Established in 2001, Citadel Global Equities is Citadel’s founding fundamental equities business and has evolved one of the most sophisticated training regimens in the industry.  One of the secrets to making it to a leadership position is “solving signal to noise,” says Ron Wexler, Macro Strategist and Head of Learning & Development for Global Equities.

Start by Developing a Thorough Understanding of a Specific Industry

As a new associate, your job will be to learn a specific industry.  A typical associate will spend his or her day reading financial statements, listening to earnings calls, going to industry conferences, speaking with suppliers/customers/distributors and increasingly, analyzing alternative data sets.  Research insights are then processed into financial models.  Those financial models are then used to make investment decisions.  In addition, associates are also being asked to help build infrastructure so the team can process news-flow faster and systematically track risk-reward.

Hint: Make sure you take the time to understand all the tools and data sets your firm has access to. Even before taking that first job, ask for specifics about the resources you’ll be able to draw upon, especially proprietary tools, libraries, and training techniques.

The Citadel approach: Because we understand that professional development is not an overnight process, each year we facilitate a number of in-person training days and more informal forums for associates. With small breakout sessions and fireside chats, these programs are designed to help foster a culture of continuous learning.  In addition, associates also have access to a digital library with hundreds of best practice documents from prior training days.

Shift from Idea Generation to Idea Monetization

To progress to analyst, associates need to start differentiating between good and bad ideas.  This requires a thorough understanding of risk-reward, positioning and investor sentiment.

Some new questions become part and parcel to your day, including:

• Is your view differentiated from the market?
• What is the catalyst path?
• What should the size of this trade be?
• When should we make this trade?
• What gets you to change your mind?

To systematically generate unique insights requires analysts to develop a deep understanding of an industry, a rich understanding of historical trends, a vast network of contacts, an array of tools to help you identify mis-pricings, and the entrepreneurial spirit to always be looking for new datasets.

Hint: As focused as you are on the stocks you’re analyzing, don’t forget to turn the microscope around. Understand how your own performance is being evaluated. Does your company set arbitrary timeframes for how long you should be in a certain role, or are they measuring performance improvements and promoting based on talent and merit? Merit-based evaluations increase the speed at which you can develop and fulfill your potential. 

The Citadel approach: As associates progress in their career, they are eventually given the opportunity to track a paper portfolio of their investment ideas.  This tool is designed to teach associates skills they will need as analysts:  portfolio construction, risk management and attribution of returns.  This learning tool is also available for analysts and is often used as an input to scale trade ideas. 

Coach the Team

Analysts that can demonstrate an ability to generate strong returns and manage associates will eventually be given the opportunity to become a portfolio manager. In this position, you’ll leverage your past experiences to mentor team members.  In particular, PM’s are well suited to teach their associates how to separate news from noise, how to effectively use their time, and how to build strong relationships.

The Citadel Approach: Similar to the associates, analysts and PM’s also participate in training days.  Discussions center around a wide array of topics including how to scale ideas, portfolio construction, risk management tips and how to manage a team.  Analysts and PM’s also have access to a digital library with hundreds of best practice documents from prior training days.

Effective time management is a critical ingredient to success.  As a PM your job is to not only help your team improve their pattern recognition but also to help them effectively manage their time.  One common approach to effective time management is to look at returns over the last year and ask what data/information was needed to have gotten various trades right.  Ask yourself what you wish you knew earlier and what you could have done better.  By routinely taking stock of your progress, you will be even better equipped to take the lead and build a strong team as a portfolio manager.

“At each stage of your career, if you’re able to separate the signal from the noise, and effectively manage your time, you can be more than just a leader of a team,” adds Wexler. “You can be a leader in the industry.”