How did investment banking culture end up this way?

In general, I've always blindly accepted investment banking culture. The rules, the interview process, the face time, the mistreatment of younger employees. It never really bothered me...

That said, I am currently reading a fantastic book called "In the Plex: How Google Thinks, Works, and Shapes Our Lives" by Steven Levy. If you read this book, you will find out that Google has a similar elite culture associated with its workforce. Google only hires individuals from top schools with outstanding GPAs. As well, Google is notorious for extremely difficult interview questions. The company brags that it hires the best of the best... does that sound familiar?

Beating the stock market

Any new investor is quickly exposed to the concept of beating the market. It seems the industry is obsessed with this goal. Fund managers are paid their bonuses on relative performance to the market. Individual stocks are often displayed on a graph in comparison to the general market... It is backbone of the investment industry!

Why the industry is obsessed with beating the market: Consider the fact that without beating the market, a fund manager provides NO VALUE ADD. Why would I pay someone 2% management fee to "match" the market. Hence the industry designed this rule to help sell their investment services. However, it is important to understand that the market is comprised of a collection of stocks which in aggregate make up the broader economy.

The 10 ways to know your boss likes you

The following are 10 giveaways that you are in good standing at the firm:

    1. 1. Your boss doesn't clock you in and out: If you are performing very well, you will eventually notice that your boss doesn't care as much if you show up a bit late, leave a bit early or take a longer lunch.
      2. Your boss begins to share family stories with you: If your boss starts telling you details about his personal life then he trusts you and expects that you will "stick around" in the company. That's why he feels it's worthwhile to tell you this stuff.
      3. Your boss asks you if you want to grab a coffee or lunch with him: You know you are in good standing if your boss offers to grab a bite to eat, or head down to buy a coffee together. This is in sharp contrast to a boss which gives you 10 bucks and tells you go bring him a lunch - that indicates he thinks you are just an admin boy.
  • Make the most out of your MBA... Because you only get one shot

    Eminem was onto something when he sang "because opportunity comes once in a lifetime"... I doubt he realized that his advice is extremely relevant to MBA students!

    When I came out of MBA, I specifically remember large banks posting "rotation programs" (sales & trading, or capital markets), associate positions, PE jobs, etc.

    Many of these roles were specifically designed for "new grads". The idea is you have to enter the field as a new MBA grad, or the odds of getting into that role later on are very slim. Sure you can always sneak in the back door, but the bulge bracket firms are primarily interested in recruiting on-campus.

    These on-campus employers are treating the MBA program as the big stage - it's your one chance to get noticed.

    Here is a scenario to consider...

    5 Rules of Getting a Job from a Non-Target School

    I've been in the industry for several years and I've come across every type of situation. I've met guys from top schools who work in bulge bracket firms, but I've also met people from those same schools who can't seem to land a great job. Conversely, I've met guys from non-target schools who managed to get into a top firm.

    Simply stated, I do recommend you attend the best school you can get into. Being the underdog is no fun and even if you "break in" it will take longer to get where you want to go. As well, there are many employers you'll meet along the way that are very rigid about the "rules". So even if you get in, it may still be harder to get promoted or find a better job later on. Therefore, the best solution is to attend the best school. This leads me to the first rule:

    Rule #1: Remember the Michael Jordan Rule:

    The Harsh Truth about Why You May Not Get Promoted!

    When you join a large organization, you tend to hear HR buzz words like: career development, career progression, succession planning, growth opportunities, etc. Essentially, you are being told that your organization takes a tremendous interest in your career development. In many cases, that is indeed the case (but not always...).

    In part, promotions depend on your performance, and fit within the company. However, promotions also depend on your boss and HR's attitude towards helping you move up in the organization!

    Let us step back and consider what makes for an ideal manager: generate higher revenues while keeping costs down. That's how you maximize shareholder returns.
    Now ask yourself: if a manager can extract the same output (i.e. financial analysis, or excel modeling) from an analyst who makes $100k, why would he be incented to promote that analyst to associate and end up paying $200k for the same excel file??? If the manager's goal is to keep costs down, then he is better off not promoting the analyst, and obtaining the same output for less.

    The 10 commandments for surviving your summer internship

    Moderator Note (Andy): DM123 completed an engineering degree and an MBA. He has work experience as an investment banking analyst, mid-market lending analyst, and is currently a corporate banking associate at a global investment bank. He also has co-op experience in management consulting, and in institutional fixed income money management.

    When I look back to those days as a summer intern, I can't help but recall the "rookie mistakes" that either I or my fellow summer analysts made at our first Wall Street job. Follow these 10 steps and you'll be sure to have a successful summer placement: