Weekend Wars: Sell side vs. Buy side

The dream and desolation of the high finance world. Which path to the upper crust of middle-class suburban boredom do I take? Do I jump to the buy side? Do I stick it out in this simian hell of pitch books and Excel? Which is really right for me? A friendly look in the rearview at how simply the decision was.

Nowadays, however, simply breaking in is hard enough. With the layers upon layers of applications piling up at HBS, Wharton, Booth and the like, an advanced degree doesn't guarantee what it once may have. The landscape is different, but the question remains:

Sell side or buy side?

For most, the answer comes easily. As the hours and pay are better, most prefer the buy side. There is also that extemporaneous angle of not being owned by the client and truly having a hand in your own fate.

That having been said, the work is not all that different. Since the buy side does tickle so much fancy, it can be argued that sticking it out on the sell side is a surer and faster path to success. With the glacial changes we have seen in the complex interplay between banks, regulators, markets and customers many buy side shops are struggling to generate the revenues they have grown accustomed to in the past quarter century.

There is certainly an air of prestige that differentiates the two worlds. Having spent much of my life in airports world and nationwide, I have developed a predatory lender's instinct towards sub-prime borrowers, when it comes to telling these guys apart. Just let me see him/her squirm in one of those tight waiting area seats and I can even guess the firm they work for.

Networking hint: first-class/business lounge, look for the guy rocking the crocs looking like he just got out of day-surgery, there's you buy side boss.

Alas, an irony I have found is profound and may bare serious thought for people weighing the decision.

The common train of thought is that the sell side is more of a sales gig and that the buy side requires deeper analytical skills and abilities. Though this is true, the catch 22 is that many of the best sales people jump to the buy side. Simultaneously, many of the analytical minds stay on the sell side. I have had more than one engineering major tell me that he never made the jump because of less-than-stellar interpersonal skills.

None of the points I've brought up will change anyone's mind. Seeing as this is a topic of great interest for many of you, however, I think it requires more in-depth thought than simple dollars and cents.

 

M^3, we should turn the "Weekend Wars" series into a series of rap battles à la Leveraged Sell-Out's "Damn it Feels Good to be a Banker."

"If you can count your money, you don't have a billion dollars." - J. Paul Getty
 

I like my bankroll bro, Keep your fucking work-life balance!

"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."
 

A more specific question on the buy-side (I am a recent grad, starting in trading at a BB soon). Say we're talking about similar starting salary for associates, why might someone want to join a fund of hedge funds over a global macro hedge fund? Thanks.

 
Best Response

"This shit's going down like Bear Stearns"

But seriously, buy side isn't all it's cracked up to be. The hours are better, sure, the pay is better (unless you're me). But you're just as beholden to a client in many situations. And in our case it's "WHY DID I LOSE MONEY TODAY YOU MOTHERFUCKERS." Occasionally they call you and tell you they're gonna pull out just to remind you who's boss. Plus, you can't get on the wrong side of your primes in a crisis, just ask the LTCM guys.

It's also a bit lonlier over here. I sit in a small office with no windows with our firm's lawyer. I'm 24, and the next research analyst is like 28, and he's considered a kid. I can't forge the same kind of relationships with my coworkers that many other analysts can on the sell side. It's not like I can go clubbing with my 53 year-old lawyer (or in my case, do something nerdy).

Also, the buy side can have a real stigma against networking. Some funds, like mine, will do everything they can to keep you away from someone who can give you a job. It can create a weird kind of insularity and secretiveness without justification. And just because the businesses are about earning returns, doesn't get rid of the truth (from another poster): "shared blowjobs are more important than 50% irr."

Gugu, a FoF is more of a sales gig (and maybe a bit more of a scam in some cases). They still do some funky portfolio valuation metrics if they're focused and can have some pretty intense due diligence processes. Or, they're just shotgunning money to wherever. Let's just say it's a job more focused on work/life balance. From what I understand from friends and Bondarb's posts, Global Macro is a constant meat grinder/adrenaline rush.

"Dude, not trying to be a dick here, but your shop looks like a frontrunner for the cover of Better Boilerrooms & Chophouses or Bucketshop Quarterly." -Uncle Eddie
 

I would agree with what others have said. If the buy-side role was not in REITs it would be more of a toss-up but REITs and real estate valuation in general does not transfer to broader equity valuation techniques nicely. Many of the people who start in real estate stay in real estate so if you like it I would definitely do the REIT thing but if you aren't committed to Real Estate I would do the BB ER role.

Also as an ER at a BB I would think you'd meet more buy-side investors than at a REIT buy-side role which could help you transition when you look to make that move.

 

The thing about funds which provides the up as well as downs is that it is unstructured. Depends alot on the people within the team.

In HK, I havent really seen that many funds which are really worth to work for free types. Many of them preach one thing and do another.

Also BTBanker was spot on. Even as ER guys arent helpful in terms of investment thesis and giving entirely independent and critical insights, not to mention always following the crowd, it still seems many hedge funds or investment firms are very willing to take them in.

If you havent been in the REITs role, how would you know its enjoyable? Please do not trust interview experiences and do some personal research and talk to people on the ground.

 

I had the same dilemma a couple years ago and after talking to PMs I knew ended up choosing buy side. Its not as easy as you think to go from sell side to buy side, though I'm not sure about HK.

That being said, unless you love REITs I'd recommend taking the sell side gig. Skillset gained covering REITs isn't as transferable as most other industries.

 

km1793, have you checked out these or run a search:

  • Equity Research- Why would you choose buy-side vs sell-side? at a big bank but not really trying to touch on that as of now. Equity Research buy side sell side ... Hi guys, So I want to do equity research. I know that there is sell-side and buy-side and, so far, ... your detailed research process and investment recommendations to the buy-side (i.e. AM, HF). The ...
  • Sell Side Trading (not prop) vs Associate PM on buy side role on buy-side. I have some sell side research/strategy experience. "I am not sure why a stint ... position to be a PM starting from sell side trading also. Any comments? ... I posted this as a response to another post, but am posting it here again (with some additions) ...
  • moving from buy-side to sell-side i know the typical path is to go from sell-side to buy-side, but how difficult is it to do the ... eventually move to the sell-side to a market-making role. how easy would it be to get sell-side interviews ... after doing a stint on the buy-side? ...
  • Buy side to Sell side- can it be done? not for investment banking. Can the switch be made? Is the switch worth it? intern buy side sell side ... a non-target Canadian school. I've got some experience under my belt with working at a large AM firm as an ... wanted one thing, investment banking. My GPA isn't the best (B-) but I've been able to land ...
  • Entry buy-side or sell-side position....thoughts? I got two different offers for post-MBA entry positions. One is sell-side ER associate and the ... other is a buy-side junior analyst (IM). The SS firm isn't a BB but it's a recognizeable MM ... to have as much LT upside potential in terms of base comp but its bonuses can match base in the ...
  • Difference between sell-side and buy-side equity research (culture/ atmosphere, salary, career paths, etc.)? Hi, I'm very curious about the difference between being a sell-side or a buy-side equity ... analyst. Of course, one main difference is that you don't talk to clients when you are a buy.side ... analyst and that your reports aren't published, as they are for internal use only. but what else? do ...
  • Does all Buy Side ER (Long Only) pay less than Sell Side ER? my most recent year.-CFA Charterholder-I have been trying to make the move to the Buy Side for over ... even Sell Side? Am I crazy for considering turning this down? Equity Research pay buy side sell side ... -I have 4 years of experience doing Sell Side ER (currently at BB) and just cleared $
  • More suggestions...

Or maybe the following pros can chime in... b43b6b7b82b87 TZgoennerei Wallstreetneversleeps

If those topics were completely useless, don't blame me, blame my programmers...

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

So let me get this straight. You are trying to get someone else to do this for you? This is not a hard thing to figure out, however it is time consuming. Why don't you go to the yahoo finance star analyst section and use that count for the sell side. On the buyside it will take some estimation but you should be able to get close. I don't think anyone is going to take the time to do this for you.

 

Just work toward getting into an analytical group whether it's a group that invests directly such as a credit focused group or even secondary like a fund of hedge funds type group. Either will get you the experience you need though both types offer very different sets of skills.

 

re: mlamb93

because you generally learn things quicker on the sell side? there's a lot more pitching and deals flying around that junior people are involved in. there's just more going on.

i know there are exceptions, especially at the top buyside places like Blackstone, which makes a case for going to such things after undergrad i guess, but generally yea.

other than that there's just more top shelf entry level openings on the sell side.

 

well i've been told that your network is a lot bigger if you start at a bank, and i guess in a sense when you move over to the buyside, which would be a given if you're good, then you would have that added network as a resource and safety net. i guess that would be in case your fund blew up or something else happened, or you had to lateral to another fund.

tbh i agree with what you're saying, i'm just trying to be thorough in my decision process

 

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