Hypothetically, if you were to restart your finance career right now with the goal of making as much money as possible, what finance career path would you take?
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On vacation recently, talked with ex head of prop trading at GS and he made the confession that there are no free lunches left in finance except Private Equity.
Interesting that he said that; I wonder if that only applies PE mega funds or all size funds.
I'm tempted to say that the smaller the deals, the more potential for "free money" there is. Often times the only thing you have to change is the capital structure (small companies may have 100% equity) and you don't even have to get particularly involved in the operations as long as the founders keep enough skin in the game.
In Scandinavia, some listed private equity firms are raising money at 20-25x EBITDA pricing and buying companies below 10x EBITDA. It's practically like printing money.
Good question, OP. Changes in technology and regulations create new profitable opportunities but it is never easy to predict the changes. Talent and hard work in general enable value creation, success and high reward. We have seen “super stars” in virtually all areas that incentivize hard work and reward creativity. Without being able to pinpoint the area, I would imagine the area gets the highest reward is the one least regulated.
That’s a very interesting take, I never thought about it that way. This reminds me of an article I read the other day on the most heavily business regulated states. Interestingly, many of the top ten were also states with smaller GDP per capita.
I have not read the article. Do you have the link? Which states were the top 3? Circling back to your original question and my comment about effect of regulation, one example is junk bond. I am no expert in this. Would like to hear more thoughts. I do agree with comments on IB being perhaps the best entry position into finance.
There's obviously no set path to tons of money, or else everyone would be doing it, but I think it's hard to pick an entry level job besides IB if you only care about maximizing wealth. Tough to beat the experience, exposure, and connections you make in just 2 years as an analyst before you're 25 years old.
After that who knows - a lot depends on regulation as others have pointed out. Maybe P/E is great now but in 5 years maybe it won't be. Everyone I know who has become a multi-millionaire has done so by working for a start-up that eventually gets bought out - but many are too risk-averse to pursue that path
Agreed. I think it will be interesting to see what happens to PE down the line due to the possibility of carried interest eventually being taxed as income.
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