Quora Answer: Which Takes the Most Talent to Manage - Hedge Fund, Private Equity, Investment Banking, or Venture Capital?

The following is my answer to a Quora question: “Which requires the most talent to manage: hedge funds, private equity, banking, or venture capital?”

How do you quantify “talent”?  This is entirely subjective.  Whilst all these pertain to finance, they actually require different skill sets, and are thus not actually rankable.  That would be like asking which doctor is better: a proctologist or a cardiologist?  One looks at the anus, and the other looks at the heart.  Or, for some people, that might be the same thing.  They are both about medicine, but they both require unique sets of knowledge.

A hedge fund is a fund that engages in speculation and risky trades for substantial gain.  It requires a person who is good at reading sudden changes in the market, and the ability to spot trends and bet against them before they fully develop.  Hence, hedging.  A private equity firm invests in the private equity of operating companies through a variety of investment strategies including leveraged buyout, venture capital, and growth capital.  They tend to seek growth over a medium to long investment horizon.  The skills required are totally different.  What may be a virtue in a hedge fund manager is not what you want in your private equity manager.