:'-( RIP Bonus

Have you guys ever had a bad feeling about a (seemingly) good deal?

Like, a nagging or gnawing feeling that this seems to be going too smoothly...The buy-side guys are being enthusiastic and super helpful, the clients are being super helpful and compliant. Despite this there's the lingering suspicion that you keep shoving to the back of your mind that:

1) money shouldn't be made this easily.
2) the wet-dreams you have of ravaging this year's bonus cheque and then cuddling it, post-coitus, in a state of other-worldly bliss are just too satisfying to ever, ever, ever materialise?

Then, someone (client-side buddy, buy-side buddy, rabbi, gf, drinking-buddy, priest, yoga instructor...etc) says something that just niggles at the back of your neck ever so slightly which momentarily brings you back to reality ...but you ignore it 'cos hey, f*ck you...raining on my parade will not be tolerated.

Then, you get an email,

that on first read seems to confirm that you will be swimming in it in no time. Then you read the contents again and realise that when you really think about it, there's a disconnect somewhere and something doesn't add up. Could be the wording or a flashback to that innocuous comment one of the buy-side guys made that one time and when you really think about it you've wasted half a year of back-breaking labour (my chair is really shit) and you will not be compensated for it.

Yep, that just happened. Deal blew up. Back to square one.

Unlike lesser mortals, we IBD-monkey types don't seem to get the luxury of a 5-stage grieving process. No denial, no bargaining, and definitely no acceptance. Just depression and lots and lots of anger.

Sigh.

Anyway, plenty more deals active, in-development, and prospective to attend to. Nothing quite as helpful to my bottom-line but such is life. Feel free to weigh-in.

Onwards we march.

Btw, I did not spell-check nor is the grammar particularly suitable but I'm distraught. Mea culpa.

 

That is pretty much IB life in a nut shell and why a lot of people choose to exit to the other side. There is this chance and hope of a huge pay day and you work yourself to the bone to get it, but there is no guarantee. There are thousands of ways, probably more, that a deal can blow up. In fact, half the time when I go out drinking with other friends in IB we talk about the most interesting ways that one came crashing down. Morbid maybe, but if you can learn to laugh it off you will be a much happier person.

 
Mephistopheles:

That is pretty much IB life in a nut shell and why a lot of people choose to exit to the other side. There is this chance and hope of a huge pay day and you work yourself to the bone to get it, but there is no guarantee. There are thousands of ways, probably more, that a deal can blow up. In fact, half the time when I go out drinking with other friends in IB we talk about the most interesting ways that one came crashing down. Morbid maybe, but if you can learn to laugh it off you will be a much happier person.

I'm actually super unperturbed about it all. Win some, lose some. Literally wrote that right out of the post-mortem. The highs are high, and the lows make me want to push harder. That said, I'm not sure yet whether I'm in it for the long-haul. My dream is to run a small structured financing outfit and idle my days away. Idk.

 
Best Response
Mephistopheles:

That is pretty much IB life in a nut shell and why a lot of people choose to exit to the other side. There is this chance and hope of a huge pay day and you work yourself to the bone to get it, but there is no guarantee. There are thousands of ways, probably more, that a deal can blow up. In fact, half the time when I go out drinking with other friends in IB we talk about the most interesting ways that one came crashing down. Morbid maybe, but if you can learn to laugh it off you will be a much happier person.

Same thing happens on the buyside, at least PE buyside. You work to get an off market deal for months that doesn't happen because someone gets cold feet, you get into an auction and bust balls doing DD to not win it, and on the other side of the deal when the sell side banker's deal blows up because of the buyer or any one of a hundred factors, that's our deal blowing up. Or even worse you invested and it shit the bed. That's much worse than a dead deal because you didn't simply not make money, you actually lost money. My friends in HF's don't have the problem of not being able to do a deal because they basically just buy it (whatever somewhat liquid instrument "it" is), but they can be flying high, hit a bump and be under their high water mark and make no money for a couple of years getting back above water or worse yet blow up a week/month/six months later and be really fucked.

Like the old saying goes if making a million bucks were easy, everyone would do it. You just gotta keep grinding.

 

True the instant gratification at close is far more immediate than your "Hope this thing performs and I can sell it in a few years" situation. Also, like you said, I imagine the downside hurts way worse on a bad investment vs simply losing the success fee. I will say this though, If you want something badly enough, I feel like you have a few more levers you can pull to make sure the transaction closes (not saying you should). You are the decision maker while I am simply the salesman trying to get you to buy something. That's why I feel ultimately I'd like to go buy-side. Pretty big shift from my attitude a few months back, but life experiences tend to change ones perception.

 
cayo275:

Maybe I'm a callous prick, but it is hard to feel sympathy for someone who compares themselves to "lesser mortals" just because they have a fucking desk job in an air conditioned office and earn significantly more than other recent college grads.

Not sure the tongue-in-cheekness of this post came through. I don't derive my self-worth from my employment ;)

 
capratecompression:

You're being melodramatic. I want to slap you. Yes - slap.

-"buyside guy"

Clearly my attempt at levity was quite unsuccessful.

The abridged version is "Deal blew up. No one cares. Work harder"

You should really look into yoga classes, my friend. That pent up anger will kill you.

 

I refuse to talk about my number, but it may be helpful to read IlliniProgrammer's 2016 Extravagant Buy-Side Bonus Spending List:

1.) Replace broken AC. ($800) 2.) Replace exploded airbag in his clunker. ($800). (Dead serious. IP is an older millennial and grew up in an era before airbags) 3.) 6 pack of PBR, 1.5 L Yellowtail Shiraz bottle, and premium Roundy's Supermarkets cheese. ($20 total) 4.) Potentially some hang glider upgrades after saving some more money, later this year. Imagine adding a big fan to a hang glider which allows it to take off in a Midwestern field rather than driving 12 hours to the Catskill Mountains. (Cost not to exceed $5000)

Money is always nice, but people own money-- not the other way around. You are what defines You. Not money, not consumption, not your bonus.

Stay humble and keep saving.

 
IlliniProgrammer:

I refuse to talk about my number, but it may be helpful to read IlliniProgrammer's 2016 Extravagant Buy-Side Bonus Spending List:

1.) Replace broken AC. ($800)
2.) Replace exploded airbag in his clunker. ($800). (Dead serious. IP is an older millennial and grew up in an era before airbags)
3.) 6 pack of PBR, 1.5 L Yellowtail Shiraz bottle, and premium Roundy's Supermarkets cheese. ($20 total)
4.) Potentially some hang glider upgrades after saving some more money, later this year. Imagine adding a big fan to a hang glider which allows it to take off in a Midwestern field rather than driving 12 hours to the Catskill Mountains. (Cost not to exceed $5000)

Money is always nice, but people own money-- not the other way around. You are what defines You. Not money, not consumption, not your bonus.

Stay humble and keep saving.

Money is a nice way to keep score but it's just paper.

As for what it buys, it's just stuff.

Hang gilding sounds fantastic btw

 

Bonus time is always a great time to remind folks that the values of Wall Street and the general culture of conspicuous consumption that we live in, are empty, corrupt, broken and quite frankly fairly meaningless in the long run.

Remember what matters. Say hi to your friends and family tonight. And if you have food on the table and a roof over your head, and hot water and electricity, you're doing better than at least a couple billion people on this planet-- some of whom are still very happy and apparently live meaningful and fulfilling lives.

 

I find it utterly ironic that those who most frequently downplay the power and value of money, are often the same individuals who:

A) chose the most lucrative, money-centric career track in the world B) have accumulated ungodly amounts of money compared to 99.999% of others

You guys aren't fooling anyone with the blase "Money is just paper" , or "You control money, not the other way around". You guys remind me of Ted Cruz.

 
iggs99988:

I find it utterly ironic that those who most frequently downplay the power and value of money, are often the same individuals who:

A) chose the most lucrative, money-centric career track in the world
B) have accumulated ungodly amounts of money compared to 99.999% of others

You guys aren't fooling anyone with the blase "Money is just paper" , or "You control money, not the other way around". You guys remind me of Ted Cruz.

.

I'll admit that I value financial security. Most people who know me will tell you that I don't value conspicuous consumption.

Nobody is ungrateful for how great they have it, but sometimes it can be nice to know that money doesn't necessarily have a huge impact on some peoples' lifestyles.

Also I am not in the 99.99%ile. Nor in the 99%ile. I do well, but if you look at how I live, and you are a college graduate in the U.S., you won't be that jealous of me.

 
IlliniProgrammer:
iggs99988:
I find it utterly ironic that those who most frequently downplay the power and value of money, are often the same individuals who:A) chose the most lucrative, money-centric career track in the worldB) have accumulated ungodly amounts of money compared to 99.999% of othersYou guys aren't fooling anyone with the blase "Money is just paper" , or "You control money, not the other way around". You guys remind me of Ted Cruz.


If you knew how I lived or what percentage of my income I saved, I don't think you'd say that.

I'll admit that I value financial security. Most people who know me will tell you that I don't value conspicuous consumption.

It's not about conspicuous consumption, it's about knowingly choosing a career (whether IB/HF/PE) in which the singular valuable output is lining yours and your shareholders' pockets. I guess I just don't understand this hypocritic "fake-out" many try to pull on this forum.

If your goal was simply financial security, you could have been a cop/ nurse / teacher / doctor / lawyer--any number of blue or even white collar jobs making 60-150k and be more than financially secure. High finance compensation at the mid-career level affords much more than financial security, it's by very definition driven by a desire to conspicuously consume.

Just because you aren't SPENDING that money doesn't mean you're not CONSUMING it--you're just hoarding it to consume at a later point in time. Again, nothing wrong with that -- but let's be real and call a spade a spade.

 

I disagree with what iggs99988 said, but I doubt you're only at the ~90th percentile. Around 60% of Americans (ALL AGES) have less than $1,000 in their savings, and the median income of a 30yo male is $40k. There are no definite stats on savings/net worth, but depending on which you look at, having $100k in the bank would put you ahead of >99% of 30 year olds. There aren't many "high-potential" careers that throw money at you out of undergrad besides finance and CS, so not many professionals are making real money yet (ex- doctors, lawyers).

 

I have accumulated an absolute massive amount of money, I have never once said that money is just paper. Sure it's a way to keep score but I can tell you for damn sure that I control money.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 
heister:

I have accumulated an absolute massive amount of money, I have never once said that money is just paper. Sure it's a way to keep score but I can tell you for damn sure that I control money.

You control money now due to your massive accumulation, and presumed retired state, but there was a point in the not too distant past in which you were driven by the pursuit of accumulating your money. You didn't have your money before you got it. How's that not being controlled by money?

 
heister:

I have accumulated an absolute massive amount of money, I have never once said that money is just paper. Sure it's a way to keep score but I can tell you for damn sure that I control money.

And a private jet. And swimming pools of vodka. I'm sure you own a UFO as well. You make Dan Bilzerian look like small potatoes. Of course anyone can be whoever they want on the Internet, including Dick Fuld. :-) . And in all seriousness nobody really cares that much whether your account is real or fake or what you own or don't.
 
iggs99988:

I find it utterly ironic that those who most frequently downplay the power and value of money, are often the same individuals who:

A) chose the most lucrative, money-centric career track in the world
B) have accumulated ungodly amounts of money compared to 99.999% of others

You guys aren't fooling anyone with the blase "Money is just paper" , or "You control money, not the other way around". You guys remind me of Ted Cruz.

Ted Cruz comparison is frightening. The man is a lunatic.

I see myself as more of a Mike Bloomberg or even a Bill Clinton.

That said, money is just paper. It's very colourful and useful paper that ensures I can pay for convenience ( which I treasure far more than buying stuff).

The reason I'm in this line of work is actually only natural given my upbringing. It was either this or becoming a wastrel. Either way, save the self-righteous schtick mate. I am aware of my many privileges, I don't make excuses for them I just try to do my own bit of good where I can.

Also, don't be such a tight-arse, take a yoga class.

 
VaultinDasOberland:
iggs99988:
I find it utterly ironic that those who most frequently downplay the power and value of money, are often the same individuals who:A) chose the most lucrative, money-centric career track in the worldB) have accumulated ungodly amounts of money compared to 99.999% of othersYou guys aren't fooling anyone with the blase "Money is just paper" , or "You control money, not the other way around". You guys remind me of Ted Cruz.

Ted Cruz comparison is frightening. The man is a lunatic.

I see myself as more of a Mike Bloomberg or even a Bill Clinton.

That said, money is just paper. It's very colourful and useful paper that ensures I can pay for convenience ( which I treasure far more than buying stuff).

The reason I'm in this line of work is actually only natural given my upbringing. It was either this or becoming a wastrel. Either way, save the self-righteous schtick mate. I am aware of my many privileges, I don't make excuses for them I just try to do my own bit of good where I can.

Also, don't be such a tight-arse, take a yoga class.

Not being a "tight-arse", "mate". Much prefer weight lifting to yoga, I leave that to my girlfriend. Sorry calling you out on your bullshit made you uncomfortable buddy. Money is just paper, but it's paper that makes the world go round, and affords you your self-described privilege.

 
Just because you aren't SPENDING that money doesn't mean you're not CONSUMING it--you're just hoarding it to consume at a later point in time. Again, nothing wrong with that -- but let's be real and call a spade a spade.

You're right on one level but wrong on another. . Yes, I am hoarding money. (Probably not as much as you would think. There is no big money pit of gold coins that I go swimming in with an elderly Duck and it's a tiny fraction of what a sane person would retire on).

No, I am not hoarding it to engage in conspicuous consumption. I am hoarding it so I can own my education, my (not expensive) condo, and my clunker free and clear. So I don't have to worry about paying rent or paying a mortgage. So one day I can go hang gliding and not worry about what the markets are doing. (And contrary to popular belief, hang gliding is no more expensive than owning a canoe or a small sailboat)

I could afford my life as a programmer in the tech sector, but I wouldn't have a shot at retiring at 50. If I were a police officer, I could retire at fifty, and maybe afford my lifestyle with a studio rather than a 1BD condo, but this geek with his glasses and sweatervest would make for a mediocre cop and I'd be bored. As a quant I get to work on complicated problems with smart people. I do not make as much as a banker my age but I get a lot of free time.

Now that you have thoroughly dissected my motivations for finance, let's talk about what drew you to this thread.

 

Not sure the OPs background, but if he is at a regional boutique, it could have a really large impact on him. Many boutiques will pay bonuses as a percent of the success fees of the deals that the analysts worked on. Add this to the fact that they may only close two deals in a year, you will understand that seeing one of these deals blow up is depressing.

 
<span class=keyword_link><a href=/resources/skills/finance/going-concern>Going Concern</a></span>:

Spending $5000 USD on a fan doesn't sound frugal to me

You're either investing more in your present experience or more in your future life. One caveat though is that the present is guaranteed, the future is not

Either way, gotta spend a little, save a little, and drink a lot. That we can all agree

Well for a fan I'd also need a generator if I don't want a three mile long electrical cord going up to my hang glider which would probably clothesline birds, trees, and airplanes and all. And you need a cart to put the glider on. And then you have to make everything lightweight. As much as I wish I could just stick a $30 window fan onto it and call it a day...
 

This thread is all over the place. Let me clear up a few things:

  1. Having money is good, ask anybody who doesn't have any.

  2. Doing better than the bottom 40% of the global population who is getting by on 'pennies a day' is not a good barometer of success. For most people in most of human history, life has been short and brutal. Whether you're comparing yourself/your wealth to Warren Buffet or some really ridiculously poor person, you're still making your satisfaction dependent on your relative status. It's not going to help you feel better, so just stop.

  3. I don't know when happiness became something that we should be striving for, but I can only imagine it's a relatively recent phenomenon.

  4. People stress out about really inconsequential events. Try to get some perspective people.

 
DebunkingMyths:

All I can say after getting my bonus is WTF TAXES. Seriously ... why bother

I used to say that until I moved from NYC to Chicago. 3.75% state and local taxes ftw.

Oh and this condo (fancier than mine) is walking distance from the lake, the art institute and the CBOT (or Northern Trust, BMO, GS, MS, etc). And at $400k it's cheaper than a fifth floor studio walkup in Manhattan.

If your bonus sucks, you'll feel better if you just spend it in Chicago.

https://www.redfin.com/IL/Chicago/155-N-Harbor-Dr-60601/unit-4504/home/…

 
DebunkingMyths:

All I can say after getting my bonus is WTF TAXES. Seriously ... why bother

Situations vary but your bank likely withheld your bonus and the maximum marginal rate, but unless you're subject to the maximum marginal rate you'll be getting some of that back. Of course a good financial professional would be managing their tax situation to avoid this problem in the first place - remember paying taxes is for poors.
 
exemplaria:
DebunkingMyths:
All I can say after getting my bonus is WTF TAXES. Seriously ... why bother


Situations vary but your bank likely withheld your bonus and the maximum marginal rate, but unless you're subject to the maximum marginal rate you'll be getting some of that back. Of course a good financial professional would be managing their tax situation to avoid this problem in the first place - remember paying taxes is for poors.

My recollection is that federal taxes are withheld at the 25% rate as per IRS regulations. Some of you folks earn enough on salary alone to put you into the 28% bracket (which starts at $90K but add $10k for standard deduction and exemption), and other folks will make it into the 28% tax bracket with their bonus.

If anything, 25% is probably modestly undertaxing a majority of WSO's bonus recipients.

 
exemplaria:

Did you even read the thing you posted?

I read section 7 lol (link at the top).

Look under "Supplemental wages identified separately from regular wages"

Look, my personal view is that if HR or your payroll firm is withholding more they are doing it wrong. There is no reason to give Uncle Sam an interest free loan on 10-20% of your paycheck for 10 months.

 

For that shit that said paying taxes is for the poors I can confirm that no paying taxes is not just for the poors. Anyone with any sense of business sense knows that these bullshit claims that people like Warren Buffet and other really wealthy people pay closer to 0% than their salaried employees do is a joke. I can take the books of a company and make them look like their margin is 1000% or I can make them look like they loose money 10X faster than they make it. The point is that just because things appear to be so doesn't mean it actually is.

Warren Buffet not only is full of shit when he rolls out that number that he pays 13.X% in federal income tax, he is doing it to stifle competition for his company. Berkshire pays taxes on multiple levels. Unless they are the sole owner of every company in their portfolio (they aren't) they can not take the income of their portfolio companies as straight pass through income.

Therefore the portfolio company pays income taxes, Berkshire pays income taxes, then Buffet pays income taxes. People are incredibly stupid in this country and they just assume that because rich people pay a lower tax rate that they pay less taxes. The tax code while complicated and having many ways to work it and lower ones taxes, it is set up that way to encourage specific types of behavior. Now if you want to have an argument about the legitimacy of a governmental system that is designed to encourage specific types of behavior at the expense of perceived "fairness" that can be an argument to be made. However saying that only poor people pay taxes is a joke.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 

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