During my last six week at Houlihan Lokey, in addition to finishing the projects on my desk and handing off my responsibilities to the two Senior Vice Presidents with whom I worked, I updated my resume and registered on several Internet job boards.
I dug out my lists of investment banks, hedge funds, private equity firms and valuation firms, many of which I had spoken with the year before, the first time I had been fired. I made numerous phone calls and forwarded my resume to dozens of contacts. I knew it would not be an easy process but at least I already had a few good leads, including interest from the largest valuation firm, Duff & Phelps. A member of the Duff & Phelps Human Resource department had called me every few months during the course of the year to ask if I was interested in working there. I had always answered in the affirmative, but they had never followed up by calling me in for a meeting.
I also had contacts at some of the top bulge bracket investment banks, such as Goldman Sachs, Bear Stearns and Lehman Brothers. I had reached out to them before, and there was no reason not to reach out again, especially since I now had two years experience producing valuations at Houlihan Lokey. I had never intended to be a consultant. It was time to find a real job, a full-time job with benefits, health insurance and bonus potential.
Since I did not have much pressure at work and had permission to look for a job, I also started researching stock trading strategies and watching the market as closely as I could. I had done some investing over the years, making money most of the time and breaking even at others, so I got prepared to be a more active stock trader.
The Internet-based technology available to people who wanted to trade stocks from home on a daily basis, day-traders, had been well-developed over the years and was quite remarkable. With real-time signals about what was going on in the markets and with individual stocks, day-trading looked easy. Every day, as I watched the market, I convinced myself that I would have made thousands of dollars if only I had been day-trading. I grew certain I could make a living in the stock market.
Another possibility I envisioned for myself was staring a hedge fund and managing other peoples’ money. Over the years, I had become enamored by one specific strategy which I some day hoped to implement on a grand scale. I had read several academic papers demonstrating that the buy-write or covered-call strategy was one of the most prudent and lucrative investment strategies—and it made perfect sense to me. I could buy stocks and sell options against them.
I could help people protect their stock investments from the downside and grow their portfolio to the upside by doing what a hedge fund was supposed to do—hedge.
If done correctly—with discipline, a little trading strategy and a portfolio of the most successful long-term performing stocks—it was no more than selling time and volatility. In the long run, I would reap the benefits of growth and the dividends paid by some of the biggest and best companies in the world. Perhaps I could raise enough funds to start my own hedge fund.
Cindy thought I should do it all: look for a job, start day-trading and try to raise money for a hedge fund.
“You don’t know what will work out,” she said.However, what she really wanted me to do was to start my own business valuations firm. “You don’t get rich working for other people,” she admonished me. “You get rich by starting your own business and being successful. At least then, no one can fire you.”
Her father had worked hard for most of his life to build up an institutional pharmacy business and had sold it off, allowing him to retire early.
Her brother was building his own health care company and was on the verge of great success.
My father had established several law firms and had been a Partner most of his life. He had also opened an innovative color photography art gallery, Images, a Gallery of Contemporary Photographic Art, the first of its kind in New York City and had founded a small publishing house, Consultant Press.
My older brother, after years of working for others, including Citigroup and Solomon Brothers, had founded a hedge fund in Los Angeles and was doing quite well.
Since graduating MIT, I had always thought I would be an entrepreneur. During the high-tech boom of the 1990’s, I had tried to raise money for a startup and had come close to succeeding, but I had not been able to raise that first round of financing. I had returned to the job market to spend my time working for companies large and small but always for someone else as a salary man. Maybe it was finally my turn to strike out on my own and start a business.
The only problem was money. I didn’t have the time or capital to start a valuations firm in New York City. The overhead was prohibitive, and what if I didn’t win clients quickly enough? I did not have the luxury of spending a year or even a few months on marketing my services. I needed to make as much money as I could as quickly as possible in order to support my family.
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