I started in ER at a BB about a year ago. So far I've hated it, I spend most of my time churning handwritten edits on research notes and updating marketing materials. I get late night faxes from hotels while the MD is traveling asking to have his handwritten edits put into a research note and sent back to the hotel by the morning. My MD wastes double the time by handwriting the edits and giving them to me instead of learning how to use a fucking computer to type into Microsoft Word. I actually enjoy learning about the sector but I can't stand the menial work I am forced to do, and I feel chained to my desk all day due to needing to be available at any given time. I work in some capacity every weekend and am expected to be available every weekend, but almost always work from home unless it is earnings.
So my question is, is this normal for Research? I chose research because I wanted to avoid this type of menial work which feels like what bankers would be doing, and to have a better work-life balance. But perhaps I just misunderstand the demands of the job. I am debating leaving research altogether but don't want to make a rash decision when maybe it is just a bad boss and I should just consider changing sectors.
At its core I think I like research, I like thinking critically about what moves markets, but I can't stand the BS work I have to do and I don't see it getting better any time soon under my current boss. What do you guys think? Change sectors, or leave and look to do something different?
PM me. We will talk.
In sell-side research, just expect some level of inefficiencies that are almost always idiosyncratic to the analyst. The MD didn't get to that corner office because he or she is a good leader or project manager so their minions lives are shitty to certain extent. My MD is a really nice dude, but the work still mostly centers around DOING (maintaining comp sheet, some sort of proprietary database, talking to idiot clients and sale people, etc.), as compared to reading and thinking. It's the nature of the damn profession, which is why most ppl do for some time and then peace out to do something else.
Even with a strong understanding the shenanigans coming into my job, I grossly underestimated the amount of selling (the SELL-side is for real) that is involved: eg. standing there for 4 hours deciding with the team what music is good for the introduction of a sector conference is not thinking and definitely not investing. So you just have to realize one thing and one thing only: sell-side "research" pretty much has nothing to do with investing or research, ironic as it is.
If you are same as the consensus and then consensus is wrong, your job is safe, but you are not gonna be Meredith Whitney. If you are contrarian to the consensus, and you are wrong, you are fired. If you are contrarian to the consensus, and the consensus is wrong, you go on Fortune magazine and be lauded as a hero. And then you come up with a narrative on how you totally saw the auto cycle coming or saw that Citi was fucked, in hindsight.
Once you make MD, (1) if you can bring in IB deals or have a stable base of audience, you make more than $1 mil each year making risk-free stock calls with 0 skin in the game, why would you leave to the buy side to deal with the pressure of being wrong and actually staring at massive unrealized loss? (2) you got private school tuitions and mortgage on that Sausalito house with San Francisco Bay view. (3) your mind is probably so plagued with how sell-side thinking that how you want to learn actually how to invest? (4) what buy side shop will hire a $1mm research analyst when they can hire an undergraduate who can be molded into a promising investor?
That's exactly what Whitney did, but turns out she can't pick stocks (also exactly to your point, she WAS able to raise a lot of money for a real hedge fund), which again confirms my belief that good sell-side analyst and good investor are two different (if not polar opposite) concepts.
Yes, good MD paycheck is too good to pass up. That is one of my points.
Your view on the hedge fund hiring is fair. I guess I am just very close-minded because I believe in certain way of investing for which sell-side does not add much value to me. Maybe there are funds that value an analyst's industry contacts that can generate informational / analytical edge. I have been on the sell-side not for long (and hopefully not for much longer), but I have seen plenty of analysts go on morning call "previewing" a stock saying her "channel checks" suggest this chemical company can move enough inventory, only to see the stock drop 30% when they massively missed guidance, just saying. In so many ways, sell-side thinking is exact opposite to how a long term oriented value investor thinks about value creation.
Sell side does make "long-term" calls, but it's 1-2 years at most. It's not really analysts' fault. The motive of the industry made it that way.
For the longest time, sell side generates revenue through commission from clients who use bank (broker)'s service - biggest service being trade execution. How do you grow that revenue? What are equity sales people motives? One and one thing only - by getting clients to trade more and more frequently. How do you get them to trade more? By putting out research reports frequently and upgrade / downgrade when you see "incremental data points", when in reality the business is just executing and the quarterly results are just fine. The clients that value the sell-side also have a 3-12 month holding period. So the entire sell-side value chain is short-term focused as a result.
Finally, sell-side analysts get votes from buy side investors based on this magazine called Institutional Investor (II) - why this magazine has some credibility I don't know, but staying ranked apparently makes you awesome and gets you comp'ed (it's like the USNEWS for college rankings). Historically, the voting is weighted using buy side firm's AUM, which meant larger AUM firms (think Fidelity, Wellington, Putnam, Capital Group, the "long-onlys") had more says on value-add of the analyst. Starting this year, the voting is weighted toward commissions, I let you draw the conclusion because I am too lazy to type it out haha.