Hesitating between Commodities and Stock Markets
I'll soon start my gap-year and I wonder which of the following I should aim BB-MM-Propshop-Commodity house-Hedge Fund as I come from a semi/non target school but I've a good GPA and relevant experience in commodity trading.
My dream job is salesman in S&T (equity, FX, derivatives, options) in BB or prop shop. But as I'm also interested in commodities and I have a great experience in this field maybe I should focus on keep on prospecting commodity firms for my gap-year ?
Would 1 year of experience in commodities be relevant for a S&T position in stock markets (equity, FX, derivatives...) after graduating or I would be too specialized in physical commodities?
To be sales I know the best gap-year path would be a 6-month sales assistant internship in IB and 6 months in a hedge fund as a commercial assistant but I'm afraid not to find anything because I'm not school targeted (even if my school is ranked #10 worldwide in Market finance by the Financial Times)
I really enjoy commodities markets but I read here it's quite difficult to climb the ladder from scheduler to trader (hello monty).
Moreover big physical houses are generally located in non-fancy places... that's not the same lifestyle as in NY or London.
Thanks
the thing that kills me about the "it's hard to go from scheduler to trader" is that it's hard to get into the industry in the first place. people are shying away from positions because they're hard to obtain, when with that outlook they'll never be able to accomplish anything difficult.
this isn't a job that's supposed to be easy, so shying away from difficulty speaks volumes about the path your career is most likely going to take.
I really can't understand why you make a direct link between the fact that I try to consider other alternatives and the fact that I strive to get rid of difficulties in accordance with your sentiments. Read my post again and you'll see why I'm not clear-cut on this.
Sounds like you're shying away from it because you can't be a BSD out of undergrad and pop bottles in NYC. I'm not focusing on the rest of your post b/c I don't know shit about the other products.
Any serious answer ?
Go with what interests you the most - that's where you'll be most successful. Screw lifestyle, difficulty, etc. I'd say try to make commodities work.
I've a liking for commodities (highly interested in physical delivery on a worldwide scale, cross borders, customs, damages, geopolitic factors, travels to check suppliers' operation spots...).
The only factor slowing me in this path is the lifestyle : you are not likely to live in NYC or SF and above all you usually start as a scheduler and it takes to 5 years just to have the background and the chance to go for a trading position. And I believe non physical first year analysts are more paid than in physical S&T.
What do you think about that?
I think you'll be paying a lot less tax in Zug than in NYC or SF.
What is it with lifestyle? Why does it have to be NYC or SF? Like I said, nobody here has a serious answer because you aren't asking a serious question. What the hell does NYC or SF have to do with commodities? If you have a passion for commodities and want to learn the physical market, why does it matter that you have to spend a few years actually learning the market you supposedly want to trade in? You aren't making much sense, so how can we help you? That's why I made those jokes about you wanting to just be some kind of 24 year old bottle service rat in NYC, because that's the only thing I can think of as to why you absolutely have to start making bank at 23 in NYC.
Do you have to be an ops monkey for 3-5 years to trade non-energy commodities? I think someone else can shed more light on this.
For example, consider, grains, softs, industrial commodities, metals, livestock. No matter the market, if you're good there is definitely 2/20 money to be made being a portfolio manager or trader down the line.
Each market is different in how you progress to become a trader, so do some research and ask around.
Some perspective from someone on the commodity side, specifically oil. I have had various jobs in the industry and they are all considered "front office" (if you want to use those references I guess). This includes strategy / bd work (specifically related to the physical trading world - ie pipes, storage, blends, rail, etc) to fundamentals where you learn the markets in depth (short to medium to long term for commercial / trading groups and their strategy counterparts)
There are so many opportunities available. In the end, it's learning the business from the ground up, which is the only way to do it. If you want to be in physicals, you have to learn from the ground up cause no one will give you opportunity otherwise, and if they did you'd fail because everyone else has the grounds up experience - devil's in the details
I find it funny how many people look at it as a success/fail outcome when it's more of a range. On the way to being in commercial / trading roles you are increasingly taking on more responsibility, getting paid more, getting better bonuses and being presented with more opportunities and connections. It's not like you slave away for 5-10 years and then make it or don't make it! You could be in this world and never make it to trading and still pull in a few hundred grand a year if you move up and know what you're doing. Some people pull in significantly more without ever being traders.
If you are set on being a trader, then yes 90% of the time you need scheduling or some sort of ops, but it's not always absolutely necessary as there is no one defined path. The most important part is learning the industry as a whole. You might as well enjoy it and find it somewhat interesting, cause guess what, as you move around and move up, and if you become a trader, you're still dealing with all the same BS.
Thanks a lot for sharing your knowledge. Banana.
During my first experience in a major dried food niche market S&T firm I learned quickly a lot from the ground up because I was highly interested in the business and it was my best internship experience so far. What are the FO positions allowing kid like me to learn about the business ? Scheduler is a "MO" position but the best way to start a career in commodities no ?
As you said the minimal background requirement in order to apply for trading/sales positions is 5-10 years scheduling or ops, but even if i don't make the cut to trading (for x or y reason) I would maybe enjoy an other road in the company or even BB positions in commodity desks. Is it true ? Do you have some ranges of compensation from first year career (scheduling...) to scheduling senior after 3 or 4 years ? And are there differences between super major/BB commodity desks/commodity houses ?
Sorry to bother you again with my newbish questions but when you say moving around you gain experience in several very different markets or just on a very specific market ?
Thanks a million for your time you help me (and others) a lot.
I can only speak to grains and other agricultural products since that's where my experience is, but you don't have to spend time in a middle office position to become a trader.. I started out of college as a trader trainee/merchandiser doing procurement work, and within six months was given authority to trade small positions. I eventually turned that position into running my own P&L as part of a large domestic and export grain group. Seven years later I am a senior trader at a desk that specializes in specialty grains for a well-known diversified agricultural company.
Over those seven years, I've only had one merchandising assistant/scheduler/logistics coordinator in any of the three companies I've worked for transition into a trading role, and that just recently happened at my current company. Until now, I've never had a trading assistant who I would have even considered promoting to trader. In my opinion, the "middle office" roles in agriculture don't really prepare you for trading--just because you're scheduling trucks or doing rail billing doesn't mean you understand how products are flowing and why, and the assistants I've had and been around usually don't want to deal with the increased workload that comes with trading. I've never seen anyone in a back office role move to the trading floor; I have seen poor traders get moved to the back office, though.
The normal course for most of the people I know in this business was to either intern as a merchandiser/trader assistant in college and then take a junior trader role when graduating, or to get hired in procurement/buyer role out of college and work into a more involved trading role. CHS, Cargill, ADM, Bunge, and any other large house have well-developed programs for junior merchandiser/trader roles. There are other ways in, but these are the most common in my experience for someone coming right out of college.
I will say that if you're dead-set on being in New York, agriculture commodities might not be for you. The big grain houses are notorious for sticking you at a country elevator somewhere in the middle of nowhere to learn how local truck markets work before bringing you back in-house to work on the trading floor. I've been fortunate that I've never had to leave the major metropolitan area where I've lived since college, but many of my friends haven't been so lucky, and you will certainly get offers to move to those types of places as your career goes on--sometimes those types of roles will pay far more than staying in a big city since it's so hard to get people to move. If you can get in with a smaller shop that doesn't own assets and just wants to teach you how to trade, you won't have to deal with that, but those opportunities are becoming harder and harder to get right out of college, and it sometimes kills your chances of moving to an asset-based company that wants someone with some operational experience.
All that being said, if you're willing to take some short-term sacrifice for a few years of not being paid huge amounts of money and having to learn from the ground up, agricultural commodities can be very rewarding. This business is still driven by a combination of building and maintaining relationships with counterparties, coupled with a knack to see opportunity where others don't and the ability to execute your ideas. If that type of work appeals to you, then physical commodity markets are a good place to be.
Physical arbs are tricky, you have to think about quality differences, about transportation timing and hedging, counterparty risk, nomination to a pipeline and a host of other factors. What if transportation cost was x, you made the trade, and then realize oh you have to pay for terminaling or maybe fuel surcharge of a barge or rail car or whatever.
It becomes even more complicated when you try to do a term deal because now you have to think about longer term fundamentals etc. Maybe you can get a cheaper transportation option to certain markets by taking out a committment on a pipeline, making you way more competitive than some of the competition. What if the market moves against you and now you have this sunk cost and the movement is now a net negative on the books?
Logistics are not sexy, but it's what allows trading to happen. Everyone can see when an arb is open on the screen, but it's a fine set of physical assets and various skillsets that allow you to take advantage of that arb. It's a team effort -yes some are paid more than others, but no one is lacking, everyone is generally well off (and even more so on a relative pay vs lifestyle scale - it can be pretty sweet).
Scheduler is MO or FO depending on the shop. For instance, if the shop is a pipeline company with no marketing arm, then you're scheduling is more MO potentially but if you are part of a marketing group and you schedule for them, then it's front office. Hell even if they call it back office, it doesn't matter, cause you're getting the work experience and working with traders and other shippers.
I don't think there is a minimum to apply for those positions. Some people have gotten lucky and gotten it earlier, others have taken a long time. I definitely think there are many positions you could enjoy, depending on your interests. I think first year compensation is largely tied to location, so I'm not sure I can really give you a range. First year compensation is also largely irrelevant - focus on the learning and the opportunities (trust me).
As far as differences between commodity houses and super majors and BBs, I'm not totally sure. Go where the assets are and where you can get an opportunity. I doubt you would get opportunities at all of them. Super majors are great learning, same with small shops. BBs that I know of basically do the same thing as the other shops but they often lack assets so harder to make money on the physical. At the end it's about learning the industry. If you can get commodity house like Glencore, obviously go for it. But any decently sized oil and gas company will be good learning if they have trading and integrated companies also provide great learning as you can see the full value chain (getting insights into production, transportation, and refining). These are just my random thoughts. I think there are pros and cons to any of those options
You can move around a lot to get experience in one market, or (depending on the company) you end up moving around getting experience in difference markets and products as well.
From the sounds of it, if I were you I'd aim for scheduler or a desk analyst or a fundamentals analyst. From there you can build up some experience and start moving around. If you like the BD / Strategy / M&A world, those types of roles provide some entry level analyst jobs as well
Yes I will cast a wide net for my gap-year. The year after I'll have to specialize in a major : which of the following I choose financial markets or supply chain management ?
Desk analyst has exit ops in M&A and Strategy (Management strategy?) ? After how many years?
You sound so fucking stupid.
Nothing compare to you when we see all the monkey shit thrown at you.
I'll start soon to aim scheduling/analyzing/graduate junior trader programs. Thanks for all the information
To clarify, I meant the strategy type roles also have analyst positions as entry level positions, so you can get your foot in the door on that side. The most important part is learning the industry, it really opens up to those who are exceptional (and sometimes lucky), meaning if you are good people know it and they want you on their team and you will get the chances you need.
As for a major, I don't know because I started at a company who didn't care that much. Finance is a safe bet, but I'd say supply chain management sends the wrong signal if you want to be commercial. Think about it, supply chain management is dealing with contracts and service agreements, about getting the right services and materials to where they need to be. It's a completely different career path
Thanks again for your answer. I'll go for financial markets then. The one of my school is well recognized and has a nice alumni base (plus ranked #10 by the FT, it can be BS but it's not irrelevant)
You said it right there, or at least very strongly implied it. The end of your first post. Jesus Christ.
Why is Rotterdam a shithole? I haven't heard anyone say that before. I'm genuinely interested, never been there (only to Amsterdam). Looked it up and so far doesn't seem that bad...
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