The stereotypical image of the world of finance and investing from the “Wolf of Wall Street” is probably slowly making its way into your mind as you read this title, but bear with me. Have you ever been intrigued by the mysterious financial world which always seems to be exclusive to insiders who understand its ins and outs? Maybe you watched the “Big Short”, “Margin Call”, or “Inside Job” and thought to yourself, wow, it all seems too complex; I don’t understand anything. What the heck does a “margin call” or “shorting” even mean?
As you grow older and become an independent adult, the thought of investing for your retirement miay start to kick-in a bit and nag you. The confusion from finance movies and news, combined with the fact that we don’t get schooled on anything remotely related to our personal finances, is not at all helpful. It might have even infused in you the thought that it’s better to pay other people to get this job done for you. Sorry to disappoint you, but more often than not, these so called “seasoned professionals” charge obscene fees without actually offering you any “Alpha”, another word for “added value”. What’s more thought-provoking is that these people want you to remain ignorant so that they continue to pocket-in their hefty fees.
The Portfolio Management Program (PMP) at ESMT Berlin was a rare and excellent opportunity to get a hands-on experience in the intricacies of this black box. In a classical way to grab your attention, I will tell you that unfolding the ambiguities of this black box can open a whole world of opportunities in front of you that you didn’t even know existed before. Please read on to know how.
The PMP is an exclusive, 2-year professional program wherein 3 groups of selected students pursue “themed” investment strategies and actively manage a real-money portfolio with a total value of 3 million EUR (1 million EUR per group). Faculty and industry professionals mentor you throughout the PMP. However, the groups are given almost full autonomy on their investment decisions and are allowed to trade various types of financial instruments on a global scale.
I chose the PMP because the realm of investing is always dynamic, mixes aspects of art and science, and allows you to accumulate an immense amount of knowledge about how the world and economies function. Furthermore, there are a lot of transferable skills that will enable you to excel in this field, busting the myth that it is inaccessible for outsiders. In the PMP, we have people with engineering, business, computer science, and even law backgrounds. If you have the passion and remain persistent, you will continue to make progress. I personally joined the PMP with only two things, a great deal of enthusiasm and good quant skills. I knew almost nothing about financial markets. Little did I know that 2 years later, I would be highly inspired off the back of this program to pursue a career in the very same field that seemed a total mystery to me at the beginning.
On the technical side, I came to grips with financial modeling, risk management, hedging techniques, technical analysis, among many other tools. On the more intangible side, I developed a solid understanding of financial products and how money flows, political and economic policies affect markets. What will always remain as the most crucial learning experience of this program, however, is the psychological aspect of investing. You deal with “real” 1 million Euros with no simulations involved. You have your skin in the game, “literally” and “figuratively”, so you must be responsible enough to engage in prudent investing and not engage in any reckless trades.
Was the program without challenges? Obviously not. Otherwise, it would have been another boring class that you take in a lecture room. There were two major challenges that I faced throughout my PMP journey, perhaps the biggest of which was that everything felt extremely confusing in the beginning; it’s almost like I was thrown into cold water without knowing how to swim. Reminiscing on this chapter of my life, I realize now that this is the essence of the PMP’s uniqueness and is exactly what needed to happen for me to “grow”. The industry itself is harsh and no one will spoon-feed you with information. The strength of this program lies in the fact that you must “rise to the challenge”, move beyond the frustration, and remain motivated and eager to learn for two long years. You have to actively seek to excel in this program and I am grateful that there was always a sense of friendly-competition within our team and among all teams in Berlin. It has always brought me and my fellow teammates back on track whenever we felt like slacking.
The same mindset applies to the second biggest challenge which has to do with the volatility of money-making in financial markets. You experience an ocean of emotions with extremely euphoric, low moments, and everything in between. You are exposed to nerve wracking situations and learn how to adapt and move on. You learn how to manage risk, course-correct, and gradually begin to develop an emotionless investing personality which made legendary investors such as Warren Buffet billions of dollars. The essence of the PMP is learning by doing, learning by repetition, and learning by failing. When it comes to learning how to invest your own money, I can’t think of a better way to learn this than being in a safe environment while simultaneously getting guidance from a professional who has gone through this journey before you. This is what the PMP offers you, a chance to be part of the “real deal” where you don’t face the scrutiny of clients or face the risk of losing your life’s savings.
If I have one final message to tell any eager students who may be encouraged to join the PMP in the future, it will be this: No matter what you choose as a profession after finishing the PMP, you can rest assured that you will have gained a tremendous treasure of knowledge that will propel you forward in your career and personal life. You will also gain extremely valuable connections and remain associated with one of the most exclusive professional programs in Europe which exist in just 4 universities in Berlin, Zurich, and Vienna. I am proud and honored to have taken part in a learning experience that most definitely deserves to be labeled “A phenomenal growth journey”.
Acknowledgments
Special thanks to Mr. Peter Pühringer (PMP founder), Sascha Czerwenka & Florian Mair (PMP managing Co-heads) for enacting and supervising this program.
A big thank you goes to Gerald Leitner (our PMP mentor) for his relentless coaching and support throughout these 2 years.
A very warm thank you goes to Udayaraj Natarajan, Baris Efe, and Tobias Großbölting (my fellow 2nd-year portfolio managers) for bringing about incredible investing ideas and contributing to a great final performance.
Final words of appreciation and gratitude have to go to the exceptional 1st-year analysts who have shown an outstanding engagement and commitment to the program, Niels Richter, Kutay Koralturk, Virgilio Avila, Hsun Ho (Gordon), Leonardo Gutarra, Kacper Szostakow, Davide Balistreri, Zane Baity, Chun-Ming Chang (Jimmy), and Jonas Beckmann.
