6/5/12

This could be a completely stupid question, so don't hound me to hard, BUT I have read two different forums (threads 1-2 years old) that have stated that Equity Research is on the decline and could be potentially dead in the next 5 years or so? Is there any validity to this?

Cheers

Comments (68)

Best Response
6/4/12

1a. ER is front office. It is a client facing role. Any other suggestion is ludicrous. ER analysts don't simply sit behind a computer and type all day. They talk to C-level execs and portfolio managers for the largest asset managers (i.e. mutual funds, hedge funds) in the world. I'm not sure where the confusion comes from.

1b. ER is not dying but consolidating and rationalizing, yes. There are far too many analysts covering stocks and far too many boutiques. It's common to read something like "well-respected boutique" on this site but in reality, besides a handful of places like ISI Group, boutiques are homogeneous. With volumes down and commission growth minimal, the boutique S&T model will disappear and shops will close. BB's will still be able to stay afloat by capturing trading commissions and more soft dollars because of better corporate and analyst access. Note that I didn't say better analysts but BB's have bigger coffers and will always be able to support more analyst marketing, large conferences and non-deal roadshows which are the main sources of commissions. There's no reason that more than ~15 people should cover any one stock and sadly, a lot more firms and analysts will need to be thinned out before ER can be profitable again.

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6/4/12

Curious as well

Get busy living

6/4/12

I don't work in ER (still in college), but I think big banks may "outsource" their research in the future. I think there's going to be a lot of new financial services firms that's going to focus solely on ER.

It's sort of like how many companies today outsource their behind-the-scenes operations (e.g. HR, audit) to other specialized firms (e.g. Kelly Services). It cuts down costs and increases efficiency. Not saying ER is back office, but it's certainly not as front office as IBD or S&T.

6/4/12

Rambo what r u talking about ER not being front office? ER is definately front office. Sure ER isnt the correct pathway if you decide to go into PE, IB or corporate advisory because it is not deals focused but nontheless, focusing on and understanding economics, finance and markets you can make a hell of a load of good coin in the future, say in 15-20 years, when the next bullmarket returns. Sure there are not many openings in ER at the moment but if you build a career in 20 years time when the next bull market comes, you are set considering the amount of baby boomers that have retired. It depends what you love and are interested in. PE isnt the end all and be all and I think plenty of jobs remain in PE, all you have to look at is efinancialcareers to see this point is true.

6/4/12

ER is going to be the best survivor in a terminally declining industry. Not unlike carriage interior manufacturers of the late 1800s. The actually carriagemakers went out of business, but the interior guys got contracts from the automakers and ultimately got bought out by them.

IBD makes the wooden carriage wheels and S&T makes the horses. But ER does something that creates value regardless of the market. It ultimately does the research that shows where the money should go. You could argue that it is back-officey, but it's a lot harder to make the argument that it doesn't create economic value than it is for S&T or IBD.

6/4/12

ER is close to being dead bros.

In reply to spaceagecowboy
6/4/12
spaceagecowboy:

ER is close to being dead bros.

Please distinguish fact from opinion

In reply to IlliniProgrammer
6/4/12
IlliniProgrammer:

ER is going to be the best survivor in a terminally declining industry. Not unlike carriage interior manufacturers of the late 1800s. The actually carriagemakers went out of business, but the interior guys got contracts from the automakers and ultimately got bought out by them.

This is an excellent observation. Any idea on what the shape of the role will be a few years down the line? I'm trying to get a feel for what the industry will look like to plan in that direction, so I figure why not spend a few minutes speculating...

Get busy living

6/4/12

It will still be there as long as there are buyside firms around. That being said...how much is going to be in the US is debatable.

6/4/12

As long as the companies/primary businesses are in the US, ER will be in the US.

With the discovery of shale gas and the US's control of the great lakes- the world's largest supply of fresh water- I suspect those businesses and thus ER will be in the US for the rest of our lifetimes.

In reply to Dank Nugs
6/4/12
Dank Nugs:

1b. ER is not dying but consolidating and rationalizing, yes. There are far too many analysts covering stocks and far too many boutiques. It's common to read something like "well-respected boutique" on this site but in reality, besides a handful of places like ISI Group, boutiques are homogeneous. With volumes down and commission growth minimal, the boutique S&T model will disappear and shops will close. BB's will still be able to stay afloat by capturing trading commissions and more soft dollars because of better corporate and analyst access. Note that I didn't say better analysts but BB's have bigger coffers and will always be able to support more analyst marketing, large conferences and non-deal roadshows which are the main sources of commissions. There's no reason that more than ~15 people should cover any one stock and sadly, a lot more firms and analysts will need to be thinned out before ER can be profitable again.

This is the impression I've gotten lately as well. Where do you see the opportunity within ER? Where do you think the opportunity for people will be as the fat is trimmed in the industry?

Get busy living

6/4/12

The buyside will exist, so ER will exist. There are too many companies for funds to research every one in depth. Likewise, ER will be most in demand for unusual industries or industries undergoing considerable change.

Basic materials requires in depth knowledge of those markets, reserves (in the case of metals & mining), and established hedges.

Biotech, Pharma, and HC require a lot of industry expertise, to the extent that a science background is very useful. Is XYZ co's drug novel enough for a patent? What is the likelihood of FDA approval, given the results of past tests?

FIG is tough. Banks are rapidly changing, and all financial institutions are very complex. Due to often lackluster disclosure, you have to dig deeper than the 10k.

Real estate also operates according to its own set of valuation metrics. Same with O&G.

Unless you are a giant $20+ billion HF or massive mutual fund, you are unlikely to have sector specialists. And you do need specific knowledge here; I would not feel remotely confident valuing a startup biotech company, for instance.

6/4/12

Thanks for the excellent insight guys.
Would have given SB to you all if I had them.
I'll reply to a few posts separately.

However, the general consensus I have been getting from these comments is that ER is FO despite what some say. And that in a bad market it is the most important division because it reveals where money should/shouldn't be which can save millions if not billions. Yes?

Secondly, a few people stated that it will be going through a massive shuffle in the foreseeable future, is it possible for anyone to put a timeline on this? When it will return to the strength it once was or whether it will at all return to that?

"All things are difficult before they are easy"
- Thomas Fuller

In reply to Rambo
6/4/12
Rambo:

I don't work in ER (still in college), but I think big banks may "outsource" their research in the future. I think there's going to be a lot of new financial services firms that's going to focus solely on ER.

I get the impression that this could be a good thing? Correct me if im wrong, but it sounds like they will become more independent and maybe more relied upon?

"All things are difficult before they are easy"
- Thomas Fuller

In reply to spaceagecowboy
6/4/12
spaceagecowboy:

ER is close to being dead bros.

Explain please :o

"All things are difficult before they are easy"
- Thomas Fuller

In reply to Dank Nugs
6/4/12
Dank Nugs:

1b. ER is not dying but consolidating and rationalizing, yes. There are far too many analysts covering stocks and far too many boutiques. It's common to read something like "well-respected boutique" on this site but in reality, besides a handful of places like ISI Group, boutiques are homogeneous. With volumes down and commission growth minimal, the boutique S&T model will disappear and shops will close. BB's will still be able to stay afloat by capturing trading commissions and more soft dollars because of better corporate and analyst access. Note that I didn't say better analysts but BB's have bigger coffers and will always be able to support more analyst marketing, large conferences and non-deal roadshows which are the main sources of commissions. There's no reason that more than ~15 people should cover any one stock and sadly, a lot more firms and analysts will need to be thinned out before ER can be profitable again.

Your post was begging for SB that I don't have. Thanks nonetheless
After the trimming and slimming is done, do you see a industry as important as it is now (has been over the last decade or 2) coming out the other end? And is there a timeline you can put on this?

"All things are difficult before they are easy"
- Thomas Fuller

6/4/12

Good luck convincing your multi billion dollar hedge fund client to speak with your semiconductor research analyst that is based in Bangalore

In reply to IamObama
6/4/12
IamObama:

Good luck convincing your multi billion dollar hedge fund client to speak with your semiconductor research analyst that is based in Bangalore

whaaaaaaaaat

"All things are difficult before they are easy"
- Thomas Fuller

In reply to West Coast rainmaker
6/4/12
West Coast rainmaker:

The buyside will exist, so ER will exist. There are too many companies for funds to research every one in depth. Likewise, ER will be most in demand for unusual industries or industries undergoing considerable change.

Basic materials requires in depth knowledge of those markets, reserves (in the case of metals & mining), and established hedges.

Biotech, Pharma, and HC require a lot of industry expertise, to the extent that a science background is very useful. Is XYZ co's drug novel enough for a patent? What is the likelihood of FDA approval, given the results of past tests?

FIG is tough. Banks are rapidly changing, and all financial institutions are very complex. Due to often lackluster disclosure, you have to dig deeper than the 10k.

Real estate also operates according to its own set of valuation metrics. Same with O&G.

Unless you are a giant $20+ billion HF or massive mutual fund, you are unlikely to have sector specialists. And you do need specific knowledge here; I would not feel remotely confident valuing a startup biotech company, for instance.

What are your views on Energy !

Though Arun murthi from Gold man sax predicted oil will reach above 100$ when it was hovering around 40$ and it did. (He got paid a lot after that )..after that he said it will go to 200$ but it nots going any where close to it....probably he didn't evaluate fracking technology

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6/4/12

Research is where a lot of industry specific knowledge and corporate relationships reside within a bank, for example it is often easier for an analyst v. someone from banking to get on the phone with a CEO. Research is also instrumental in the capital raising process, which by the way is tightly regulated so you can't really offshore it. The real problem is that equities have been in a bear market for over a dozen years now so that's puts pressure on the entire equity biz, research included.

6/4/12

Kudos to westcoast and nugs, who are spot on.

The industry is in the midst of some consolidation. Commissions have dropped from an 1/8th to 3-5 cents per share over the last couple of decades, which has hurt the equity S&T/ER business as a whole. However, ER plays a number of different roles that aren't appreciated by those who are unfamiliar with the day-to-day capital markets world. A couple of additional reasons to those listed above:

1) ER plays the role of outsourced research for the buy-side. Given recent outflows, hedge funds and mutual funds can't afford to carry the headcount necessary to perform necessary due diligence on their applicable coverage universe.

2) ER has evolved into a driver for the IPO businesses. For example, Morgan Stanley's tech bankers have great relationships, but their sell-side analysts are well known and have deep relationships with most start-ups. It is not unusual for a sell-side analyst to have a conversation with a private company a week in order to walk through trends, the company's business model, upcoming conferences, etc. The same is true with VCs and private equity funds who often tap the sell-side for thoughts on a space. These relationships pay off in banking business down the road and serve as added coverage for banking groups.

The best work in the investment industry is done over the phone and in-person, which is why "outsourced to India/China" will never happen. ER is very much a relationship industry, and success is dependent on contacts in industry and on the buy-side. Contacts almost impossible to build from another country.

6/5/12

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

In reply to swagon
6/5/12
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

That was neither funny nor grammatically respectable.

"All things are difficult before they are easy"
- Thomas Fuller

In reply to swagon
6/5/12
burnsy:
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

That was neither funny nor grammatically respectable.

I thought it was funny and about as respectable as asking retarded questions and putting them on the front page.

In reply to HumPiranha88
6/5/12
HumPiranha88:
burnsy:
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

That was neither funny nor grammatically respectable.

I thought it was funny and about as respectable as asking retarded questions and putting them on the front page.

Different strokes - I wont argue on whether or not it had comical appeal.
However I will argue your second point - I stated at the start of my post that it may well have been a stupid question, but hey i'm just trying to learn! No need to attack me on that front. As far as the question appearing on the front page, I am grateful it is there (attracts more legitimate answers and insights) but as you very well know, it wasn't my choice, so don't attack me on that point. It makes you look stupid.

"All things are difficult before they are easy"
- Thomas Fuller

6/5/12

I am currently doing trading in London and though research isn't my cup tea, I will admit that they play a pivotal role in terms of flow. Generally if you have a good research team, it stirs up interest in the firm and gets them talking to sales and/or spec-sales depending on what they want and assuming sales isn't shit you could get an jump in flow. In terms of career prospects (from what I know) it's not terrible, generally AM tends to be the popular exit opp. for many with others moving horizontally (e.g. BofAML to JPM). That said I could imagine if you are a top-flight analyst and are brought over the wall frequently enough a move from ER to IBD would not be a stretch of the imagination.

6/5/12

There will be always be room for someone who can add value in this space although it's easier said than done. I will tell you very few people (including myself) give two shits when some ER guy puts out a new report claiming whether something is a buy/sell. There is a .01% that is worth listening to and the rest are mostly full of shit which is why it is in decline, it doesn't have the power it used to.

In reply to burnsy
6/5/12
burnsy:
HumPiranha88:
burnsy:
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

That was neither funny nor grammatically respectable.

I thought it was funny and about as respectable as asking retarded questions and putting them on the front page.

Different strokes - I wont argue on whether or not it had comical appeal.
However I will argue your second point - I stated at the start of my post that it may well have been a stupid question, but hey i'm just trying to learn! No need to attack me on that front. As far as the question appearing on the front page, I am grateful it is there (attracts more legitimate answers and insights) but as you very well know, it wasn't my choice, so don't attack me on that point. It makes you look stupid.

Well i think it sucked

I eat success for breakfast...with skim milk

In reply to Ben Shalom Bernanke
6/5/12
Ben Shalom Bernanke:

There will be always be room for someone who can add value in this space although it's easier said than done. I will tell you very few people (including myself) give two shits when some ER guy puts out a new report claiming whether something is a buy/sell. There is a .01% that is worth listening to and the rest are mostly full of shit which is why it is in decline, it doesn't have the power it used to.

Thts why they hire people with industry experience....

6/5/12

I don't think so. I think investors are getting wise to that fact that Hedge Funds charge a lot and its hard to beat the market after such high fees. I use to have a hedge fund and if I could do again I would charge smaller fees.

Most mutual funds don't even beat the market, which is bad as well.

Index funds are a very solid option for a lot of investors.

But i still think asset management will exist in 5 years though.

In reply to mal228
6/5/12
mal228:

But i still think asset management will exist in 5 years though.

Good call.

In reply to andyinsandiego
6/5/12
andyinsandiego:
mal228:

But i still think asset management will exist in 5 years though.

Good call.

Given this is my division, I certainly hope so!!! I know that UBS and a few other firms are emphasizing this over the universal/investment bank model, and AM is much more visible than even a few years ago. Any thoughs on the shape of things to come?

Get busy living

6/5/12

There are gonna be 50,000 CFAs setting up Surf Shops and Doggy Daycare services for the tech peeps in a few years

6/5/12

It's a cost center.

They would outsource everything to India and pay them in Peanuts.

6/5/12

I dont think some sectors like Energy can be outsourced to place like INDIA

In reply to Ben Shalom Bernanke
6/5/12
Ben Shalom Bernanke:

There will be always be room for someone who can add value in this space although it's easier said than done. I will tell you very few people (including myself) give two shits when some ER guy puts out a new report claiming whether something is a buy/sell. There is a .01% that is worth listening to and the rest are mostly full of shit which is why it is in decline, it doesn't have the power it used to.

This is clearly someone with a LARGE ego speaking prior to thinking. If no one listened, or ".01% was worth listening to" as this genius claims there would be no ER. Secondly, they wouldn't be able to move the markets as they do when they publish research with Buy/Sell ratings. Contrary to your post, this happens EVERYDAY. It comes down to having analysts who are respected and followed closely. Sure, you suck as and analyst your opinion is worth shit. No one will listen. Pretty sure this holds true for anything in life. So thanks for the intellectual insight. As alluded to in previous posts, the industry is compressing due to tighter compensation and large supply of coverage.

-Brasky Out

In reply to Bill Brasky77
6/5/12
Bill Brasky77:
Ben Shalom Bernanke:

There will be always be room for someone who can add value in this space although it's easier said than done. I will tell you very few people (including myself) give two shits when some ER guy puts out a new report claiming whether something is a buy/sell. There is a .01% that is worth listening to and the rest are mostly full of shit which is why it is in decline, it doesn't have the power it used to.

This is clearly someone with a LARGE ego speaking prior to thinking. If no one listened, or ".01% was worth listening to" as this genius claims there would be no ER. Secondly, they wouldn't be able to move the markets as they do when they publish research with Buy/Sell ratings. Contrary to your post, this happens EVERYDAY. It comes down to having analysts who are respected and followed closely. Sure, you suck as and analyst your opinion is worth shit. No one will listen. Pretty sure this holds true for anything in life. So thanks for the intellectual insight. As alluded to in previous posts, the industry is compressing due to tighter compensation and large supply of coverage.

It has nothing to do with ego. The culture of wall street has changed over the years. People used to hang on every word an analyst would say. And I'm not arguing there aren't analysts that move markets. Sure, when a respected shop or big name ER guy makes a call it definitely moves the market, my point is investors and funds no longer rely on these guys to do their research. They do it themselves or have their own research guys. Other than large pension funds, there are probably very few people who still make daily decisions based on research reports.

ER is no different than asset management in the sense that it will always be around for those that can add value. If you're good at what you do, people will catch on and listen to you.

6/5/12

The people who think that ER will get outsourced have a fundamental misunderstanding of its role. ER is not there to simply put out notes on companies. A big part of ER is buyside guys picking up the phone and calling a favorite analyst when they have a question on a company. It could be anything, from getting the 5 minute download on the history of how the stock has traded, gauging how other investors are positioned, trying to figure out the "whisper number" for this quarter's earnings, or understanding industry dynamics. ER guys are very helpful in this regard.

Basically, ER is a conduit where information flows one way and opinions flow the other. The ER analyst collects information about the company (through reading, diligence, talking with management, etc) and that flows to their clients through notes, phone calls, and meetings. On the other hand, from talking with investors all day and hearing the various bullish/bearish arguments, ER's estimates/price targets will eventually triangulate around the mean of where the buyside is viewing the stock, thus forming a real consensus given that all of the analysts are then aggregated and averaged.

The other role of ER is to manipulate stocks/push the agenda of the banks. There are some banks/analysts that are more guilty of this than others. I will not elaborate further but you can imagine why this function exists.

In reply to Ben Shalom Bernanke
6/5/12
Ben Shalom Bernanke:
Bill Brasky77:
Ben Shalom Bernanke:

There will be always be room for someone who can add value in this space although it's easier said than done. I will tell you very few people (including myself) give two shits when some ER guy puts out a new report claiming whether something is a buy/sell. There is a .01% that is worth listening to and the rest are mostly full of shit which is why it is in decline, it doesn't have the power it used to.

This is clearly someone with a LARGE ego speaking prior to thinking. If no one listened, or ".01% was worth listening to" as this genius claims there would be no ER. Secondly, they wouldn't be able to move the markets as they do when they publish research with Buy/Sell ratings. Contrary to your post, this happens EVERYDAY. It comes down to having analysts who are respected and followed closely. Sure, you suck as and analyst your opinion is worth shit. No one will listen. Pretty sure this holds true for anything in life. So thanks for the intellectual insight. As alluded to in previous posts, the industry is compressing due to tighter compensation and large supply of coverage.

It has nothing to do with ego. The culture of wall street has changed over the years. People used to hang on every word an analyst would say. And I'm not arguing there aren't analysts that move markets. Sure, when a respected shop or big name ER guy makes a call it definitely moves the market, my point is investors and funds no longer rely on these guys to do their research. They do it themselves or have their own research guys. Other than large pension funds, there are probably very few people who still make daily decisions based on research reports.

ER is no different than asset management in the sense that it will always be around for those that can add value. If you're good at what you do, people will catch on and listen to you.

Overall I agree. The industry has changed and research is now done internally at some firms dependent on size. More importantly agree with your point that if you're good at what you do (add value) people will catch on. Only slight divergence would be that few people make daily decisions based on research reports. I think this would be hard to quantify allowing it to be argued for threads upon threads. One point I pose based on my experience: It relies on the relationship of the sell side sales member (even analyst reputation in some cases) and their buy-side contact accounting for their investment horizon and style bias. Sure it's not everyday, but a call based off a solid report can spark a trade nearly immediately most likely increasing or decreasing a position (still affecting them none the less). I appreciate your point of view. Imagine your on the buy-side? hahah

-Brasky Out

6/6/12

I think ER industry will be something like entertainment industry in terms of economics of labor. i.e the differential between the lead analyst and everyone below him will be extremely large, like the differential between the actor and rest of the production crew.

Reason?
Firstly: Automation.
Secondly: Analysis skills, quantitative skills, and technical skills are slowly becoming "commodity", and it's just a matter of time that these skills become omnipresent, like in India, everyone who works in financial industry and everyone who want to work in financial industry.... has completed/pursuing CFA.

In reply to Tommy Too-toned
6/6/12
Tommy Too-toned:

There are gonna be 50,000 CFAs setting up Surf Shops and Doggy Daycare services for the tech peeps in a few years

Lol...

Please elaborate

6/6/12

I recently read an article on this, but wasn't able to find it. Unfortunately, i don't remember the exact wording, but the essence of the article was that sell-side research is moving from providing their opinion to providing data to their clients. In my time on the buy-side, I have seen this a lot. I'd rely on sell-side analysts to provide me with, for example, all the same-store sales data on retailers, but i wouldn't ask them on their opinion on the stocks. It would save me a lot of time because i wouldn't have to spread all the data myself. Especially for generalists on the buy-side this is a very helpful service.

So I agree that research will not be outsourced, but there might be a shift in terms of what information they provide.

6/6/12

I am surprised that many of you missed the one crucial element that analysts bring to the table...corporate access! We do NDRs, conferences, analyst days, field trips, etc with clients and management of covered companies. That is what our clients (hedge funds, mutual funds, pension funds) pay us for 90% of the time. The majority of the time, before an investor takes a position they either want/have to meet with management and the analysts relationships with CEOs, CFOs, etc make this possible.

Until they make it cost effective to fly from India to the U.S. on a weekly basis, ER will not be outsourced...

Smokey, this is not 'Nam, this is bowling. There are rules.

6/6/12

Also, like some have said, ER is valuable for coming up with ideas that analysts at hedge funds haven't thought of. Nobody gives a shit about our ratings or price targets, they want to know how we got to our estimates and what makes this company different from all of the others.

Smokey, this is not 'Nam, this is bowling. There are rules.

In reply to wallstreetballa
6/7/12
wallstreetballa:
Tommy Too-toned:

There are gonna be 50,000 CFAs setting up Surf Shops and Doggy Daycare services for the tech peeps in a few years

Lol...

Please elaborate

So many CFA candidates out there. Someone's gotta start killin' baby boomers or the CFAs are gonna be hangin' with their wangs out by the shores near Silicon

6/7/12

Maybe this was already said but if you search you will find posts from '05+ saying ER would be finished. It is still not 7 years later.

Maybe EPS estimates are shit, but everyone knows that including the Analyst. It is just a matter of over/under. That is why there is consensus, so you can spend your time on important or potentially value-add things. The next time you need a company model, comp analysis, micro models, macro models, primers, and a professional opinion from someone balls deep for years in XXXXXX industry, who you gonna call? If you have any $$ as a firm, all of this a phone call away.

I would sure like to get a hold of a several models right now so I do not have to build the industry model from scratch. Again, if I were trading with that firm, crazy to say that is not very worth the cost to staff.

6/18/12

I also hear some finance old tymers saying the same thing. I've always thought that it's because traditional equity research arms were housed under brokerage firms, and any trades off of the recommendations would generate revenues for the firm at large. Now with commissions off the trades thinning (i.e. through lower volumes of trading, distrust of the stock market, trading technology, etc.), the ER firms are waning in turn. Maybe sell-side research is going out of fashion? Anyone want to comment or correct me or add on to this?

Baby you're the perfect shape, baby you're the perfect weight. Treat me like my birthday, I want it this way and I want it that way. It makes a man feel good baby.

In reply to swagon
6/18/12
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

Swagon is a parasite on this site. Good for nothing. Loser who seems to have a lot of time to waste.

Go on, throw monkey shit, say some retarded stuff back to me. It's obvious the type of person you are - good luck in life bro, have fun clowning around on the internet all day.

In reply to Buddyfox
6/18/12
Buddyfox:
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

Swagon is a parasite on this site. Good for nothing. Loser who seems to have a lot of time to waste.

Go on, throw monkey shit, say some retarded stuff back to me. It's obvious the type of person you are - good luck in life bro, have fun clowning around on the internet all day.

Agree

"All things are difficult before they are easy"
- Thomas Fuller

In reply to burnsy
6/18/12
burnsy:
Buddyfox:
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

Swagon is a parasite on this site. Good for nothing. Loser who seems to have a lot of time to waste.

Go on, throw monkey shit, say some retarded stuff back to me. It's obvious the type of person you are - good luck in life bro, have fun clowning around on the internet all day.

Agree

Go run a lap

I eat success for breakfast...with skim milk

In reply to TonyPerkis
6/18/12
TonyPerkis:
burnsy:
Buddyfox:
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

Swagon is a parasite on this site. Good for nothing. Loser who seems to have a lot of time to waste.

Go on, throw monkey shit, say some retarded stuff back to me. It's obvious the type of person you are - good luck in life bro, have fun clowning around on the internet all day.

Agree

Go run a lap

Agreed. DO NOT ANGER THE WSO OVERLORDS......they'll sic Blastoise on you

Get busy living

In reply to TonyPerkis
6/19/12
TonyPerkis:
burnsy:
Buddyfox:
swagon:

u always r gonna need ER cause kids aint gonna stop messin around gettin into accidents and puttin firecrackers up their butthole then oops it exploded, hurry up get johnny to the ER asap they gotta sew up his butt crack

Swagon is a parasite on this site. Good for nothing. Loser who seems to have a lot of time to waste.

Go on, throw monkey shit, say some retarded stuff back to me. It's obvious the type of person you are - good luck in life bro, have fun clowning around on the internet all day.

Agree

Go run a lap

Good one!

"All things are difficult before they are easy"
- Thomas Fuller

6/19/12

Swagon is ok in my book, but start spending more time on getting where you want to be

Fo real

Get busy living

1/29/13

All these f*ng Indians are killing our industry. Since they flood our market in mass as they work literally for peanuts they are destroying the compensations as well. Soon enough, even they will have to get a flight back to India. Please stop their f*ng invasion.

1/31/13

Seriously arorts2, thats kind of reply u have

1/31/13

I hope my point hasn't been covered as this forum is , well, long. Equity Research as an earnings model needs drastic changes but the discipline is probably the only actually USEFUL skill in the whole of the city when coming to analysing companies.

Most BB's don't actually take any money for their research, but they make money at the back end because currently, you need to trade with said bank to acquire their research. The big problem with paper research is that it is passed around with no care of who wrote it. I work at a market making company and if I want any piece of equity research for my PA it is extremely easy to get my hands on it, yet this is a product which a bank is paying four guys $150k each a year to do! Furthermore, I have no intention of trading with said bank either.

Of course the bigger funds do have a set system of increasing trades against better research but this is open to interpretation. If all banks went to a subscription based model, you would see a lot of useless analysts get ironed out and a lot of sales traders facing drastically lower earnings but this is the most rational way to monetize research

1percentblog.com

In reply to energyanalyst
1/31/13

energyanalyst:
Seriously arorts2, thats kind of reply u have

Of course I'm serious. Everyone knows that's a huge factor! And it doesn't help at all!

1/31/13

Each industry differs, its easy to send the research work to INDIA for company like wal mart. But, when it comes to commodity based business like oil you need to be close to source.

In reply to energyanalyst
2/2/13

energyanalyst:
Each industry differs, its easy to send the research work to INDIA for company like wal mart. But, when it comes to commodity based business like oil you need to be close to source.

I think that people were freaked out about this trend maybe a decade ago, but by now it is pretty obvious that there are very big limitations on what outsourcing can really do.

As someone who utilizes offshore resources, I have to say, you get what you pay for - which is not much. We use them to make pretty charts, pull simple data (great if you need to do something very simple with large quantities of data) - anything more complex gets these people very confused. My analysts have figured that it is easier and faster to the work yourself than triple check the work done in India. Sometime it is pretty amazing how bad the work is - keep in mind I work for a major bank so we get the better ones. When I had good offshore analysts they usually ended up getting a real job - so training these guys is a total waste of time. My guess is that we use them because someone high up has a relative/friend in india who runs this circus - but the reality is we would better off having these guys back in the US in our building with much better quality control and accountability. They are very good at writing Excel macros though - have to give them that.

In reply to redrut
2/2/13

redrut:
I hope my point hasn't been covered as this forum is , well, long. Equity Research as an earnings model needs drastic changes but the discipline is probably the only actually USEFUL skill in the whole of the city when coming to analysing companies.

Most BB's don't actually take any money for their research, but they make money at the back end because currently, you need to trade with said bank to acquire their research. The big problem with paper research is that it is passed around with no care of who wrote it. I work at a market making company and if I want any piece of equity research for my PA it is extremely easy to get my hands on it, yet this is a product which a bank is paying four guys $150k each a year to do! Furthermore, I have no intention of trading with said bank either.

Of course the bigger funds do have a set system of increasing trades against better research but this is open to interpretation. If all banks went to a subscription based model, you would see a lot of useless analysts get ironed out and a lot of sales traders facing drastically lower earnings but this is the most rational way to monetize research

As someone already said, what you pay for is access to management, industry experts, field trips and company visits. We will also do small custom projects for key clients. Written research is only a very small part of what big institutions pay for.

In reply to energyanalyst
2/2/13

energyanalyst:
Each industry differs, its easy to send the research work to INDIA for company like wal mart. But, when it comes to commodity based business like oil you need to be close to source.

BTW my rant is against the mentality of outsourcing, NOT the Indians per se, although it does seem that the Indian culture in India doesn't encourage a lot of individual initiative :)

In reply to ILOVENYGUY
2/4/13

ILOVENYGUY:
energyanalyst:
Each industry differs, its easy to send the research work to INDIA for company like wal mart. But, when it comes to commodity based business like oil you need to be close to source.

I think that people were freaked out about this trend maybe a decade ago, but by now it is pretty obvious that there are very big limitations on what outsourcing can really do.

As someone who utilizes offshore resources, I have to say, you get what you pay for - which is not much. We use them to make pretty charts, pull simple data (great if you need to do something very simple with large quantities of data) - anything more complex gets these people very confused. My analysts have figured that it is easier and faster to the work yourself than triple check the work done in India. Sometime it is pretty amazing how bad the work is - keep in mind I work for a major bank so we get the better ones. When I had good offshore analysts they usually ended up getting a real job - so training these guys is a total waste of time. My guess is that we use them because someone high up has a relative/friend in india who runs this circus - but the reality is we would better off having these guys back in the US in our building with much better quality control and accountability. They are very good at writing Excel macros though - have to give them that.

"You get what you pay for." Exactly this. Offshore associates are great for data collection once you hold their hand and walk through it. Even after months of hands-on teaching, you might not get a quality analysis on an earnings release. Ramping up requires a long time even if you set aside a few hours every morning and evening. It's just harder when you can't ask/answer questions on the fly. And this is just in terms of industry specific knowledge. The time zone is also an issue although I've heard of alternatives such as associates within or near the same time zone (like the Caribbean).

While on-site associates will always be needed, I'm wondering if the 2nd or 3rd associates will be outsourced (depending on coverage size and workload). I believe some have been relocated to offsite locations such as Buffalo, NY.

11/3/13

I came into ER from industry. was working at a sell-side firm. ER will not die but it will evolve. financial modeling and other technical tasks can be automated or outsourced to india. but industry research/insight/contact will stay with the analyst. 20% of ER is modeling, 50% is finding insight, 30% is relationships with corporate clients/buy-side. just that there are too many ppl wanting to be in ER yet not enough jobs. so the wage will go down. people think ER makes a lot of money but it is not true, unless you work at big banks. even then there is a risk of layoff.

In reply to redrut
11/3/13

very well said. i, too, think buying for research directly is the most rational way to monetize it. it's just an awkward biz model to pay for research thru banking.

11/3/13

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