Want to consider some career paths. I recently switched from a mid-sized O&G firm doing BD / Corp Dev. into a role at a large integrated O&G company doing straight up oil market fundamental analysis. I love the job; it’s the ultimate ‘lifestyle’ job, lots of freedom with flexible hours and great learning / involvement with the physical market. It’s been a great fit with previous BD experience.
With my current role, I could hustle and possibly be placed on the path to head in the direction of physical and/or paper trading in a few years. Given my sector specific knowledge, I could also possibly get into an ER role (I would bring solid oil market understanding, but not so much technical / reservoir or specific equity understanding). Last option and one with least resistance, I could continue on current path and become the senior market analyst and be the ‘expert’ (no trading, but lots of input to traders / senior management). My boss has received offers from investment banks and various other shops to come do commods fundamentals for them but has declined due to lifestyle trade off.
I wanted to get input from various folks on WSO: the ER folks, commodity folks, trading folks, etc. Which direction affords the best $ long term and which one has the best risk/reward profile? ER seems more of a grind but lower risk than trading which is more variable. Also, junior ish ER positions (and some intermediate) seem to pop up quite often these days within the sector.
Any thoughts? Which direction would you head in?
If there's enough interest I'd be willing to do a seperate thread or answer any questions anyone has in regards to the oil industry or any of my previous experiences.
trading > ER
Why do people post one liner shit like this without any explanation to back up their opinions? Do you honestly think this is going to help inform the OP on his decision?
Depends on what you are interested in. ER will get you more in the weeds, require more writing, and will have less comp variability. Trading will be more in the day-to-day flow, be higher level, and will have more comp variability with a higher ceiling. With an ER background you can exit to hedge fund or asset manager.
I think the first question you have to ask yourself is "can you handle the mental stress of trading?" Before I get bombarded and everyone insists I have a vagina hear me out. Not everyone is built to trade. Gauge your reaction next time you take a position and it immediately goes south. Now multiple that by 1000's; assuming you're trading futures.
I agree some people aren’t built for trading. I think I could be, but I hesitate to say that with confidence; we’ve all heard of the wanna-be traders who end up not cutting it. Likely the biggest determinant of success will be the environment and training which should be pretty good here. You won’t see the crazy bonus numbers you hear on WSO, but some shops like that do exist and you can always try and make that move down the road.
For futures trading, you have more insight about product flow from the physical side so you should have an edge (for some trades) compared to a prop desks with no physical presence. For physical trading, a shop with more physical assets will usually perform better and be able to limit risk more. This stacks the odds in your favor as you have a better ability to take advantage of location differential, quality differentials, blending, storage, and alternative transportation options etc. I am a bit baffled by the amount of money a physical trader can make. Yes it is a specialized skill set, but you’re not a one man show and you need a considerable corporate structure behind you to ensure success. As an example, if you have access to certain pipeline (or railcars in today’s environment), you can take advantage of the wti/brent and heavy/light differentials and make a killing. Doesn’t mean you are better, just means your company had the luck and/or foresight to invest in these assets ahead of time.
I guess at the end of the day I’m less interested in physical trading and would rather be involved in the financial markets whether it be via commodity futures/options or equities. Of course that doesn't mean I would say no if physical trading was offered to me, but preference would be in the financial markets. I think what bothers me (rightly or wrongly) is that physical trading requires huge amount of scale and infrastructure. I will forever be tied to a physical shop. I can know everything there is about a potential trade and still not be able to take advantage of it whereas in paper trades you can simply put on a trade (of course it’s not as simple and there are varying levels or risk/reward in paper vs physical, but hopefully you get the idea).
So the question becomes whether to focus on strict commodities for trading paper or move into O&G based equities to eventually move over to AM or HF. Family life starts coming into the equation too. I don’t mind working long hours, but I would need my employer to be flexible in timing of those hours (I’d want to be home from say 6-830 at least 3 times a week but would then be fine with working into rest of the night until whatever time is required). It’s not about the actual hours, just the timing of those hours. I’m guessing sellside ER does not offer this? Which would limit the options to AM or stay long term to move into trading. Thoughts?
Hey, just saw your note. Trading itself, or even asset mgmt/investment management will surely give you a better life balance (after your day of trading is over there's no use in you being there). As for ER- earning season requires crazy hours due to the fact of updating models, poking/prodding mgmt, reanalyzing the announcement, etc.
Both have advantages and disadvantages. Perhaps the most lucrative would be to do investment management while developing personal trading strategies for o> particularly on 3x leveraged securities if your firm has limitations about deriv positions. Also don't discredit the big energy players: exelon, etc. You could trade/manage supply. I'm sure it's intense, just a different level
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