Day 2 - Learning About Hedge Funds

Day Two:

My second day at SDB was almost as confusing as my first. I met a hundred more friendly but un-interested people on the dealing floor. By the end of the day, I could not remember any of them nor could I remember the jobs they did. By the same turn, I am sure they forgot about me instantly. God, was I setting myself up to look like an idiot or what? Day two and I still had no idea whom anyone was, what anyone did and worse what I was supposed to be doing.

I did however learn two things and remember one person. I learnt how to use my computer terminal. I could access my email which I did not yet need, I could pull up an information system called Bloomberg which could do a million things for me that I did not know about, I could access Reuters which would do about a million other things that I did not understand and I could access a couple of electronic trading platforms that seemed to make my job irrelevant.

The person I remember was Sara Dudley. She worked on the Hedge Fund sales desk. Sara taught me as much as she could about Hedge Funds. When I say she taught me as much as she could, I mean as much as she had the patience to. From the look on her face I think she was wondering why SDB had hired me. Why not? I was thinking the same thing.

Hedge Funds, now there’s a business. I understood pretty quickly, or at least I thought I did. In my understanding they would at any one time be long something they thought cheap and short something they thought expensive and ride the spread differential. Some of them were leveraged long, Sara had explained. Wow! You buy something and lend it back to the bank you bought it from and with those proceeds you buy some more and do the same again and again. And you were not tied to just one broker. As a big Hedge Fund you could deal with any number of counterparties. Yahoo! I thought for the sales people, but I was not sure for whom it was great business. Sara looked at me as if I was quite mad, or perhaps just stupid, when I voiced this.

I did however like the idea of Hedge Funds and from the volume of enquiry the desk was generating I thought that I would like to have a Hedge Fund or two as a client. Sara made it clear to me that in no way was I qualified or capable of dealing with such sophisticated clients. Thank you Sara!

End of day two. What was I doing?