Summary of Tom Costello's The Front Office

By IRB Media

Please note: This is a companion version & not the original book.

Book Preview: #1 The most efficient way to make outsized returns is by luck, but credibility with institutional investors is the only thing that matters. Good luck is great, but no one is going to give you billions of dollars to manage just because you’ve gotten some. You must demonstrate a systemic causality in your trading to prove that your performance isn’t just luck.

#2 There are some simple things you can do to increase your credibility in institutional finance, and some that are so difficult that only the most intelligent people can do them.

#3 If you want to work for a big hedge fund, you’ll have to follow their rules. The most reputable firms are large, multi-strategy funds. They’ll have a carefully thought out filtering process designed to make sure that the most reliable and responsible people ever get anywhere near a money management decision.

#4 Starting your own fund will allow you to do things the way you want to do them, and pay higher dividends when you succeed. However, this is a rather expensive route.

• Language: English
• Publisher: IRB Media
• Release date: Feb 15, 2022
• ISBN: 9781669348702

IRB Media

With IRB books, you can get the key takeaways and analysis of a book in 15 minutes. We read every chapter, identify the key takeaways and analyze them for your convenience.

Book preview

Insights on Tom Costello's The Front Office

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 6

Insights from Chapter 7

Insights from Chapter 1

#1

The most efficient way to make outsized returns is by luck, but credibility with institutional investors is the only thing that matters. Good luck is great, but no one is going to give you billions of dollars to manage just because you’ve gotten some. You must demonstrate a systemic causality in your trading to prove that your performance isn’t just luck.

#2

There are some simple things you can do to increase your credibility in institutional finance, and some that are so difficult that only the most intelligent people can do them.

#3

If you want to work for a big hedge fund, you’ll have to follow their rules. The most reputable firms are large, multi-strategy funds. They’ll have a carefully thought out filtering process designed to make sure that the most reliable and responsible people ever get anywhere near a money management decision.

#4

Starting your own fund will allow you to do things the way you want to do them, and pay higher dividends when you succeed. However, this is a rather expensive route.

#5

Having a team of professionals, from legal to prime brokerage to custodial, helps your credibility. However, most hedge funds are started by people who believe they know how institutional capital markets work, but really don’t. As a result, failure rates are high in the hedge fund world.

#6

At the beginning, using big, well-known firms such as Goldman Sachs gives you some credibility. However, if you're not big enough to generate enough revenue for them to make those relationships work, you should start off with modest goals.

#7

The things you and I should focus on are the areas where the hedge fund industry is different from other industries,