The market seemed to be a little sketchy last week and even though this will probably blow over, I think we can all agree that at some point in the next few years we are going to see a big recession just considering the fact that we've had a 10 year bull market. I was pretty young in 2008 but from what I remember, finance professionals were getting fired left and right.
Are prospective/current investment bankers worried about this? I signed for a 2020 SA position and am a little scared that if the economy goes to shit, they will pull my offer, or that they will hire less FT making it extremely competitive to get a return offer. Also, a bad economy means worse deal flow, which will also lead to clawbacks in PE (making that recruiting process a lot harder in the next two years).
How recession-proof is the banking industry? I've seen old posts on here of people celebrating their Lehman offers, which goes to show even the best candidate can get screwed when a bank flops.
A few thoughts from my inexperienced self:
A market correction in 2020/2021 will not have an impact similar that of the Great Recession
As a junior banker, you are extremely affordable and highly utilized
Platforms run the risk of missing rising tides if they simply lay masses off whenever the market displays any sign of volatility (think of the resourcing that it takes to recruit, hire and train new talent)
Finally, consider your cost relative to that of a VP--some platforms pay these individuals extremely well without the expectation that they begin to build a book of business--mediocre VPs would be the first to go
I'll caveat all of this given that none of us can guess the timing or magnitude of the next market correction or how a particular platform will be affected.
My recommendation would be to focus on what you can control as a summer: producing a quality work product on a consistent basis. Most banks will resist showing talented candidates the door, even during the slowest periods.
I'm not worried at all.
We get a recession - great, some seniors will be pushed out and the road to the top is less competitive. Bonuses might be bad for a year, but in the long-term they're gonna go back to normal.
We don't get a recession - great, PE and strategics continue to fight over deals because they cannot afford not to. Money in the bank doesn't do anyone good and in this current deal climate it's fairly easy to run processes.
As for my personal spending, my savings and earnings can handle pretty much any realistic interest rate. For the overall economy there might be some rotten apples and people will lose jobs. However, that doesn't affect me.
It doesn't matter what the market does today, tomorrow or even in a year. The only thing you should worry about is to make sure you are a valued intern that lands a FT offer.
If you're up for VP in the next couple years, like me, then yes....you are worried. If you're an incoming analyst, not so much.
Weird flex, but ok.
Not sure if you heard, but people tend to get promoted every 3 years at the associate level. Or canned. I referenced both possibilities.
I've had similar worries and just signed my 2020 offer as well. A recession will likely hit in the next year or two, and frankly the sooner the better in my opinion. I would rather have it hit during our junior years and clear up before we eventually are in a position to get promoted (or jump to PE for that matter). Like others have mentioned above, juniors are less likely to get cut than some senior positions.
No point of being worried about something that's out of your control. Recessions hit almost all industries, people get laid off, etc.
Entire classes got slashed during '08 and are back on their feet. Everything will be fine in the long run if you're good at your job.
There is not much you can do about it.
This is probably the only answer that actually matters.
What are your other outs?
Call options on CBOE VIX index or treasury bonds during the market swing. Also, precious metals such as gold, silver, etc.
People read wsj everyday and love to talk about recession risk. You’re probably 19 years old. Go have a natty light and chill.
Natty Daddy :)
Terrified? Absolutely not. Concerned? Maybe.
You are right in that we have had the longest bull run in history, but I don't think there are any indications that we could have anything bigger than a routine correction (unlike '08). That said , the trade wars with China and the US could be something to watch, this last leg of tariffs was pretty hefty.
Overall though of all demographics you probably have the least to worry about. At best you are valuable but not expensive labour for the bank and in the worst case scenario you have time to recuperate. Its people with cushy jobs or on the cusp of retirement that probably stand to lose the most.
No, it's going to be black friday for yo boi and my main man Distressed Industrial Buyer
Booms and Busts come and go. There is with 99.99% likely hood that there will be a recession at some point in the future. And then another one. And then another one. There will also likely be a boom that follows. And then another one. And then another one. The media/et all tout the "end of the world" many times before and we always bounce back. Tune out the noise and focus on your work. Do the best you can - you can't ask yourself to do more. Better yet, Have a plan B if shit hits the fan. don't blow your bonus on rolex this summer, instead save it and pounce on every buying opportunity there is when the market is 40% off. People and the capital markets are much much more resilient than people give it/themselves credit for. You will be OK.
Looking to buy my first house for the low pretty soon...so the timing kinda works out.
You’ve already signed and broken in to an extent, the people hardest hit will be sophomores who will never make it to the quality of firms they would have a year early.
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