - 30 Under 30 – Top Traders (11-20)

30 Under 30 - age as of September 2006

A continuation of traders who qualify to retire young and retire rich.

11. Simon Jones, Citigroup, New York
Age: 25
Trades: Spot forex – yen

12. Chris Lanigan, Ziff Brothers Investments, New York
Age: 29
Trades: Equities – energy

13. Cliff Larson III, The Cliff Larson Co., Minneapolis
Age: 27
Trades: Wheat

14. Austin Lewis, Lewis Asset Management, New York
Age: 30
Trades: Equities – micro-cap

15. Daniel Lirtzman, NYMEX, New York
Age: 30
Trades: Natural gas

16. Giles Macey, Mako Group, London
Age: 30
Trades: US Treasuries/futures and options

17. Kelvin Milgate, ABN AMRO, London
Age: 27
Trades: Carbon emissions

18. Adam Nadler, Sperling Enterprises, Boca Raton, FL
Age: 29
Trades: Equities

19. Marc Pasuco, XTF Market Making, New York
Age: 29
Trades: Energy ETFs

20. Darren Petterson, TransMarket Group, Chicago
Age: 30
Trades: Yield curve

21-30 - to be followed

Answer to my question yesterday: What is Bobl futures?
Contract (future) for an ideal type of Federal Government debenture bond with a nominal interest of 6 %, issued in the form of Federal Government debentures and Federal Treasury warrants with a residual term of 3.5 to 5 years. In other respects, the structure of the bobl future is similar to the Federal Government future. Source: Deutsche Bank

futures contract with medium term debt that is issued by the Federal Republic of Germany as its underlying asset. The contract has a notional contract value of 100,000 euros, with a term to maturity of 4.5 to five years. Unlike most other types of future contracts, BOBL future contracts tend to be settled by delivery. Source: Investopedia

Test of your investment knowledge: What is ETF?

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Retire Young Retire Rich

Wednesday, June 13, 2007

Retire Young Retire Rich - 30 Under 30 – Top Traders (1-10)

If you want to retire young and retire rich, check out what these young guys did.

While Trader Daily is receiving nomination for the 2007 list of 30 under 30 Top Traders, I would want to review last year’s list with you.

Candidates have to be under 30 by September of the nomination year. In 2006, the youngest were only 25.

Visit my blog frequently. You’ll be amazed by the success stories of these young guys.

Here’s what the editors of the poll say:
“We polled the worldwide trading community in order to identify the top young talent currently slaying the capital markets. Behold the future – and the present – of trading.”

“They are TOO YOUNG to remember the original Dukes of Hazzard. When disco was in style, most of them were in diapers… These are the rising stars of the trading universe, 30 of the best traders age 30 or younger – as determined by you…”

30 Under 30 – age as of September 2006

1. Chandler Bocklage, SAC Capital Advisors, Stamford, CT
Age: 28
Trades: Equities

2. John DePalma, Bank of America, New York
Age: 26
Trades: Fixed income – short-term interest rate

3. Lee Frankenfield, Deutsche Bank, New York
Age: 29
Trades: Equity Variance

4. David Garonzik, Goldman Sachs, New York
Age: 27
Trades: Forex

5. Gualtiero Giori, Sagio Investments, Geneva
Age: 26
Trades: Equities

6. James Groth, independent, Chicago
Age: 29
Trades: Treasuries, gold and equity index futures

7. Adam Grunfeld, Comac Capital, London
Age: 25
Trades: Currencies, metals, equities, interest-rate futures/swaps and exotics

8. Gabriel Hammond, Alerian Capital Management, New York
Age: 27
Trades: Energy – MLPs/ETFs/futures

9. Rebecca Hogan, Morgan Stanley, New York
Age: 27
Trades: MBS

10. Lawrie Inman, Marex Financial, London
Age: 25
Trades: Bobl futures

11-20 - to be followed

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Retire Young Retire Rich

Monday, June 11, 2007

Retire Young Retire Rich – Build a Hedge Fund Career

Chase Coleman – Hedge Fund Trader
Tiger Technology Management
Age 31 (2007)

As my blog is for young bankers and those who want to start an investment banking career, I am now going to start a series of success stories about those of 30 or even younger. Here is a young man who qualifies to retire young and retire rich. Chase Coleman made US$50 million at the age of 30.

Trader Daily has an annual poll of Top 100 Hedge Fund Traders. In 2005, Chase Coleman was the youngest on the list. Let’s compare his estimated income between 2006 and 2007.

June 2006

Chase Coleman

City: New York
Firm: Tiger Technology Management
Age: 30

CONSIDERED ONE of the top young hedge-fund traders today, Charles “Chase” Payson Coleman III is a descendant of Peter Stuyvesant, the last Dutch governor of New York — and the man who constructed the wall that gave Wall Street its name. Now that’s a pedigree. Coleman had a stellar year in 2005, with returns of more than 40 percent across his $2 billion– plus portfolio, including some significant bets on several small-cap stocks in China and Europe. Coleman also got married last year. His clients love him as well.

Estimated Income: $40 - $50 Million
Trader Daily

April 2007

You needed to have made $50 million in 2006 just to gain admission to this list. You needed $1 billion in annual comp to crack the Top 5. Behold capitalism’s ultimate honor roll — the fourth annual Trader Monthly 100.

Chase Coleman

City: New York
Firm: Tiger Global Management
Age: 31

One of the youngest members of the Trader Monthly 100, Coleman now manages roughly $2 billion in assets; his returns last year were in the neighborhood of 30 percent.

Estimated Income: $75-100 million
Trader Daily

Couple of posts ago, I mentioned that Dow Kim of Merrill Lynch quitted his US$37-million job to start his own hedge fund. Looking at Chase’s income, will you support Kim’s decision?

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Retire Young Retire Rich

Friday, June 8, 2007

Lehman Brothers Promotes New Head of Equities

Sigurbjorn Thorkelsson - Lehman Brothers

How would you target yourself in the first six years of your investment banking career?
Analyst? Associate? VP? D? MD…? If you are good enough, people won’t care how old you are. Couple of days ago, Lehman Brothers announced their appointment of Sigurbjorn (Siggi) Thorkellsson to the position of Head of Equities, Asia. Siggi made himself an MD at Lehman six years after obtaining his master’s degree from Stanford. In 1998, at the age of 32, he was the Co-head of US equities derivatives at Lehman, based in New York.

Investment bankers have to love New York, London, Tokyo and Hong Kong. Siggi is a good example. After heading the equity derivatives trading team of Lehman at New York and London, he’s marching off to Tokyo in his new position. I’ll talk about living in these cities later on.

Sigurbjorn Thorkelsson will relocate to Tokyo as Lehman seeks to build out its equity franchise in Asia. June 5, 2007

Sigurbjorn Thorkelsson - Bio
1966 Born
1990 Degree in Mechanical Engineering, University of Ireland
1992 Master in Industrial Engineering and Finance, Stanford
1992 Lehman Brothers
1994 CIBC
1998 Managing Director, Lehman Brothers, Co-head US Equity Derivatives, New York
1999 Board Member, Lehman Brothers
2004 Head of European Derivatives Trading, Lehman Brothers, London
2007 Head of Asian Equities, Lehman Brothers, Tokyo

Thorkelsson has headed the European equity derivatives and convertibles division for the past three years, overseeing trading, sales and analytics for the businesses. He joining the bank in 1992, but left between 1994 and 1998 to work for CIBC. He rejoined Lehman Brothers’ equity derivatives group in New York in 1998, and took part in the establishment of a structured products trading group. He has since taken on a number of roles including co-head of US equity derivatives trading and head of European equity derivatives trading.

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Investment Banking Career

Wednesday, June 6, 2007

Investment Banking Salary – News & Bios

Dow Kim - Merrill Lynch

How are you going to spend US$37 million?
Couple of posts ago, I mentioned that global heads’ and CEOs’ income has no ceiling. But is there a ballpark? Yes, Dow Kim, was reported to be paid US$37 million last year. In May 2007, one of the hottest news on Walls Street was his resignation from Merrill Lynch to set up his own hedge fund.

Dow Kim is the Co-President of the Global Markets and Investment Banking group at Merrill Lynch. What is the temptation of running a hedge fund? How much can a
hedge fund manager earn? Read this.

Really Big Bucks
In 2006, three hedge fund managers took home over $1 billion on the year, according to Alpha magazine's new list of the
top 25 fund earners. Read more.

Dow Kim started his career as a credit analyst/derivatives trader at Manufacturers Hanover Trust in 1985. In the first nine years of his career, he managed to survive through the merge with Chemical Bank. At the age of 28, he made himself the head of derivatives trading at Chemical Bank, Japan. At the age of 31, he was the head of derivative trading of Merrill Lynch in Japan. Today he is the second-highest-paid executive at Merrill Lynch, after the CEO Stan O’Neal.

If you are doing as good as Dow did, you can also make yourself a department head before 30. Department heads nowadays make between US$6.25 million and US$2.5 million depending on the size of the investment bank you work for – according to Investment Dealers’ Digest.

Dow Kim – Bio
1963 Born
1984 BSE, Wharton
1985 Credit Analyst, Derivatives Trader, Manufacturers Hanover Trust
1990 MBA, Wharton
1991 Head of Yen Options Trading, Japan, Chemical Bank
1994 Head of Derivative Trading, Japan, Merrill Lynch
2000 Head of Fixed Income, Japan / member of Management Committee, Merrill Lynch
2001 Head of Global Debt Markets, Merrill Lynch
2004 Co-President of the global Markets and Investment Banking group, Merrill Lynch

Dow Kim is an Executive Vice President of Merrill Lynch & Co., Inc. and President of the Global Markets and Investment Banking group. In this role, Dow shares responsibility for Merrill Lynch’s sales, trading and investment banking activities worldwide with Greg Fleming, who is also President of Global Markets & Investment Banking.

Prior to his current position, he was senior vice president and head of Global Debt Markets from 2001 to 2003, with responsibility for all debt sales, trading and origination activities on a global basis. Before that, he was managing director and head of the Global Enterprise Solutions Group, an integrated global derivatives and foreign exchange group from 2000 to 2001.

Prior to moving to New York in March 2000, Mr. Kim managed the firm’s integrated fixed income business in Japan for 3 years and was a member of the Executive Management Committee of Merrill Lynch Japan, Inc.

Mr. Kim joined Merrill Lynch in January 1994 to manage the Debt Derivatives Trading Desk in Japan, and subsequently served as a Managing Director and Head of Debt & Equity Derivatives there.

Prior to joining Merrill Lynch, Mr. Kim worked for Chemical Bank from 1991 to 1994 in Tokyo as a Vice President and Head of Yen Options Trading. From 1985 to 1991, he worked for Manufacturers Hanover Bank in New York as a credit analyst, a commercial banker and derivatives trader.

Born and raised in Korea as well as in Singapore and the U.S., Mr. Kim earned a BSE from The Wharton School in 1984. During nine years with Manufacturers Hanover/Chemical Bank, Mr. Kim took part in The Wharton Executive MBA Program and received an MBA degree in 1990. Mr. Kim also completed the Advanced Management Program at the Harvard Business School in
November 2000.

Source: Bloomberg

Answer to my previous question: What is Marshall Wace TOPS?
Most hedge fund managers trumpet the brilliance of their own trading strategies and, given half a chance, disparage their brokers’ ideas. For one thing, it helps to justify their high management fees. Even traditional fund managers have been building their own teams of analysts, to avoid having to rely on brokers.

So Marshall Wace, with $7.5bn under management, is something of an anti-hedge fund: it has become one of Europe’s largest hedge funds by championing the value of brokers’ ideas. The fund’s TOPS system captures the best “sell-side” strategies electronically and trades on them. Almost 200 brokerage firms feed ideas into the system and the best performers are rewarded with additional trading business.

Source: FT

More about TOPS

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Investment banking salary