Why Not Trading?
Given that the work is often double, the lifestyle is horrendous, and the pay is often equal, why do you want to do your analyst stint in IBD rather than S/T?
Given that the work is often double, the lifestyle is horrendous, and the pay is often equal, why do you want to do your analyst stint in IBD rather than S/T?
Career Resources
I think a lot of people want to do IBD for the exit opps - i.e. because they want to get into a good pe shop.
I'm probably the wrong person to ask though, since I want to get into trading.
You learn a lot more in i-banking than you do in trading. I feel as though once you've been a trader for a few years you kind of reach a point where you are just doing the same stuff over and over again. I think the i-banking "path" has a lot more knowledge to gain.
They have different cultures. Not everyone is made for trading, or IBanking.
i'm not sure you learn more in ibanking than in trading. in fact i'm almost positive this is not the case...but you might not be interested in what you're learning.
me, i'll take 55-60 hours a week all day long over banking. but that's just me.
First, IBD does not offer more exit opps, nor greater learning opps, than trading. Second, the "Sales & Trading" world includes sales, origination, trading, and structuring, and comprises a far greater proportion of any bank than IBD--in revenue, profit, headcount, everything. So general stereotypes of what most of you undergrads know about "trading" does not apply to the entire "S&T" career field. Very few people who have not worked in S&T really have any clue what it entails. In addition, IBD and S&T are very, very different. Thus exit opps are not better for either, just different. I am in the S&T world. I am not interested in IBD because I don't enjoy the work. Same reason why I have no interest in PE. Thus, having great PE exit opps is about as appealing to me as having great exit opps into marketing or advertising. It's irrelevant. Finally, anyone who thinks you do the same things day in and day out in S&T is way off base. The bottom line is that the cutting edge of what banks do in the financial markets happens on the trading floor. Creation of new products, the most innovative sturturing, the greatest risk-taking, and the greatest profits, are all on the trading floor. Just something to keep in mind.
so, skins1, what are these exit opp that are different?
another desk/bank, hedge fund....what else?
It all depends on the area you are in. I am in commodities, and exit opps here run the gamut from PE, to Hedge Funds, to industry. If I ever leave my firm I can pretty much do anything even remotely related to energy. So the desk you are on is a big determinant. Next, in general, the Investment Management world is quite a bit larger than the Private Equity world. S&T tends to give more exit opps into the broader IM universe, and IBD into PE. Finally, there are also the differences between sales/origination, structuring, and trading. Each also has it own exit opps. My point is that "Investment Banking" is a rather well-defined and quite small career field. What now falls under "Sales & Trading" is not well-defined and covers a whole range of roles, not to mention the fact that capital markets in general make up probably 75% of the business at most banks, and IBD makes up 25% at the most.
Most of the people in Banking just aren't smart enough for Trading.
i think both areas are rather broad and there is an increasing trend towards some capital markets desk being placed in IBD at some banks. i agree that exit opps into the finance world for s&t and ibd are on par with each other, but ibd gives you a fundamental corporate finance background that you can take into non finance positions at corporations and consulting firms...
I just realized something. The reason people in IBD are so obsessed with exit opps is because most accept the fact that IBD is a miserable life and do it solely to gain a skill set and leave. That is nothing new. But what I just realized is that these people also don't seem to understand that there are actually career fields out there where people enjoy what they do, and plan to make a career out of it. Thus the sheer numbers of exit opportunities available for any given career field is not the number one factor in choosing what to do with your life. I was in the military prior to getting my MBA, and while the number of exit opps available to military officers is quite high, if you were to ask most young officers about the exit opps available they wouldn't really care, because they love what they do and plan to do it for the rest of their careers. The IBD mentality rerally is quite sad. I really do feel badly for those who feel their only option is to pursue a life they know ahead of time that they won't enjoy.....
way to dodge the issue skins1
Dude, I'm not dodging the issue. There is not a single exit opp that IBD allows that you cannot also achieve via an S&T position. S&T can also give you that fundamental corp fin background. On my desk I spend quite a bit of my time analyzing capital structures, financial statements, etc.--I hate it, but I do it. My point is that most people have no clue what S&T entails, and your comments regarding IBD show that. I can point you to a dozen kids on our credit desk who do the same thing as the bankers do, just with more of a quant focus. I can also tell you that I do a lot of projects on my desk alongside the bankers, so I have to have the same knowledge base. The difference is what you enjoy most--a macro vs a micro focus, quant analysis or fundamental analysis, etc. In the world of S&T there are positions that do one or the other or both--my point is that your stereotypes of what S&T involves are simply not accurate. The S&T world is far bigger than the world of banking, thus S&T has all the same exit opps as IBD, and then some. The question is which desk you are on, which role, etc. You also have to realize that I am looking at this from the MBA point of view. IB is not the holy grail for MBAs that it is for undergrads, in fact, at the top MBA programs it's really not a very desired career choice, other than for people who don't have any previous finance experience. If you land a Goldman M&A position as an MBA at Wharton or HBS, no one is running around patting you on the back, it's just another career field. There are kids leaving these schools with positions that are far harder to attain and with far better pay than an IBD associate (or an S&T associate, for that matter). Just trying to keep some perspective here.....
this guy is a fuckin idiot and this is so fuckin wrong....try to get a job in PE at like TPG from a trading or structuring role, and dont even get me started on sales bc sales is a fuckin joke
ok that might be true but at the end of the day headhunters ASSUME that the former IBK analyst is 10x better at that
that's poor logic fucktard
i'll admit there are jobs that are harder to attain, like the insanely complex quant jobs at DE Shaw, but right now IBK assoc can make THREE HUNDRED THOUSAND PLUS their first year bc it's a great year....i don tknow what jobs ur talking about buddy
honestly people dont make millions in structuring, or we wouldv'e heard about it... you hear about guys pulling down the ocasional $100 million bonus as a senior currencies trader or whatever, but that is trading, NOT structuring/origination/etc
ur supposed to be planning ur career LONG TERM, not jumping on a bandwagon....all the markets are very slowly headed toward more liquidity/trasnparency at some point, as i've been told by some older guys in the biz. as an example there are people right now pushing for munis to be traded on exchanges
if u want to build a career that will last, whether it's going into real estate or running all kinds of companies or PE investing, then IBK is a MUCH better starting point than if ur trading some arcane product that nobody's heard of
also, ignroe the fact that some people are more interested in S&T for now....most of the young eager students on here wanna know where u can make the msot MONEY, and how PROBABLE it is that you will succeed in that. in trading it is a fucking gamble; theres a lot of luck involved in making it big, people get fired bc they just didn't "have the right type of mind to be a great trader" or whatever.....it's a very specific type of person that will not fuck up as a trader, and they are born not bred
also its funny how u guys claim that S&T is less cyclical but then on days when the whole market fucks up u start talking about getting drunk and killing urself (see: "traders train" forum)....u want stability work in restructuring or an industry group
to a trader $500k/yr is considered success, while in banking you make that 3 yrs after b-school GUARANTEED
OK they are both very attractive career paths. I was considering both before I landed a job in IBD. There is no point trying to say which is better...
by the way......i am fuckin sick of hearing about how trading/capital markets revenues dwarf corpfin revenues. PE investing brings in tons of money at these big banks, and as we all know LBO funds are run by former corpfin investmetn bankers
propspie - ur rant made little to no sense...for instance, an associate in IB can make 300K after 1.5 years in a good year, but an associate on a sales desk has the potential ability to make twice that. they both have to be good to get paid cuss a crap associate gets fired in both IB and S&T. IB is a career gamble much the same way S&T is - if u suck, u dont get paid in either area.
also, trading revenues do make up a larger percentage of revenue/profit at banks - just read through the latest GS 10-k and see the splits.
ok fuckin idiot, after this im done. everyone else who replied is a fuckin idiot too
i am not saying 1.5 yrs, fucktard....im saying your first year in a good yr u can make $300k....that is NOT going to happen ur first year in S&T, bc in S&T u have to have some experience and bring in money to start mkaing big bonuses
WTF is wrong w you people? i already made this very clear: IB is NOT a career gamble in the same way that S&T is.... if u suck in IB its much easier to hide, plus there are groups in IBK that are MUCH less cyclical than any S&T desk. don't fucking simplify it
You must be pretty mediocre if you are thinking about how it's "much easier to hide" in IB.
On my trading floor, the number of employees ranking VP or above easily outnumbers the number of analysts and associates. Additionally, I am under the impression that 500k is pretty standard for a first year VP in trading. This seems pretty in line with three years out of b-school. Additionally, most traders today do not need to go to b-school.
total number of working hours over the year / year-end salary.
In this perspective, S&T make a ton more on an hourly basis.
I've met analysts that have made more than MD's in S&T. Granted, it's rare, but is that even possible in IB?
On some desk in S&T...including SALES, which some idiot above thinks is a "fucking joke" I know people who have been there for 5 yrs and make over a million, year over year...I think someone is bitter..I love S&T, working on the trading floor is a great experience. Everyday is different and exciting. Exit opps are really good also, granted you are good at what you do. On good desks you are in daily contact with PM's at hedge funds, etc. If you can show them you can generate good ideas, odds are they will offer you a spot. You are in contact with management of various corps etc. If some peopel want to sit at a desk for 90hrs a week, have fun.
I think the poster above nailed it--bitter for sure.
Prospie: I'm not going to waste my time replying to most of your comments, but I will comment on the 300K pay as a first-year associate. That number was the same for S&T and IBD across the Street. Why? Because for the first 12-18 months HR still sets the comp bands for new associates. Thus the range was still rather tight. That was total comp as of your first full-year bonus--so 18-months after graduation from b-school. The comp was 95-100K base, plus bonus of roughly 150-300 for ALL finance positions. Average bonus was right about 210 from the numbers I have seen. The average was the same for S&T on all desks, and for IBD in all groups.
You are slightly correct that it's easier to hide in IBD rather S&T, but only for so long.
I work in banking, but have to tell you that S&T profits >>>> than IBD at most places. This even includes times like these where you're seeing lots of M&A and LBO's taking place. The CEO's of a lot of BB banks grew up the ranks as traders. Just as it's easier to go into PE with IBD (relatively speaking), S&T guys dominate the HF industry. The heads of biggest HFs are former traders, not bankers.
I wish banking would have hours similar to S&T, but it doesn't. I choose that b/c I like what I do and prefer fundamentals over technical analysis of company, etc.
prospie - as i recall ur some punk from podunk u whos not in IB at all...now let me make this clear for u so u can do back to your leisure studies - 1.5 years is the time it takes for u to get a bonus in IB or S&T b/c bonuses are paid out in december/january and u start in july so you get a paid a stub after 0.5 years and get a full bonus 1.5 years but if you were in IB you would know this. also, if you suck as an associate, u wont get paid squat outside ur base and ull be asked to leave much the same way ull be fired from a desk if u suck in S&T..who da hell pays 300K to someone who sucks??
In the end, it boils down the personality type. Both S&T and Ibanking will grant you excellent financial skills, amazing earning potential, and very good exit opportunities or (dare I say it) for those of us who actually might want be career bankers good promotion possibilities. If you are good at either one you will get paid a lot, or get fired if you suck.
So why did I choose banking? Because, I don't have the personality needed to be a trader. I am very hyperactive and tightly wound-up. One bad trade and I would probably die of a heart-attack or grey prematurely. Banking's pace fits me perfectly and I don't need much sleep. Very important as well is that I have a girlfriend, who is very understanding of what I will be doing and the sacrifices it will require from both us. Finally, I love the client interaction aspects of banking. What little I have had hss been amazing and the idea of covering an industry I love is very appealing to me. Yeah, down the road, I might change my mind. I might want to shoot myself after 2 years as an analyst, but for now I loved banking, the atmosphere, the work I had to do, and the client interaction. If someone from S&T from my bank walked up to me and offered me to transfer departments, i would decline.
As an FYI, I had final round interviews with GS for S&T for an internship, which I didn't get. However, 2 interviewers emailed me back and said to keep in touch during the summer, so we could talk again in the fall. After doing an internship in ibanking for another BB, I never regretted not getting GS S&T because I know I would have accepted.
yo ask if she has similar girl friends and hook me up!
yeah seriously. Shows there might be some hope afterall in finding a keeper. I had a gf during my summer in between sophmore and junior year where I had to work 45 hours a week and she complained that I didn't give her enough attention and time. She was promptly showed the door.
you wish you were a trader man, stop being a bitter banking monkey
Bet you can't say this 10X real fast.
Who the fuck wants to hide, or is even thinking about it?
You better show up fighting to be the best, and believing you have the potential to be the best, no matter where you are. IB, sales and trading, it doesn't matter. If you think you are going to be making a million by being anything other than the shit, you are sadly mistaken.
...but the above post by "prospie" is so stupid start to finish that i have come out of hybernation.
First of all, as noted by a previous poster, anyone who thinks sales "is a joke" has no idea about how the business works. Good salesman make as much or more money then bankers, period.
Secondly, "trading some arcane product that nobody has heard of" is currently making a fairly sizable group of people in the business ungodly sums of money (many at a ridiculously young age). In fact I would say that "trading some arcane product that nobody has heard of" is consistently one of the best jobs on wall st. year in and year out.
Thirdly, let me dispel another popular myth that prospie highlights: Banking has more job security. In point of fact unless you are an experienced banker with hard-earned client relationships as an Investment banker you are no more then cannon-fodder. Completely expandable. At the end of the last reccession way back in the early 90's GS once fired 80% of their associate class in one swoop, on one day...as Casey Stengel used to say, "u can look it up". So bankers and traders and salesman have the exact same job security...0 until u are a producer and then 100% complete immunity. If you don't believe that ask anyone who has worked on the street for more then one business cycle.
Lastly, let me highlight that prospie's post implied that banking is a career that has more long-term stability then trading which he characterizes as some sort of fad that will be eliminated by technology. i would just like to point out that if u polled actual working wall st. professionals and asked them where the biggest bubble in financial employment lies I believe the top answers would be 1) CDO origination/subprime lending 2) Private Equity 3) Hedge Funds 4) M&A. Saying you are striving for a PE job b/c you are looking for something long-term as opposed to chasing what's popular today would be a good joke if said with the right intonation. I know on my trading desk it would likely get a laugh...
alright fellas....guess i lied about that one being my last post
the sales guys have less power and make less money than the traders on their desks...also, u will hear over and over how getting a 'sales assistant' job out of college is a fucking deadend and that the guys that actually get the sales jobs are former traders et al
i admitted this much....the real question is whether that arcane product is something to build ur entire fuckin career out of, obviously. NOBODY has rebutted my point that there is a general shift over time toward more transparency....i didn't say that computers will take over, i'm not a fuckin idiot. if u get into equity options and equity options trading starts to die off in 5 years, then u too are dead in the water bc u are a specialist and that product has been your life day in and day out
that recession was horrible, not likely to repeat itself....and furthermore i was talking about industry groups + restructuring groups. those groups can weather a storm and it is. bankers provide a valuable service to industry, which is what the real world is about, and they always willthat is bc traders are arrogant fucks who have a chip on their shoulder toward traditional i-bankers....u would get laughs bc they like to overcompensate
there may be bubbles in M&A and PE, but at least those are skills that are needed to run companies, which u do not get selling credit swaps...my argument was NOT that lower-level bankers or PE guys are immune to layoffs, but that when things turn around they will always be back and have VERY transferrable skills and a prestigious-looking resume.
in 30 yrs, PE and IB will still be here....u can't say the same about most of the random shit that goes in capital markets and S&T
I had read this thread earlier and really had to shake my head at some of the atrocious reasoning that took place... But these two quotes in particular represent the height of error (not folly, because the starting point wasn't exactly solid to begin with). And this guy spends half of his posts calling other people "fucktards"...
'....im saying your first year in a good yr u can make $300k....that is NOT going to happen ur first year in S&T, bc in S&T u have to have some experience and bring in money to start mkaing big bonuses'
this is completely false.
and skins is a US military officer, how about showing a little respect?
God, bankers are dummies. I think it's wonderful that I can have a degree in leisure studies, work from 8am-2am everyday and go bald by 27 so I can make 200k a year. I mean, fuck that. There is much better upside and you have a life!
Like, isn't a life important? If you want exit opportunties in IBK, then aren't you exiting into jobs that work you the same? You think PE guys are doing 9-7 like hedgies? Fuck no. PE guys are busting balls all the way up, because they had no math skills out of college and can't take the 'pressure' of the trading floor. I mean, fucking please, be men. If you can handle the swings on partypoker.com, then you can handle the trading floor.
best post here
The stress is obviously much more in trading, so wouldn't the traders being the ones going bald? That's certainly one trepidation I have about going into these fields. If you look around, everybody is fat, bald and fugly from the job!
Are missing the point. Yes, the lifestyle in trading is better, and yes, the upside in trading is probably higher than banking from ages 22-35 or so (i.e. it's more meritocratic than banking early on and thus traders can be making multiple millions by early 30's. BUT, long-term, there is really no comparison. People starting out in banking and learning fundamental analysis have way way more upside. Just take a look at the U.S. billionaire list. While there are a few traders (Steve Cohen, Lew Ranier - not even sure he's on there anymore), all the truly rich finance people focus on fundamental analysis or private equity. Steve Schwarzman is a great example - the Blackstone IPO will likely make him worth $10 billion and he's definitely not from a trading background. And have you heard of a guy named Warren Buffett? His investment approach is much better learned through banking rather than staring at some candle chart ro whatever else random shit you guys use. You can argue that traders can go to hedge funds and that hedge fund managers make billions, but honestly the roles that traders enter into at hedge funds are generally pure execution roles with very little upside. The future PM's do not come from execution backgrounds, but rather from research analyst backgrounds, which is the exact role that banking sets you up for.
You pretty much have to ask yourself whether it is worth it to sacrifice most of your 20's working in banking/PE in order to eventually have a shot at entering into the top of society and really having an impact in business (there is really no way you can argue that traders make anywhere close to the impact that PE guys or activist investors make). I actually don't blame traders for saying that the sacrifice is not worth it. It's a personal decision. But to argue that trading sets you up for the long-run as well as banking is just plain wrong and most of you traders will realize it during the next down-turn when you lost your job (bankers might lose their jobs too but at least they have a transferable skill-set and won't be forced to beg for jobs at random prop shops).
if you wind up with 5mm by your early to mid 30s, you think that's not enough to qualify as 'set up for the long run'?
I hope to be out of this game in 5 years.
why nobody on this board ever talks about being a career banker?
I think it totally has to do with personality, if your a gambler or not, if you like "downtime" during your day, or to be screaming and running nonstop all day. The hours may be better in SandT but the stress sure ain't.
That $5MM is enough to live on. But the point is some people are ambitious, like finance, and dont "hope to be out of the game in 5 years." I worked on a trading floor and I generally found that people were not really all that ambitious but were rather more interested in making money and retiring by age 35. I also saw no passion for finance, and would argue that if you actually enjoy financial theory and want to add value to society, you should go into banking. If you want to make a few million and retire by 35, go to trading. Also the stress factor mentioned above makes it questionable whether the lifestyle is any better in trading.
Add value to society? please
'that if you actually enjoy financial theory and want to add value to society, you should go into banking.'
adding value to society, that made me laugh...don't be deluded aboutt he value of any of this
Another thing is the fact that you have the POTENTIAL to make enough money to retire by 35. Obviously, not every trader is going to succeed. In fact, some newly hired traders never even get a chance to trade. If that happens, was trading really better than ibanking? In ibanking, you at least make a solid salary doing what I would say easier work than trading. There is so much risk invovled with being a trader that you definitely earn your salary as a trader.
Sure, if you are a good trader, you will really make it. Every trader I know did it for one reason: to retire early. Every ibanker I knew did it for the money and the exit opportunities. I think at the end of the day, both are good careers. However, some people are not trader material, just like some people arent' ibanking material. I say whatever peronality you have, go into one of the two fields, suceed in them, and watch your money pile up.
PE has been proven to increase efficiency and create wealth for society. Not sure that traders or salespeople really do much of anything worthwhile. In fact, you guys should read the article on the front page of the WSJ today about Alan Blinder, the Princeton economist. Especially focus on the offshoring part where he pretty much argues that anything that can be easily replicated overseas eventually will be. I can't really think of a more easily replicated thing than trading. All you need is to set up a trading floor in Mumbai and there's really no reason for a hedge fund to use a U.S. investment bank than the one overseas. I would agree that the analyst work of ibankers is largely offshoreable as well, but at the upper levels, both in banking and PE, the business is much more relationship-based. Putting together deals requires connections and face to face interaction, and that clearly is not offshoreable. Have fun losing your job to some overseas dude in five years....
Wait, secondary capital markets DON'T increase the range of company financing decisions? Future markets DON'T help farmers/producers stabilize prices and run their businesses more effectively? Derivatives DON'T help others selectively shed and acquire risk according to their appetites for little transaction costs?
Get your head out of your ass. If you learned anything about the basic principles of economics, you should know that any service that people willing to pay for is something that improves value to society (usually). Otherwise, they wouldn't pay for the service. This includes trading and banking down to the McDonald's burger flipper.
Dude the value add to society of any of those things you mention are far from proven. Let's consider futures markets - so essentially farmers are making a random bet on prices with really no knowledge of how markets work - that sounds like a really smart idea. Derivatives - ummm all you have to do is ask the smartest investor who ever lived what he thinks of derivatives (or if you'd like read FIASCO if you haven't already) - both conclude, one from an insider's perspective, one from an outsider's, that derivatives are worthless. And actually if you knew anything about financial theory, you'd realize that the fact that people are willing to pay for something does not in any way mean that thing is valuable. All it means is that the person thinks that the good or service is valuable. I mean, consider heroin or crack - does the fact that someone is wiling to pay for those mean that they're good for society? Sorry, but traders do jack shit for society and won't exist in ten to twenty years.
'Have fun losing your job to some overseas dude in five years....'
i will be done by then, my friend.
pe creates wealth for its investors, not for society.
where do you work anyway blahblah?
You guys just needs to cool down a little bit and subscribe to a little reality check. Here are some key points: 1. Somebody mentioned Steve Schwarzman. I highly doubt he is getting 10bb from the IPO. I could be wrong because I just don't know, but that seems highly unlikley. 2. Somebody said that the finance people on the Forbes list are mostly bankers. The people on the Forbes list who are bankers are old as shit and there are not that many. Look at the traders: Lampert, Cohen; those guys are in their 40s. 3. With increased regulation, hedgies, and foreign competition, the chances of a banker/pe/vc guy making it on the Forbes 40 years down the line are slim. 4. Let's examine the average banker and the average trader, both of whom made MD. In their 20s: Banker - works all the time; no social life; you can distinguish yourself as a gunner, but because of the nature of the biz you cant be a hitter. Trader - works hard and is stressed, but has a good amount of free time, especially considering the money he/she is pulling down. if youre good you can make it past gunner status and move on to hitter status. that is, your bonus potential isnt capped. you can be pulling in 7 figs. 40s: Banker- MD. still traveling away from the family. 2mm/ year all-in. wife hardly knows you, kids know you less. fat, ugly, pale. Trader- MD. 2mm/year. Still stressed. You know your wife, you know your kids. you love both. because over the years youve had a lot of time, you are still in pretty good shape. you go home and have a lot of sex while those bankers are in a hotel somewhere.
what u are forgetting, fucker, is that this so-called trader in his 40s is very lucky that his product is still hot (and even that he hasnt been fired yet)
STILL nobody has rebutted this point....i.e. people in S&T are product specialists and they ahve a very narrow skillset, so if their product becomes less profitable or favorable or whatnot they are SCREWED
To your points:
Schwarzman owns about 40% of Blackstone I believe. Assuming a VERY conservative valuation of the company of $25 billion, that puts his net worth at $10 billion. It's likely to price closer to $40 billion, so even if he owns less than 40% which he might (I don't know the exact percentage), he's likely to be valued at $10 billion+ following the IPO.
Lampert comes from more of a banker's background than a trader's background in the traditional sense. Yes, he was technically "trading" at GS, but was on the prop desk and was not trading for client's behalf. The two are completely different, and the skill sets needed for what Lampert does now (and then) are learned MUCH more easily in banking than trading. Also worth noting that while Cohen comes from a trader background, his firm is beginning to focus more and more on fundamentally based investing, which again is learned in banking. Also wouldn't surprise me to see insider trading allegations come down against SAC pretty soon, cause they do some pretty shady shit over there.
The point is that pretty much all of the finance people on the Forbes 400 are fundamentally based investors, not traders, and the best way to get into their firms is by doing banking. I can think of maybe like three technical traders on that list, and about twenty five PE/fundamental hedge fund managers.
I think you're just throwing shit against the wall at this point, cause there's pretty much no logic to that argument. Feel free to explain why exactly and maybe you'll sound convince me (but I highly doubt it).
Yea let's actually consider the average banker and average trader for a moment. Since they're both average, they are both likely to get laid off during the next downturn and not make MD. After losing his job, the trader realizes he has no transferable skill sets, only knows one product which is in the shitter, and thus can't find work anywhere. His wife leaves him and he ends up moving to the Bronx and taking a job at a concession stand at Yankee Stadium. The average banker, meanwhile, can go into corporate development at any Fortune 500, and while he won't get filthy rich, he will have a nice tidy life with a loving wife. Being a banker is MUCH MUCH safer unless you know 100% that you are going to be a star trader. There's no comparison.
Two things are clear. 1. You couldn't be a trader because you have no risk tolerance. Think of expected utility instead of what your (errant) perception is on what could happen. Plus, did it occur to you that most traders probably would not want to go into a corporate development program for a fortune 500? Different personalities, different ambitions.
i think for either career, you have to be married to your career first and put your wife and kids second to succeed. I'm sure theres examples of soemone having both a successful career and good family life in both careers, but that is the exception, not the norm.
Thats why most traders retire early and most bankers leave the business for more manageable jobs. I don't think you can say a career is better becuase you can have more sex... thats just stupid. If the stress is as much as you say it is, you'd need viagra to get it up anyway.
Look, I want to set one thing straight. being pale and fat has nothing to do with the industry, but with the person. During my Summer Inernship, i looked around and only about 10% of us looked like they hit the gym on a regular basis. Among traders, on the other hand, the guys seemed in a lot better shape and the girls were also a lot hotter. I guarantee you that after 19 years, when some become MD's, the ones who have a culture of working out now, will still have it. But because fewer ibanking analysts hit the gym to begin with, it is only natural that fewer MD's will be in good shape.
In addition, military personell is equally attracted to S&T and banking, or the difference is negligible. I met a lot of ex-military in my bank and they told me that a lot of their buddies work at other banks. So it is not true that traders are alpha ballers, and bankers are complete nerds.
And finally, one key difference in your two descriptions. Stress level. Do you think that being under constant stress does not affect family life? Do you think the wife and children of a constantly stressed out trader receive only love? Do you think that 25 years of constant stress will not put a toil on you, your body, adn those you love?
traders hate bankers, bankers hate traders
nobody is going to "win" this argument
I don't hate bankers. Two of my good friends out of the office are at Blackstone and Allen. They have very different ambitions than I do, I can easily see both in an exec role in a fortune 500 company. On the other hand, I have no interest in that. They have no interest in correlation trading. I know their job sets up them up for what they want to do and I have no problem with them taking that path. They (for some reason) don't share blahblahblah's perception that traders are ignorant and without skills, they both know my job is much more analytically challenging and quant. They know this type of role fits me much better, there is no hate.
Exactly. The only thing its good for is bringing out the crazies on both sides, with certain posters that show they have no grasp of the industry as a whole (not going to name names...).
Its all about personality and what you want to do. If you are driven, talented, and passionate about what you do, you can be succesful in either banking or trading. Its honestly all about YOU, who cares what other people think. In my mind, both are extremely prestigous and we should be thankful we have a chance to work in this business. It beats the hell out of anything else you can get out of undergrad. If you want to be banker, good. If you want to work in S&T great. Personally, my choice was S&T and i couldnt be happier. But someone else may have made the opposite choice and feel the same way I do.
NO BANKING IS THE BEST! FUCK TRADERS! FUCK YOU BITCHES! YOU CANT GO TO PE! I JERK OFF TO EXIT OPPS! BANKING GIVES ME SO MANY EXIT OPPS.
OH, AND FUCK PLAIN OLD BANKING...IF YOU DONT DO GS, MS M&A OR UBS LA, YOU ARE FUCKED. OH WAIT, NOT UBS LA ANYMORE BECAUSE Moelis IS PUNKING OUT! FUCK THAT SHIT! TRADERS ARE JUST JEALOUS OF OUR EXIT OPPS!
AND WE ADD SO MUCH VALUE TO SOCIETY! IF YOU KNEW THE THEORY YOU WOULD UNDERSTAND, MY PITCH BOOKS CHANGE THE WORLD! WTF DO FUTURES DO? FUCK THAT SHIT!
WHEN I AM GORDON GEKKO YOU IDIOT TRADERS WILL BE SWEEPING THE STREETS! JUST LOOK AT THE THEORY!
HAHAHAHA
God amongst mere mortals
this should be in hall of fame just for this god like post
The narrowness of a skillset doesn't imply lack of transferrability or profitability-- it implies the ability to understand something "arcane" or "deep" and profit from it, which in finance is most important. Transferrability is a much more personal trait, whether someone can apply the techniques of learning product X to situation Y, or whether someone learns by mimicking someone else or develops their own strategy. If you know a product well, you can find ways that commoditization has "missed" something, and therefore increase YOUR profitability in the face of what you call a PRODUCT profitability reduction. Or you can take your skills at learning say equity option trading to trading currency options, or structured equity if you understand the nature of the industry. I just don't think a huge portion of the market, and primary revenue driver for many of our employers, will somehow disappear in a computer-induced poof within 5 years. Also,One of the highest growing and most paid jobs was Equity Sales this year -- this is literally what 85% of ppl here bash as the playground of idiots. Yet they generate fees, and they still thrive. Very few products are really ever "less profitable" -- profits just require more of a microscope and a larger array of tools. Potential abounds, have faith.
Products get more commoditized, yes, but a fuckin IBM can't build strategies or make fundamental directional bets without human interaction/decision-making. You can't program for everything, and those that do get run out in the face of others who have looked at a situation with a human eye.
And if you're worried about helping society, no one's curing AIDs here unfortunately. Trying to analyze the benefit to society of anything any of us does, banking or trading, is only going to launch us to a level of bullshit that rivals Bruce Wasserstein.
'But you're a trader, so you probably dont understand the concepts of NPV or DCFs.'
Right b/c discounted cashflows are concepts that are irrelevant to the pricing of say a bond.
unbelievable....
I think people who talk about trading here are very naive as to what many S&T divisions include. For example, I know of desks at at least three banks that essentially do P/E or distressed investing sort of work. At least one of them sits in the middle of the credit section of a fixed income floor. I think the MDs and members of these desks just love the trading floor rush that one gets from all the activity. Also, most banks have a whole array of proprietary desks that engage in most of the activities that hedge funds use.
Also, I have never really heard of someone doing technical analysis on a market making sort of desk. Most traders are trying to hedge their exposure to the other side of the clients' trades, and possibly take a direction bet. This has to do with a lot of complex mathematics like stochastic calculus, and is both an art an a science. Do you seriously think someone trading GM credit is not in tune with both their fundamentals and current market conditions?
Finally, not everyone gets stressed out from this sort of work, and many desks do very illiquid sort of deals where a great majority of the profits get booked when the deal closes. Thus, it is not necessarily true that S&T involves a huge amount of stress. Again, if you are market making, you can hedge most of your stress away and just collect the spread.
Sales and trading will not disappear. EVER! First, no electronic exchange can provide the sort of liquidity some clients demand. Second, some many illiquid and exotic products exist out there that such a task would remain impossible. I would be worried going into cash equities trading though.
Stop talking about how much richer bankers get. Everyone knows Goldman, Lehman, and Morgan have past traders running their respective operations. Additionally, a great deal of hedge fund managers either started by trading their own book or working in S&T. People get hired off desks all the time to join hedge funds, so I am not sure the exit opportunities are that bad. In a down turn, I am not sure trading will get hit so badly, because volatility, just as much as a great economy really drives trading profits.
Essentially, I think trading is just a lot more than people in IBD think it is. Understanding IBD's work is a lot more simple.
'Also, I have never really heard of someone doing technical analysis on a market making sort of desk. Most traders are trying to hedge their exposure to the other side of the clients' trades, and possibly take a direction bet. This has to do with a lot of complex mathematics like stochastic calculus, and is both an art an a science. Do you seriously think someone trading GM credit is not in tune with both their fundamentals and current market conditions? '
FX spot does involve TA. And credit trading doesn't involve stochastic calc.
'Finally, not everyone gets stressed out from this sort of work, and many desks do very illiquid sort of deals where a great majority of the profits get booked when the deal closes. Thus, it is not necessarily true that S&T involves a huge amount of stress. Again, if you are market making, you can hedge most of your stress away and just collect the spread. '
Yes, exotics PV well on day one generally. But it does you no good if you just bleed that p&l away over the life of the trade. And couple that with unhedgeable products and pin risk and you've got yourself a recipe for stress. Many exotics are not really hedgeable, at least not well. '
The reason that a number of banks are run by ex-traders is simply that the best bankers move on to bigger (and better-paying) jobs well before they're anywhere near the top of GS, MS, wherever. Unfortunately for traders that's not really an option.
And while no i'm not trying to cure AIDS, I think in any job it's good to feel that you're providing something to society. At least in banking, you are providing a valuable service to companies. In S&T, really all you're doing is selling people shit that is just as likely to lose them money as it is to make them money. I couldn't look myself in the mirror every morning if I was doing that.
that is worthwhile is fundamentally based. And that is what I'm referring to.
"Partnoy doesn't understand derivatives well." He was on a fucking derivatives desk!!!! If he doesn't know derivatives well, then what the hell was he doing giving clients advice regarding them?
He was a salesman, and he did it for one year and then left to go write books. QED.
and to this 'market making, which is primarily bullshit based. '
try market-making a few yards of vanilla swaps sometimes, we'll see how easy you find it to bs your way through that.
'Also, as to your point about Buffett loving derivatives, are you kidding me? He calls them "weapons of mass destruction." That doesn't sound like love to me. '
I really wonder about whether i should take the time to educate you or not. One, insurance is a form of derivative. Berkshire Hathaway is an insurance company. Two, buffett trades derivatives periodically. read the chairman's letters sometimes. munger has spoken about it at the annual meeting too. He doesn't like to be a market maker...hence his unwind of the gen re book.
buffett's actions often belie his preaching (and I say this a berkshire shareholder)...he has recommended index investing (again, you should actually read the BRK annual letters sometime) yet he is not an indexer. he tries to give advice for the 'common man'.
seriously, where do you work?
'At least in banking, you are providing a valuable service to companies.'
really? so the aol/twx merger was a good thing for time warner shareholders?
Last point...Buffett will tell you that both graham and munger are smarter than him.
I've read every single Buffett letter to shareholders, and own the stock as well. The fact that he has dabbled in derivatives a few times does not change his opinion that derivatives are generally not good for society. I would agree that insurance is a form of derivative (but not that Berkshire is an insurance company, it's clearly a holding company), and would allow for a role for the most basic forms of derivatives - call options, put options etc. What I find worthless (as does Buffett) are the esoteric derivatives whose value are derived from about seventy different moving parts and who nobody, include the traders and salesmen, truly understand. The fact that Partnoy was a salesmen doesnt help your argument, and in fact hurts it, cause that means he's giving advice on shit he doesn't understand. "QED"
I'm not an expert on derivatives, but using it as a hedging purpose, isn't that benefitial? I can think of simple example. If a pension fund or mutual fund invests in bonds as part of their strategy and buys credit default swaps hedging against their riskier holdings, they've protected themselves and the interest of all their investors should the issuing company of the bond go bankrupt, which to me seems benefitial. With derivatives, there's flexibility and the ability to employ various strategies and be innovative, which all seem like benefitial reasons. my 2c
You claimed that Partnoy understands derivatives. his being a salesman doesn't necessarily make this the case though it reflects poorly on Morgan Stanley.
Berkshire is primarily an insurance company.
blahblah for the third time, what do you do for a living?
MY NAME IS BLAHBLAHBLAH! I WORKED ONE SUMMER IN FINANCE! I AM A GENIUS! LISTEN TO ME! I AM IMPORTANT!
Geeze, this guy is spouting some ignorant shit.
Even if, in some impossible alternate reality, trading ceased to exist (which is completely insane), to say that traders have no skills with which to transfer to another line of work is MADNESS. Maybe they can't get a job working with credit default swaps, but they are going to be damn good at math and work very well under pressure. And guess what, people with VERY strong math/analytical abilities will ALWAYS be in demand.
Get the fuck out of here claiming that traders don't get NPV...fuckin' 5th graders could learn that shit, easy.
TheKing, Rest assured I've worked more than one summer in finance. I've worked only one summer in S&T true, but have significantly more finance experience than that. Jimbo, i'm not gonna say where I work/what I do, but rest assured that my interests lie on the corporate finance side of the business.
As to some of the other points, Berkshire is not primarily an insurance company. It has about fifty different companies rolled into it, and insurance is but a small part of Berkshire. I never argued that Partnoy knew derivatives - actually I argue the exact opposite, and I think his lack of knowledge is generally representative of most salesmen who simply try to dump shit on people who mihgt know even less than them.
With regards to hedging, there are certain instances when hedging through basic derivatives makes sense. But I am hard-pressed to believe that the complex derivatives that are based off of twenty five different securities are used by anyone to hedge, and quite frankly I don't know what purpose they serve to society.
I have enjoyed this thread immensely (in all seriousness).
For what it's worth, I was an IB analyst (now in PE/mezz) and did it for the skill set. As far as my own opinions on the relative merits of IB vs. S&T, I can't say.
I am simply not wired for a trading desk, and so I know IB was the better starting point for me. But I sure wouldn't mind a 7 am - 4 pm workday.
Anyway blahblahblah...your thought above on BRK is flatly, laughably, dead wrong. The entire MO for Berkshire is to use the float generated from the insurance holdings to go out and invest in other businesses (does this even have to be written?). Insurance operations comprise by FAR the bulk of what the company does.
we arent talking about "finding just any job"....we're talking about moving on to BIG THINGS, which is what investment bankers have the skills, connections, and resumes to do!!
(also, people keep thinking that my argument is that computers will take over trading....i'm not even saying that, i'm just saying that more and more shit will be moved onto exchanges, the spreads will be very thin, the only guys left will be the absolute GENIUS prop traders, and those guys are born not bred, so just give up...trading is very hard to succeed at)
Do any of you traders care to contest the fact that trading, due to its lack of face-to-face contact and limited reliance on relationships, is easily offshoreable? I predict that most trading floors are located in India, China, and the Middle East within ten years. People there will be willing to do your job for a fraction of what you get paid. You guys are nothing more than a glorified call center.
We are now less then 7 years from all trading being located in sweatshops in China and Vietnam right next to the 10 year old girls stitching basketball shoes according to this guy!
'Do any of you traders care to contest the fact that trading, due to its lack of face-to-face contact and limited reliance on relationships, is easily offshoreable? I predict that most trading floors are located in India, China, and the Middle East within ten years. '
sure, i do. would take the other side of that prediction in size.
Blahblah--I'm curious what kind of desk you worked on and which firm you worked for. You said: most people you saw on the trading floor "were not that bright". Looking around on my desk right now (and I'm in sales, by the way), about 25% of the people around me have PhDs in physics, math, etc. from Oxbridge/MIT/Chicago-type schools, another 50% have either a Masters in Finance, or MBAs--all Wharton, Chicago, Sloan, etc. The rest went to top-10 undergrads. Yes, we're all a bunch of morons with no idea how to calculate an NPV....
Im with Skins on this, from my experience people in trading have much better credentials than the banking guys. PHD's in physics, math MFE's etc. I only know one banker in my group that has a PHD in Math.
'It has about fifty different companies rolled into it, and insurance is but a small part of Berkshire. '
Yes berkshire has a variety of holdings, but insurance is the primary business by a long margin.
Trading is heavily reliant on relationships, cuz that's where market-making business comes from, and that's what salesmen do, and unless you are in prop, it's what you do every day. I believe it was in FIASCO where a salesman said he "integrity" was the most important thing, since it is all relationships. I'm not commenting on how true that is, but frankly I think Partnoy needs to get off his soapbox as fast as he stepped on it.
India, China etc will develop their own trading platforms yes, it's called globalization. That doesn't mean we can't compete, nor does that imply everything will be standardized on an exchange. You simply cannot predict what will and will not be traded in 20 years. And it's not like they haven't heard of the 20-and-1 concept in Mumbai.
Finally, how come no one is talking about the fungibility of investment banking analysts? It's not like their work is exactly difficult to do, nor does it necessarily require a solid mentor/decision-maker like trading does (which is why trading assistants/analysts will not be in India if the MD is in London/NYC). As an example, McK is already outsourcing the scrubbing and "prettyfying" of their models.
Yeah the NPV/DCF arguement was by far the worst comment in this thread. I'm a banker but definitely appreciate the heavy math/quant skills required in trading.
Suppose that is why many banks recruit traders heavily from engineering and math programs.
IB-100 hrs a week, heirarchy, not particularly meritocratic. And you get fat, 100 hours a week doesn't leave much time to stay ripped.
S&T-55-60 hrs a week, meritocratic, more stressful, more opportunities for success at a very young age, more exit opps (HF, IM, being awesome at everything).
Bottom line is, S&T > IBD
now, who would win in a fight with a sabre-toothed tiger?
Sorry to resurrect an old thread here...but what is better for learning investments (something like HF), IB stint or S & T?
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