The Career Insight Series provides interesting insight into popular graduate careers through personal one day work diaries.
John Butters is an independent portfolio manager with an expertise in macro strategy and special situations.
My life is a little complicated at present, so I will give you my usual routine when things are settled!
I try to keep to a very regular routine. I never used to like routine — at university, my days were all over the place — but I have learnt that a strong routine is the way to get through a solid amount of work. I like to get at least eight hours’ sleep, as any less means that my mind is not sharp. I get up a little before seven and make the first coffee of the day (good-quality instant, because it’s quicker), and drink it while shaving and ironing a shirt and listening to The Economist’s audio edition on my iPhone. The Economist is great but allocating three hours a week to reading the whole thing is not practical with my schedule, so the audio edition is a good compromise.
I have a short ride on the tube to work, during which I usually read an economics or strategy piece on my iPad. In the office I make a breakfast of fruit, yoghurt and granola and spend an hour or so reading the news (Bloomberg, the FT and FT Alphaville) and checking the day’s data releases on the Bloomberg machine and the excellent ForexFactory.com. Then I spend 20-30 minutes writing a strategy briefing, which I send to my colleagues.
I write all the time, as it’s the best way to consolidate your thoughts and to bring out the weaknesses in your opinions. Throughout the day I write little pieces for myself, in which I explore questions that I don’t yet understand. I mostly write in physical notebooks and in Evernote, which is a great tool.
Mid-morning, my colleagues and I have a meeting where we talk about our latest investment ideas and try to pull them apart to see what further work needs doing. I love these meetings, because they are a chance to look at ideas outside my specialisms — one of my colleagues loves deep-value equities, for example — and because explaining ideas to other people who are prepared to criticise is a great way of testing them out.
We have a good working relationship and people don’t take intellectual criticism to heart. That’s very important, because in order to get any good ideas you have to really pound the mediocre ones. We track our ideas carefully to make sure that everything is taken to a conclusion, using a simple Access database; things that are “live” and haven’t been talked about for a few days reappear automatically on the agenda. After the meeting I think through my research priorities and other tasks for the day, which I keep track of using Todoist.com.
I keep a close eye on the markets, of course. I have a screen on my desk that displays eighteen of the most important, plus anything on my watchlist, and once a day I like to go through the list and look at everything over one, four and fifteen years. I also look at a whole range of different indicators for the major economies on a daily basis, including breakeven inflation rates, credit spreads, term funding vs. overnight spreads, secured vs. unsecured lending spreads, central-bank balance sheets, real interest rates, yield curve slopes and the Citi economic surprise indices.
I have various tools that I have made to help with this, like spreadsheets that pull all the data out of Bloomberg and make a pack of charts, and pages that display markets in the way I like to look at them (currency pairs against interest-rate differentials, for example).
When I research things, either macro questions or special ideas, I write papers. I like to be writing all the time! Sometimes it’s only a paragraph in an email, and sometimes it’s something more formal (for which I sometimes use LaTeX, because it makes working papers look lovely with very little effort). Macro questions fall into two categories, which are naturalism and modelling. Questions in naturalism are about finding out what is going on, which is often not a trivial thing.
Modelling is about fitting observations together to get to a deeper understanding. You need a model to make a rational forecast, and in macro you often need a little set of rational forecasts to make a complete market view. I collect modelling approaches and modelling tools; my favourite tools are Excel, which is so brilliantly simple, and R, which is a statistical programming language that is really flexible.
Special situations are all about understanding the instrument in question and working out how to value it — if they weren’t hard to value then they wouldn’t be “special”. I like to come at them from several different directions and often create harsh but reasonable stressed scenarios. Anything that still looks cheap after that is probably a good buy. It’s harder when the “specialness” is all about future prospects, because then the valuation will probably not be low compared to a downside scenario. Then you have to focus on the right questions like, in private equity, is it a good team.
It’s important to pause in the middle of the day, because you can’t work hard all the time. So at lunch time I take a break and go for a run or a swim and then read a few of my favourite blogs. The economics “blogosphere” in the US has really flourished in the past few years and I skim through a list of twenty or so (Mark Thoma’s “Economist’s View” is a good place to start exploring blogs, because he has links to, and summaries of, good pieces from all over the web; he also has some great video lectures on his website, including a good course on econometrics).
I also follow some feeds of political opinion polls and blogs on statistical methods and behavioural psychology. I think what’s going on in psychology is really exciting. Over the last few decades it has moved from pseudoscience to proper science, and as a result ours is the first generation that has anything like a scientific understanding of our own and other people’s minds. Daniel Kahneman’s book “Thinking, Fast and Slow” provides a wonderful introduction.
No job is all intellectual fun, and there are usually administrative tasks to get through. For example, marketing anything in investment management means an awful lot of paperwork — presentations, offering memoranda and so ont. Also, one has to be “out there” in the market to find out about new ideas. I try to read the latest ideas from brokers and to chat with them, although I never devote as much time to this as I should. There are some really smart people on the sell side, and they talk to a lot of other smart people, so they can be a really good source of ideas
I try to finish by 8pm, but I often fail! If possible I read a chapter of a book or watch a video lecture in the evening. You have to keep learning or you go stale, and the more new ideas you encounter, the more interesting new connections they make in your mind. So never stop! I do try to spend one evening a week with my girlfriend, though, and we don’t work at the weekends if we can possibly avoid it. We’re getting married in August and it’s important to spend time on each other. However much I love my job, it’s only work, and there are much more important things in life!
Thanks to Evelyn Anyiri for coordinating and starting these series !
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