I regularly get people asking me how they can get jobs in finance.  Many of them are young.  Some are older and have done other things, but have been bitten by the investing bug, and want to make a shift.

Now, before I start, let me say that if you are smart, driven, motivated, organized, and generally capable at all that you do, and you are working in another field, say chemical engineering, and you want to move to investing, you might be better off asking your supervisors to give you projects with dotted-line relationships to the investment function of the company.  That could propel you to later roles where you head a division, or run a smaller company.  The ability to invest wisely has all sorts of positive spillover effects in managing an enterprise.  So before you head off to work in investing in the public markets, take a step back, and see how you can combine your existing expertise, and try to invest in the private markets, where you may have Buffett’s “unfair advantage.”

The first thing I tell them about is my career.  In short, here it is:

• Actuarial Trainee — Pacific Standard Life
• Actuary for the Domestic Annuity Lines at AIG
• Investment Actuary for the Pension Division at Provident Mutual
• Investment Actuary for the Annuity Division at Provident Mutual
• Mortgage bond manager and Risk Manager for Mount Washington Investment Group, which was managing the assets of Fidelity and Guaranty Life.
• Manager of of the investments for Fidelity and Guaranty Life. (Still risk manager too)
• Corporate bond manager for Dwight Investment Management (Still risk manager too)
• Senior Investment Analyst for Hovde Capital Advisors, covering insurance companies, and managing the profit-sharing and charitable endowment funds.
• Concurrently, writing for RealMoney.com.
• Chief Economist and Director of Research for Finacorp Securities, which allowed me to work from home during a difficult personal time for my family.
• Concurrently, writing the Aleph Blog.
• Principal of Aleph Investments, offering stock and bond management strategies, and a strategy to switch between them.

That’s a lot for 25 years.  Do you notice something unusual here?  Most of the jobs I switched to I did not have the full complement of skills to handle.  I learned as I went, but there were two costs to that:

1. Only risk-taking businesses would hire me.  That meant more pressure, which in general, I did not mind.  I liked challenges.
2. I had to learn more as I took the jumps.  Not everyone likes to do that.  I love a challenge.

For those looking for jobs in investments, if you can’t find the opportunities you would like, I would encourage you to look for adjancencies. Look for jobs that are close to investing.  Here are examples:

• Investment marketing
• Investment accounting
• Investment auditing
• Investment management consulting
• Working for the rating agencies (anyone can get a job there)
• Working for the regulators
• Working for government investors, pension plans, GSEs, Supranationals, etc.
• Working for endowments
• Working in the Treasury arm of a corporation.  Hedging, pension plan, short-term investments, etc.
• Work in a bank, thrift or insurance company.  Look for projects where you can show off investment expertise.
• And more.

And in all of these ideas, network.  Join your local CFA Society; get the credential if you can.  Talk with people in investing.  Volunteer and show your competence.  This will not return void.

Those with energy and a willingness to learn have a huge advantage over the rest.  If this article benefits you please e-mail me, and let me know how your career has benefited.

He finally decided to do it.  He’s going to buy back stock.

Don’t get me wrong.  I am not a critic here, nor an admirer; I am just an observer.

Buffett is a rational guy. Hyper-rational.  More rational than I am.

He thinks that his stock is a good buy below 1.1x unadjusted book value.  I don’t know that he is right there, but I give him and Whitney Tilson the benefit of the doubt.

My friend Josh Brown said:

Full disclosure, I’m long Berkshire Hathaway B shares for client and family accounts and have been forever and a day, so of course I’m thrilled with the news this morning.

Normally I detest buybacks.  The primary reasons are:

They usually occur at the top of a cycle and are a sign of a top when they peak en masse

They usually are used to mask massive stock option issuance to enrich insiders while doing nothing other than offsetting dilution to shareholders

They are financial engineering and are thus suspect

They are inferior to dividends

They can be a sign that management has no idea what to do to grow or improve a business

But Buffett is not masking stock issuance, he is purely concerned with building shareholder value and sees an investment in his own stock (and hence the various companies he owns) as the best use of capital.  This is very different from when Cisco issues 50 million in options and then announces the requisite buyback that would offset it.

As far as buybacks go, this is a good one, but the question remains, how good is it?  If Buffett had better uses for cash, he would not be buying back stock, and this is at a time when all equity valuations are depressed.

To me this indicates that Buffett does not have any large places to deploy cash superior to the cost of capital of Berkshire Hathaway, which is pretty low, aside from investments with an inadequate margin of safety.

That doesn’t mean the whole market is overvalued, but it does mean that a bright guy like Buffett anticipates no more large productive places in the near future to put large amounts money to work than by shrinking his own balance sheet.  Not a good sign for the economy.

He could sit on the cash and wait.  He has done it before at valuation levels like this in the mid-2000s.  It’s not as if the compression in valuations has only hit BRK.  Many companies seem cheap now on a current earnings basis.  This is especially true of many insurers, of which BRK is one.

Buffett was willing to expend cash to make a superior offer for Transatlantic Reinsurance at a little more than 70% of book, and 8x forward earnings.  Granted, that would have only deployed $3B+, and given him more float to invest.  Still, it shows the cheapness of the environment.  But perhaps there is more uncertainty around the valuations of less well-capitalized firms than BRK, so buying back higher quality BRK stock is preferred to buying in the liabilities of companies of which Buffett has less knowledge.

There is the more radical act: Buffett could buy the stock outright himself.  He has significant personal outside holdings; why not sell them and buy more BRK?  That would make an even greater statement then the buyback.  An insider buy from the ultimate insider at BRK would say a lot more than shrinking BRK’s balance sheet through buybacks.  Think of it this way: Buffett’s interest in BRK increases 4 times as fast if he uses his own money versus the corporation doing the buyback.

As an investor in insurers here, I have better places to put money than BRK.  I like BRK, but the whole industry is cheap amid the uncertainty of the macroeconomic environment.  BRK deserves the higher valuation because it is a diversified industrial/insurance conglomerate, and not merely a despised insurer.

I will sit and own my cheap insurers because their cash flows will more than justify higher valuations eventually.

PS — there had to be a better way to do this.  BRK could have struck a deal to do an accelerated share repurchase, without jolting the market, and pushing up the price of a repurchase.  Perhaps it could have been done by simply announcing that the Board has approved buybacks, should the price ever become favorable for that, and then repurchase slowly and quietly.