8/1/10

I've been seeing increasingly frequent discussion on the various boards over the similarities and differences between careers in banking and in trading. A lot of us can speak with authority about one of the two, but not many people can say they've had first-hand experiences in both. I think it's important for us to be clear about the pros and cons of each of the two career paths and I'd like to consolidate some of the opinions that have been floating around about this topic on this thread.

Here's one impression I've gotten from speaking with people on both sides of the isle: Banking is for the typical ivy-league pencil-pushing over-achieving workaholic, while trading requires a somewhat less quantifiable "it factor" that typically manifests itself in the form of uber-competitiveness and the ability to withstand tremendous pressure. A Chicago-based prop-trading friend of mine - we'll refer to him by the initials "A.P." ('A' as in Adam, 'P' as in Ponzi scheme) - once told me that ex-athletes tend to make good traders for that reason, and are therefore actively recruited by many top-tier prop-shops in the Chicago area. I found that tidbit a bit startling, considering quants are supposed to be taking over the world of trading and to this day I still haven't met an athletic quant...

So in an effort to stimulate a healthy flow of information, I'd like to ask anyone with any input on this topic to contribute their $.02. Some of the questions I'd personally like to see answered here are:
-What do recruiters look for when hiring bankers vs. traders? What skills, talents, likes & dislikes are a good fit for what job?
-Who typically makes more money between the two over the long run?
-Which career path typically offers better work/life balance, satisfaction and flexibility?
-What are some of the top locations for each of the two?
-Who gets more tush?

Also, when answering, please make an effort to distinguish between the various kinds of trading, i.e. prop, S&T, etc. and different banking departments.

Protects your selves at all times and come out swinging at the sound of the bell.

P.S. How do you like the "Pick A Side" bumper sticker idea?

Comments (141)

8/1/10

Wondering the same thing, I'm torn between persuing OTC derivatives trading or IB.

"The higher up the mountain, the more treacherous the path"
-Frank Underwood

8/1/10

Your boy must have been talking about sales. Most of the top prop shops (especially in the Chi) have no interest in non-quant background people. As a matter of fact, many won't even talk to the soft-skilled business major crowd. You'll see some target kids get a shop based on rep and connections, but the general preference is towards heavily technical people and there are more PhDs in the game every day. The general train of thought as of late is "give me a comp sci, stat, engineering automaton" (though I'm seeing chemistry and physics frogs pop up on the radar) and I will teach him what he needs to know. The entrepreneurial types are too likely to bolt for their own shop once you teach them a system. For the record, by faaaaaar the most handy skill for trading today...pro-gram-ming.

A trader with real game can knock out in a year what an MB in IBD can over a career. The typical banker, however, will clock hundreds of thousands a year after a while, no matter what. No such guarantees in trading.

The tush goes Alpha every time. Like everything else, it's a matter of what your risk profile is, the situation then adapts to you. Keep'em swinging.

8/1/10

Money may be the common denominator, but traders aren't bankers, and bankers aren't traders. The line may be blurred as you get higher up (HFs, etc.), but from what I have seen, very few people would do one or the other if given the chance. All I've ever wanted to do save for professional sports was to have been a trader. I have never had the desire to do DCF spreadsheets late into the night. This is not to knock IBD, I know quite a few that do IBD and it works for them, but it has never appealed to me.

I work at one of the top tier BBs (albeit in the BO, I'll get to the trading floor eventually or leave the street all together), and salary wise, most market makers (not even the hot shots that are prop guys) seem to have more fun with their job than bankers do, but again my views have shades of selection bias, as I'm only going off of a handful of bankers I know vs. many more traders.

I played a fairly pressure packed sport in college, and the fact that (yes, I know plenty of people are gonna come here and say "well market making isnt prop and therefore isnt really trading blah blah blah) there's risk, but rewards in intelligent decisions (most of the time) is something that draws me and most into it that go into the career. I also believe it was bondarb or revsly or one of the traders on here that said the job may be 24/7 but since you're actively using your brain, (as opposed to cranking out pitchbooks-sorry for the bias), its more enjoyable.

The mansion in Greenwich on Round Hill Road, the porsches and the blonde trophy wife which my banker friends aspire to, to be like other bankers, have never appealed to me (except for the wife of course).

Just my 2 cents

8/2/10
dorsia reservations:

I also believe it was bondarb or revsly or one of the traders on here that said the job may be 24/7 but since you're actively using your brain, (as opposed to cranking out pitchbooks-sorry for the bias), its more enjoyable.

That's exactly why I chose M&A, you dont need to use your brain. Sure the work is boring and the hours are long, but it's easy, and if some bank is going to pay me $100k a year to make powerpoint presentations then I'm not gonna stop them.

You know you've been working too hard when you stop dreaming about bottles of champagne and hordes of naked women, and start dreaming about conditional formatting and circular references.

8/1/10

how about s&t vs prop trading?

8/1/10

If banker presses B instead of M, in worse case scenario he'll get raped by MD at most.

Trader on the other hand will make the entire market go bananas for 40 minutes.

8/1/10
PussInBoots:

If banker presses B instead of M, in worse case scenario he'll get raped by MD at most.

Trader on the other hand will make the entire market go bananas for 40 minutes.

This.

Still not sure if I want to spend the next 30+ years grinding away in corporate finance and the WSO dream chase or look to have enough passive income to live simply and work minimally.

8/1/10

-Who typically makes more money between the two over the long run?
Traders can be done by 35 with a few billion, yet to meet one banker in same boat
-Which career path typically offers better work/life balance, satisfaction and flexibility?
depends on your goals..
-What are some of the top locations for each of the two?
NYC & London for both
-Who gets more tush?
does not matter on job, if you got game you got game

8/1/10

Let me add a couple minor but possibly important points, although these are secondhand info that i've heard/heard:

- a trader is not a trader. Even within BB S&T there are vast differences in terms of income/exit opps/hours/ lifestyle for a trader. Just because you're a trader doesn't mean you can some day move to a hedge fund and cash in on the bonanza. Some traders can never move to a hedge fund and will never make seven figures, simply because of where they started. It depends on what kind of trading, what your product is, etc.

- Of course you can make a lot, but the median is probably pretty similar to the ibanking track. Shit, remember a couple years ago when Blackstone (or kkr?) was offering $1m over the course of 2 years for PRE-MBA associates. So you're 24, here's a million dollars. I doubt that happens much in trading.

- for those who are arguing that a computer can never really replace a human trader, I have seen threads recently where guys on here were concerned about automated trading taking over a particular product or market.

Moral of the story, don't do it for the money. If you're on the fence about whether you should pursue a job in S&T, you're already not cut out for it.

8/1/10
prospie:

Let me add a couple minor but possibly important points, although these are secondhand info that i've heard/heard:

- a trader is not a trader. Even within BB S&T there are vast differences in terms of income/exit opps/hours/ lifestyle for a trader. Just because you're a trader doesn't mean you can some day move to a hedge fund and cash in on the bonanza. Some traders can never move to a hedge fund and will never make seven figures, simply because of where they started. It depends on what kind of trading, what your product is, etc.

- Of course you can make a lot, but the median is probably pretty similar to the ibanking track. Shit, remember a couple years ago when Blackstone (or kkr?) was offering $1m over the course of 2 years for PRE-MBA associates. So you're 24, here's a million dollars. I doubt that happens much in trading.

- for those who are arguing that a computer can never really replace a human trader, I have seen threads recently where guys on here were concerned about automated trading taking over a particular product or market.

Moral of the story, don't do it for the money. If you're on the fence about whether you should pursue a job in S&T, you're already not cut out for it.

agree to moral and yes 24 year old traders can be offered $$$$

8/1/10

look, the whole athletes make good traders thing is way overblown. yes, traders like to hire other guys that have athletics background, but it is not nearly a big deal as it has been made out to be. To be a good trader, you need to be smart, most of the products today are very complicated and have a lot of different risks and other characteristics. Even for simpler products like government bonds, there is still a lot going on and you will see very smart people on all those desks. when i was interning at a BB on the agency desk, all the younger traders that had been around for a couple years were all engineering majors at school. so even on the sell side brains > brawn. but being a former athlete definitely does help, its just not a make a break type thing that some people make it out to be

8/2/10

I am more on the electronic side of trading, and I can't really comment on numbers for either side- trading is a lot more driven by personal performance, and if you can establish a track record of making real money for a firm, you can get someone to offer you a percentage of your earnings.

I can tell you this though- bankers tend to be more of the wannabe old money crowd, and are the types of guys that will look at your shoes and watch when they meet you before they look you in the eye, which I personally detest. Traders on the other hand tend to be from more diverse backgrounds, or really I should say have far more diverse personalities.

Each has their own misery, hours in trading are generally better, though as markets are becoming more 24x7, that is not necessarily true in all cases.

Someone should really start a database where we can all input our numbers. Sometimes I wonder if that 26 year old sales chick is raking it in or not.

8/2/10

Jr. Trader @ a bank with a lot of banker bud's. So my answers will not apply to you Chicago Prop guys (although I did intern at a reputable prop shop)

-What do recruiters look for when hiring bankers vs. traders? What skills, talents, likes & dislikes are a good fit for what job?

Recruiters want bankers generally more polished (eloquent) and their traders with raw mental ability (that's why engineers do well). The trading/athlete phenomenon is due to the pressures on the job- pressures that athletes are familiar with. Nevertheless, both groups like pedigree and intelligence, and my desk is filled with Ivy Leaguer's

-Who typically makes more money between the two over the long run?

Interesting question. The median salary (and the correct answer) is probably the same for both professions in the long run. Too many people on this board think that 20mm+ traders are found everywhere. In the short run, bankers make more.

-Which career path typically offers better work/life balance, satisfaction and flexibility?

This depends on your personality. One forces you to work 100 hours a week on BS models while making your life pretty miserable. The other forces you to be at work at 6:30, forces you to work 70 hours a week and stress out the remainder of your free time, making your life pretty difficult. One isn't easier than the other. They are just really different.

-What are some of the top locations for each of the two?

I say NY, but to each his own.

-Who gets more tush?

The operation guy, the artist, and the barista probably get more azz than most of the monkey's on this board. The fact that you used the word 'tush' suggests that you seldom lay the pipe yourself...

"Sounds to me like you guys a couple of bookies."

Best Response
8/2/10

I work as a prop trader on the International desk of a prop trading firm in NYC and I went to a target school so a lot of my friends are bankers...only a select few became traders. Personally I only work 40-45 hours a week usually from 8 am to 4:30 pm and sometimes I'll stay late if I want to look into new ideas and build some things out. However, when I was a trading assistant/junior trader, I did work more hours just because I wanted to be the first one in the office and the last one out (as a rule of thumb, you should always be there when your superiors are there to support them and more importantly, learn) Also, I do find myself watching CNBC and reading bank research when i get home just for my own personal knowledge and I like to hear other people's opinions. When I am working though, I am sprinting the whole time unlike bankers which are pretty much running a marathon.

In terms of compensation, a good trader makes a LOT more than a good banker for the simple reason that we are getting a % of our PnL and banker pay is pretty much a fixed bureaucratic ladder system. Being a trader is a TRUE meritocracy and you eat what you kill and if you can't kill, well then you go become a banker or flow trader. In my firm, we get paid 40% of our PnL once you make a trader once you make it out of the trading assistant program. We also do hire a few flow traders or prop traders from the banks if we feel they have an "edge" that we currently do not have. Every trader on my desk is up at least 1.5 million this year on my desk or more and we of course have 1 guy who is up 7mm+ this year (not me =( ) However, the options desk is down this year because the volatility of volatility has been so high but that isn't their fault but yes their compensation will take a hit this year although I don't think any of them will be let go.

Since banking is more bureaucratic, it's probably easier for people to keep their jobs as a banker b/c as a trader, nobody cares if you did great work analyzing and building out spreadsheets if you can't translate that into PnL. I enjoy picking off traders who don't have a clue what they are doing and I'm sure other traders do too so you see why bad and mediocre traders must be let go (so you can pick them off when you go to another shop) Also, bankers may make more at the junior trader/analyst level right out of school but that's because 1), we are letting you see our proprietary strategies in exchange for you just doing our PnL and bitch work so there's no reason for us to pay you a salary but since we know you have to pay rent, we do 2) the amount you will learn just by being around successful prop traders should be enough compensation; you are learning to make money, not make stupid powerpoint presentations and kiss ass although we do appreciate it very much. After a while, you can go anywhere and make that money (usually after a junior trader program is done) so firms have to start paying you what you are worth or you will go somewhere else.

Just my 2 cents but I'm biased but I will tell you that I'm mid 20s and I make more than all my banking friends by a good margin and I have no ladder to climb - the market and margin calls is who I report to.

8/2/10
ngtrader:

the market and margin calls is who I report to.

While this may be enjoyable to some, personally I would find that to be a reason not to do trading, and hence a huge factor for deciding between banking vs trading. Trading is much more of a niche career path than banking. Yes it is more meritocratic, but you will only be doing one thing your entire career. I can't imagine being on my deathbed 50 years from now and realizing that my entire career accomplishments can be written in a single line preceded by a $ sign. Yes, banking has more grunt work for a longer period of time, but you do learn more tangible skills that can be applied to other fields. For me, job satisfaction is worth much more than the amount of money I could make.

7/19/11

If this is what you want:

accountspayable:
ngtrader:

the market and margin calls is who I report to.

more tangible skills that can be applied to other fields. For me, job satisfaction is worth much more than the amount of money I could make.

Why not do something like consulting, where you will learn a lot more initially, and pick up more of the interaction skills with less of the grunt work?

9/1/13

Hi, i was just wondering how you got the job you have.

8/2/10
BillyRay05:

-Who gets more tush?

The operation guy, the artist, and the barista probably get more azz than most of the monkey's on this board. The fact that you used the word 'tush' suggests that you seldom lay the pipe yourself...

shit, i should call it "azz" from now on

8/2/10

ahh this is some great stuff goldmansack... this is a major crossroads I am at right now

8/2/10

One of my friends who worked as a Trader at a BB lost 1.5 million. After that, he can never find a second job relating to trading. :(.

12/17/12

I d like to add my bit to this. I ve worked in trading and now I am in IB.

Meritocracy in trading

I am not sure on this one. You can quantify the result of your work by a $#, but I believe there is misconception on this among new joiners. In banks, with prop stuff not being the core of the business, the majority of the trading does not require the special talent or quant edge that people in prop shops are looking for.
The whole game in both Trading and IB is incredibly political at big banks. I have seen people with very questionable p&l figures move through the ranks in a trading environment by striking the right chords with the bosses.

High-flyer pay

We constantly hear stories of some 25 year old traders raking in 7 digit sums while I have never heard of such a thing in IB.

I think this is misleading because people going in to the industry get the impression that once they get a trading job, do well, they will be in the news. This may well be the case and good luck to anyone who does pull it off, but the reality is a combination of landing in the right team, having a boss you are a natural fit with, and your desk doing well.

There is great dispersion in terms of performance among trading desks within both prop shops and banks.
Consequently the culture from one desk to another can be completely incompatible. Within the same bank you may easily find rates to be the natural home, while finding yourself absolutely incompatible with people in equities.

I believe trading success is a function of finding the exact right product to trade. A great FX trader can be a mediocre performer in equities and vice versa.

Within the trading floor the quality of jobs varies enormously, most roles are not the glamorous trading roles people look for, while in IB there is substantially less dispersion, and the skills you gain are very transferable between teams.

Having said all that, if you one has a good understanding of where exactly within trading he wants to fit in, and has the interest in the business, trading is definitely more rewarding.

12/25/14

.

  •  12/25/14

bump

12/25/14

The differences are very easy, its choosing what you want exactly thats a little bit tougher.

Banking: Lot of Hours, Compensation probably a little better than trading starting off but not "real" difference (10-20k differences dont really matter when your starting off), Work involves doing alot of models all day and night long and preparing to sell banks services to clients, exit opportunites - hedge fund (surprisingly alot of hedge funds other than specifically quant oriented probably will be your suitor) / PE / Anything else you really want to do. 2or3yrs and most likely you will have to get your MBA (costly)

Trading: Hours are less but early mornings (ie. 6-7am). Very intense trading durring the day. Forget about Equity Derivatives... its a joke - i would suggest sticking with Credit or any other fixed income instrument. Compensation v. similar to banking although depends on performance of your group. exit opportunities? continue trading, go to a hedge fund, business school (not necessary). Opportunities are obviously alot less but if you like trading, i would argue you want to keep doing the same thign.

anyways, hope this helps. for an internship, you can really do anything you would like- not really a problem as you can experiment since you dont really know. If anything, i would do a banking internship to make sure thats what you want to do.

12/25/14

For a 1st year analyst, what is the annual base pay & sign-on bonus(at a bulge-bracket firm) like for both trading and i-banking.

I have recently been offered a FX trading position by a bulge bracket and would like to find out if my offer package is reasonable.

Many thanks guys.

12/25/14

thanks for the reply
by the way, why is equity derivatives a joke?

12/25/14

All the bulge brackets typically offer similar base salaries so as to remain competitive. As first year analysts one is probably more concerned with finding a place where the culture suits them than how big their salary is.

  •  12/25/14

yeah, i want to know to why equity derivatives are a joke? thats what im thinking of going into. i dont even know what dredit derivatives are!

12/25/14

its not really a joke, but fixed income is where all the action, revenue, and more importantly, market size is. I would be curious why everyone would be interested in trading Equity options over Fixed Income stuff? You know there are all sorts of options you can trade in fixed income as well...

  •  12/25/14

fixed income seems boring. to an outsider equities appear to be where the action is. anyway, if you could pick the desk with the most action and bonus potential which would it be?

12/25/14

heh. Most Action/Bonus potential probably right now in commodities. Structered Credit maybe as well. Anything with credit and rates and fx is 'action' packed.

12/25/14

Equities is a tough place to be - margins are getting squeezed - but can still make a good buck working there...

  •  12/25/14

Is it harder to get a job is S&T vs ibanking

12/25/14

Base pay for iBanking and trading at most firms are the same ($60K this year). The bonuses will differ by $5-20K depending on performance of trading and banking that year. Banking usually gets the higher cut.

12/25/14
Dan Bush:

Hi,
I will be a junior at a target school next year. I'm looking forward to interviewing and i am hoping to land a summer analyst position for summer '07. I am quite familiar w/ the banking sector due to these wonderful message boards and from reading books. I either want to do banking (M&A) or trading (Credit Derivatives or Equity Derivatives). Can somebody with INSIDE KNOWLEDGE explain day-in-life and compensation characteristics for the two?
Thanks

i cant speak to what the life of a trader is like but i can tell you what the m&a group is like:

the hours generally tend to be much worse than industry groups but the benefit is that you are able to work across industries because at a lot of banks you are a product group. however you will have some of the best exit opps coming out.

hope this helps and good luck with interviews!!

12/25/14

anyone else notice dan bush admits he's a junior in this post? looks like we've got 600 posts of bs out of him.

12/25/14

busted...no wonder he posts that much

12/25/14
aspiringmonkey:

busted...no wonder he posts that much

Dude you're a fucking idiot. Have you ever heard of lending posts. Dumb ass.

12/25/14

What are the advancement opps in both? Is it much faster to make MD in S&T versus IBD? Also, how does the compensation compare at senior levels?

12/25/14

What are the advancement opps in both? Is it much faster to make MD in S&T versus IBD? Also, how does the compensation compare at senior levels?

12/25/14

so someone asked you to post something for them when you've been here for 1 week? Pretty unlikely.

Especially when anonymoust posting was enabled then.

12/25/14

if anonymous posting was up why would i post under my name? hmmm.

12/25/14

because you joined 1 week prior to that thread, and anonymous posting was indeed enabled, since someone posted that same day.

Come clean

by Dan Bush on Fri, 2006-07-21 18:36
by Anonymous Monkey on Fri, 2006-07-21 22:19

12/25/14

he's busted. hopefully he'll go the way of zala and roguebanker so people can get advice from real bankers.

12/25/14

Dan the Man...say it isn't so? I've got to be in NYC the week after next to market a private placement to some hedge funds...wanted to try to hook up for drinks somewhere in Midtown. FUCK MAN!

12/25/14
Dan Bush:

Hi,
I will be a junior at a target school next year. I'm looking forward to interviewing and i am hoping to land a summer analyst position for summer '07. I am quite familiar w/ the banking sector due to these wonderful message boards and from reading books. I either want to do banking (M&A) or trading (Credit Derivatives or Equity Derivatives). Can somebody with INSIDE KNOWLEDGE explain day-in-life and compensation characteristics for the two?
Thanks

Hey guyz I'm a analyst at.. oh wait I'm still in school.

12/25/14
Dan Bush:

Hi,
I will be a junior at a target school next year. I'm looking forward to interviewing and i am hoping to land a summer analyst position for summer '07. I am quite familiar w/ the banking sector due to these wonderful message boards and from reading books. I either want to do banking (M&A) or trading (Credit Derivatives or Equity Derivatives). Can somebody with INSIDE KNOWLEDGE explain day-in-life and compensation characteristics for the two?
Thanks

HAHAHAHA.....wait, wait.....HAHAHAH

12/25/14

If you are real PM me your bank email. I will email you from my banks email. Then I will report the results on this board. Of course I will keep you email confidential, as you will mine.

----------------
Account Inactive

12/25/14

Take buysideanalyst up on his offer. Prove 'em all wrong Dan the Man! Fuck! lol.

12/25/14

get some real life friends, monopolisf

12/25/14

And honestly, Dan wrote a lot of bullshit but at least some of it was entertaining.

The regular Q&A gets boring sometimes IMO...but then again...I'm not on here looking for a gig or to receive constructive help...I'm just here for occasional entertainment. ;)

12/25/14

what a let down, dan

12/25/14

so is ECM still middle office dan?

12/25/14

That post sounds too friendly to be Dan.

12/25/14
MikiLzrd:

That post sounds too friendly to be Dan.

when he started out posting he was ok...then when he started post whoring he got bad and started picking fights with everyone

12/25/14

a lot of people will respond that a bulge-bracket firm will give you the best place to start a career in trading; i think one reason would be that a lot of them do a rotational thing for 1st years.

but if you're at a top hedge fund, i can't see any reason not to go with that. trading is all about who your mentor is, and who's to say you'll have a more attentive, more intelligent, more compassionate mentor on a Lehman trading desk than at some hedge fund? it really depends.

i would not recommend some prop trading firm or market maker, though, for starting out.

12/25/14
12/25/14

It's pretty unusual to go from ibanking to trading. And if you ask to move internally, you might find that you've volunteered for redundancy.

  •  12/25/14

you are going to suck incredibly as a trader if you are so risk-adverse that you'd waste two years of your life (two miserable ones at that) just to build a career fallback option

12/25/14

What happens to traders who aren't good, where do they go? Also, what percentage of people starting out as traders are good enough to continue trading at a bank or hedge fund?

12/25/14

seriously...

12/25/14

H2O: I think the fact that they get fired is obvious. The real question is - what do they do then?

12/25/14

if they don't want to leave the industry, they find another job on the street. for example, some traders don't make money but sometimes have good trade ideas and very solid quant skills. i don't know what happens to the ones who left wall street unsuccessfully.

12/25/14

Ive been told by several successful traders that it isnt a bad idea to do banking then transfer over to trading. You learn so much more doing banking for 2 years than you would grabbing coffee for someone and keeping books up to date. Also, if you have an idea of what you may want to trade, you can probably jump into that area in banking and learn a lot about it. For instance, if you are interested in trading fixed income, jumping into lev fin for 2 years wouldnt be a bad idea. You make more money, and learn much more.

12/25/14

Qualify as an accountant first, then become an astronaut, after which I think I want to train as an investment banker. When I have my two year banking experience I will run for the presidency, my accountancy skills will help me rig elections and stuff and if that doesn't go well (or if I mess up at the banking stage) then my astronaut skills will help me deal with the fact that my head is in the clouds (cloud 9, or outer space?)

How realistic is my plan?

From the ghetto....

From the ghetto....

12/25/14

Sounds realistic to me, Tier2Sta. I went from (next to) the ghetto to Wall Street, and I'm not close to done yet (nor is that close to all of the neat stuff I've gotten to do since I dropped out at fourteen).

I know it's important to distinguish between pie-in-the-sky BS and actual possibility, but it's also important to believe and act as if the greatest career you can imagine is yours for the winning if you want to make the sacrifices. Because, in general, it is.

12/25/14

yes you would be an associate. i'm guessing you know what s&t is like. what type of 'pricing' is required in a flow product like cds though?

s&t:fast paced, flat hierarchy, limited exit opps
ibd:slower paced, long hours, more hierarchical, great exit opps

12/25/14

Jimbo, again thanks for the response. When people say exit opps, do they mean exit opportunities? Ive seen the term around this board alot. And do exit opportunities mean more in terms of salary, or placement (heddge, PE), etc.

As far as CDS pricing goes, its complicated. Due to legal and SEC stuff, clients (hedge, custodians) need independant pricing (for NAV's, etc).

12/25/14

Ok...I mean you can price CDS in bloomberg or just get dealer runs, so i was confused. it should trade like an asset swap.

and yes exit opps for bankers seem to be pe and hedge funds. the pay in banking and s&t are obviously both very good, but the opps out of s&t are much more limited. pay at pe and hedge funds are also very good, especially at the more established places.

12/25/14

How hard is it to get into b-school from a bulge bracket S&T program. I understand it's not neccesary but what if you wanted to switch careers.

12/25/14

Can't you just directly infer CDS prices from the underlying bond yields?

12/25/14

corgi, that was my comment about asset swaps. but not CDS does not generally trade at the asset swap levels, b/c there's a whole funding/trading special aspect.

junior, i know a few ppl who have done it. i think you're slightly better off than ibanking in a way b/c it's rarer to be from s&t

12/25/14

Junior: I think you would have an easier time than many in terms of work experience, but keep in mind, that is one aspect of the whole application. You have to know how to play it up the best you can in your essays. I just got into Cornell and I currently work at IB that is not BB, but just below (hint: first name is that of an animal). Hope this helps,

12/25/14

cervantes, is this the FAST group? I used to know some people at Bear

12/25/14

Jimbo, I just sent you a PM

12/25/14

Remember if you go into S&T you can always go into IM or a HF if things don't turn out that well. Hell if the worst comes to the worst you can even day trade (though I haven't personally tried that myself).

12/25/14

I don't understand how bankers have better exit ops to HF than traders? aren't traders more prepared for that type of job?

12/25/14

Traders/sales/structuring definitely have better exit ops to the buyside. IB has better exit opps to PE (commodities S&T being the exception, there it is equal with IB). That said, you're talking about completely different types of work. Most people I know in S&T (myself included) have zero interest in the type of work people in IB or PE do on a regular basis. And vice versa. That said, sales jobs on a trading floor can start to resemble IB/PE very quickly.....

12/25/14

thanks skins1

12/25/14

you dont price cds off bonds or anything else, theres just CDS pricing models . a hedge fund can have one but then needs to be verified (ie. how do auditors know it is the correct model?). thus teh need for independent 3rd party and broker quotes, especially for off the run stuff.

12/25/14
huh:

you dont price cds off bonds or anything else, theres just CDS pricing models . a hedge fund can have one but then needs to be verified (ie. how do auditors know it is the correct model?). thus teh need for independent 3rd party and broker quotes, especially for off the run stuff.

seems like an arbitrage opportunity then if the CDS "derived" price differs from what the market price of default risk is for a given corporate bond.

12/25/14

if you dont wanna be a slave for 2 years and wanna have exciting work and get paid, go into s&T

12/25/14

why do you say that commodities S&T has equal exit opps to PE as IB?

12/25/14

corgi, in theory yes, but good luck sourcing the bonds sometimes...cds should trade similarly to the asset swap but not right on top of it.

12/25/14

iambateman: I was saying S&T has equal exit opps to energy PE. I'm mentioning it because PE firms focuses on energy are growing by the day, and unlike other PE firms, energy PE don't just go and recruit people from IB, they recruit a lot of people from commodities desk as well. For two reasons. First, you need both skill sets. Second, at some banks the commodities desks tend to "lead" energy deals because they have a large chunck of the contacts and expertise.

12/25/14

thanks for the clarification...that makes sense

i was thinking u were saying commodities s&T has equal opps to typical p/e buyout firms which wouldnt make sense...

12/25/14

If you're leaning towards S&T but aren't floored there are plently of groups in "capital markets" that are banking oriented. Most BB firms have capital markets separate from both IBD and S&T, right in the middle. Thus you interact with traders on daily basis if you're in Debt Capital Markets as well as with bankers on acqusition financings but less so if you're in a flow group like FIG for example where most underwriting is originated with the capital markets professionals and their relationships with client's treasurer.

12/25/14

First, you're a military man. You probably go to West Point or the Citadel which are both amazing schools. You most likely have ridiculous self-discipline plus from what I see in your course load you are at least slightly quantitative. These two are probably the most important personality traits for a trader. You should go into trading, even think about foregoing B-School. It's unnecessary for you to be a superstar trader and since all you want to do it retire to a beach house ASAP, the sooner you learn to trade and the sooner you become proficient at it, the sooner you can leave.

Good luck man.

12/25/14

to become a superstar trader u need x factor and maybe a little luck. discipline will get u a lot farther in ibd

12/25/14
x13:

to become a superstar trader u need x factor and maybe a little luck. discipline will get u a lot farther in ibd

How would one qualify this magic "x factor"

12/25/14
titanboxer:
x13:

to become a superstar trader u need x factor and maybe a little luck. discipline will get u a lot farther in ibd

How would one qualify this magic "x factor"

u dont. my point is that becoming a successful trader obviously involves a few fixed attributes but there is no guarantee you will become a "superstar trader". there is just more risk involved in terms of grandiose success whereas in IBD, if you are extremely disciplined, intelligent, personable, you can and will succeed. OTOH, that same person could fail as a trader because of sheer bad luck, bad timing, or lack of "x factor", factors which you cant really quantify

12/25/14

I think you have better "skills" for IBD

12/25/14

good explanation

12/25/14

Sounds like you are doing great now (and as a US citizen I thank you for serving in the military). Business school could work well for you as you will meet lots of people who had been and will be on Wall Street. Go to the best BSchool you can and keep your eyes and ears open to see what people are telling you were their experiences. See what may be applicable to your skills and experiences. From a 50,000 foot view, x13 above is right, that IBD if you have the right attributes could be somewhat less risky as a career path. But my bottom line recommendation for you is don't pigeonhole yourself. Plenty of people will try to do that for you. Be flexible. No need to preordain your career path now.

12/25/14

You basically answered your own question. You have a family with a newborn, like the work/life balance of S&T, hate the work/life balance of IB, are confident in your ability to sell, and don't know if you have the drive to make it in IB. It's S&T for you, my friend.

As for exit opps, getting into PE isn't the holy grail. If you're good at S&T, sticking with it will still make you a good amount of money down the stretch.

12/25/14

my understanding is good sales guys make 1mm+ per year--getting in at 36 as an associate I think sales is a better option

also its less structured than banking which means you wont be surrounded by peers in their mid 20s...

12/25/14

I would pick whichever you want to make a career out of honestly.

---------------------
"Well, you can do whatever you want to us, but we're not going to sit here and listen to you badmouth the United States of America."

12/25/14

Thanks all for the feedback. Good/top sales guys making $1mil+ per yr...I'm assuming that that these are the guys handling the top tier accts...curious typically how long it would take to get to those levels.
While I feel sales is better suited for me, the biggest dilemma is how much longer do I want to be in sales....doing it for an IB will just be selling a different product. The things that I've enjoyed the most in my course work so far have been modeling and valuations stuff...

Are there any sales ppl on this board who can chime in? I would love to hear your view point.

12/25/14

Are you against considering the trading side?

Jack: They're all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

12/25/14
Revsly:

Are you against considering the trading side?

I dont think I want to deal with the pace/stress that comes with trading. Plus I'm not necessarily sure I have the quant skills to excel in trading.

12/25/14

Dude, in general, there is no chance of an "exit opp" to PE for someone in your situation. I'd run hard after the job you want and make it your career.

12/25/14

It's a tough thing. Even in undergrad I remember people struggling with the question "IBD or S&T!?". Worry about it when that problem presents itself. 95% of people get neither.

12/25/14

sales is less glamorous at most bb's and is considered lesser front office

12/25/14

^^ Don't listen to iphoned, she has no idea what she is talking about and was retarded enough to start the "Rank every IBD group regardless of bank" thread. Sales guys make a lot of money. I know a lot of people that chose sales because they were better at it and did not like trading everyday.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."

12/25/14

I would go with IBD, cuz you clearly live only for the exit opps...

12/25/14

...I assume you want IBD considering S&T at Goldman is amazing for many groups, choose the division over the name in this case. What if you don't get a FT offer after interviewing in the fall, but have a return offer. Choose where you want to be.

Reality hits you hard, bro...

12/25/14

Goldman Sachs OMG ITS Goldman Sachs SERIOUSLY GO TO Goldman Sachs OMG ITS Goldman Sachs HOW COULD U TURN DOWN FREAKIN GOLDMAN SACHHHHS

12/25/14

Who cares which you would give you more FT options? Pick the one that is the route you want to go. Having a ton of S&T FT options doesn't really matter if you would prefer to do IBD and Visa versa.

12/25/14

Agree with nb84, decide if you want to do S&T or IBD first, then its an easy choice.

12/25/14

UCLA Medical Center or Cravath, Swaine & Moore LLP?

12/25/14
randombetch:

UCLA Medical Center or Cravath, Swaine & Moore LLP?

haha clever

12/25/14

S&T Goldman
you don't want to do banking...

12/25/14
PA:

S&T Goldman
you don't want to do banking...

Unless, of course, you DO want to do banking.

12/25/14

If you do some digging on this site, you'll come across some very insightful posts in the comment section about every single one of those industries. Often times those are far more insightful than any answer to a post like yours because they are often in response to a very specific question which lends a much better insight into their world.

I've found it fascinating. Particularly the comments about restructuring.

12/25/14

IBD->S&T easier than S&T->IBD.
Get an IBD internship if you can.

12/25/14

I think this is highly dependent on investment style. I haven't worked in any of the stated professions, but just wanted to point out that number 2 above is wrong. It does not take someone 3-5 years to move from IB to HF. It can actually be done in less than a year in some cases and typically in 1-2 from what I've seen.

12/25/14

It depends what you want to do at the HF. Bankers usually become Analysts-->PM. Traders stick to trading. Both analyze companies, but in different ways. It also depends on the size/sophistication of the fund because there can definitely be overlap (at small funds the PM is usually also the Trader).

12/25/14

I would say banking without a doubt -

1. I have seen probably less than 3 (out of probably over a hundred) former traders at an analyst position at a fundamental equity or debt fund. Every single one has been banking, PE (usually banking plus PE) or equity research. Traders go into trading at hedge funds or into more macro funds

2. It keeps doors open for other paths like PE, corp dev, business school that are either impossible (PE) or tougher (MBA) out of trading. Note that PE is also a large hunting ground for hedge fund analyst positions

12/25/14

Obviously banking. And many top analysts can leave for a top HF after 1 year of banking, there's no set recruiting schedule like there is with PE.

Go talk to any of the top 5 headhunters and they'll tell you.

12/25/14

About 3 months ago, I would've agreed with you and wso_user, but after talking to several people within ibd, trading, ER, and the buyside, I'm pretty sure the hype for ibd is all groupthink. Just a quick LinkedIn search of people at HFs such as Bridgewater and DEShaw will show a handful of people with trading backgrounds. Furthermore, is it even safe to say that a HF trader has a worse shot at PM than an analyst? A friend of mine interned at a large fund and said PMs were split half and half with their backgrounds.

12/25/14

Those are not fundamental hedge funds which I qualified in my post, and both are far from your average hedge fund. Bridgewater is not a typical HF job at all for numerous reasons and DE Shaw is a quant fund that hires PhDs. They do have a fundamental LS group though that's likely all former bankers/PE/ER

12/25/14

Alright, after doing some more searching, I agree that bankers get placed in L/S funds whereas traders get placed in GM. A lot of GM PMs do come from trading backgrounds, so moving up really does depend on the strategy you're in. The big funds are usually multi-strategy and I'm guessing that the PMs under their GM umbrella would come from trading backgrounds (correct?). You are correct in saying that many PMs with banking backgrounds spend a couple years in PE as well. Traders don't have to go through this and usually just go straight to HF.

I guess the next step to help me make my decision is to figure out which strategy I would rather pursue. I feel pretty open to either strategy right now, and I don't have a strong affinity to either. I also know that I'm not really interested in PE and would rather just jump to HF as soon as I can. Lastly, I want the opportunity to advance within to PM.
Seeing that there's been a trend towards more macro-driven funds and having noticed (and heard) that traders can move to GM quicker than bankers to L/S, GM sounds like a good bet. Traders can also move up to PM within the GM umbrella. This means I should start off at a trading desk relevant to macro strategies.

What do you think -- does this all make sense?

12/25/14

Look at the strategy first.

No one at Bridgewater is actually doing real meaningful work, which is quite well known. DE Shaw recruits from ugrad, 90% for back office. Did you look into what type of strategy it is?

No PM I've ever met was a trader (long/short fund). Don't know why I bother responding to these threads, go talk to anyone at Dynamics and ask for yourself.

12/25/14
patternfinder:

Of course, I would just buy in scales.

See my WSO Blog | my AMA

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12/25/14
patternfinder:

Of course, I would just buy in scales.

See my WSO Blog | my AMA

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