"Modelling" has to be the biggest misnomer in this industry.
I remember back when I was still a student, being intimidated by the idea of having to form "models" - despite my undergrad being in physics.
It turns out in finance, "modelling" just means dividing one excel cell by another, saying "yeah sure, that growth will obviously continue for a good 3 years and then errr, it'll drop to x%", use a few sums and then boom, "model".
What a joke.
I cannot believe the mystique around this industry, if society actually knew what a joke this job was - we'd get the same level of respect as the guy in the street handing out junk leaflets.
Agreed with Elite_Bulge dick move by the Synergy
consulting sounds like a meme job
"The majority of the workforce is stupid and lazy". You're an ass for saying that. The majority of the workforce didn't have the privileges you likely had growing up, never mind the opportunity to get paid 6 figures out of school for performing glorified third grade math between reading articles on ESPN. Open your eyes dude. You sound like the type of kid who thinks being rude to waiters is cool and loves to hit the elliptical at Equinox. I'm picturing Pete Campbell from Mad Men - just a twerpy WASP taking his insecurities out on the world.
SB for that (was hard to choose between helpful and funny), you're 100% right and I retract my statement fully. Was in a bad head space yesterday. I woke up and read my comment and was like, "Jesus Christ what's wrong with me"
I award myself no points, and may God have mercy on my soul.
Love the Pete Campbell reference - although I feel like he'd fit in just fine at any BB, even today.
At some point during college I realized that IB is way more about soft skills and acting WASPy than actual technicals. I did a group project with an "incoming EB analyst" who didn't know what WACC was.
So no, it's never okay to be rude to waiters (ironically the rudest person I met to service staff also loved reposting stuff on Facebook about equality or social justice or what not) and you're a tool if you use an elliptical.
That said, I'm going to push back on your statement. Let's be honest, 80% of the value in any organization comes from 20% of the people. Is it politically correct to say? Absolutely not. Is it true? Well, have you worked in a corporate environment? How alive are your peers, really? How alive are your back office staff? If you don't see this, I wonder how long you've worked in any large organization.
It's not a matter of "privilege" as it is ambition. I have way more respect for someone who came from poverty, now owns a convenience store that he works his ass of in and makes $50,000 than someone in a corporate 9 to 5 job where half the time he's just checking social media, makes more money than the convenience store guy, but really he's just watching Game of Thrones or other people play sports and just passing the time between now and death.
I'm not naive enough to think that there isn't inequality but at the same time, there's more opportunity now than there has been, ever. Look, if you want a 9 to 5 corporate job and have a "work life balance", it's a free country so do what you want, but let's not glorify this as they're just some poor underprivileged dude who otherwise could be making Excel models with us if only he had the privilege.
Back to OP's post:
[quote]I cannot believe the mystique around this industry, if society actually knew what a joke this job was - we'd get the same level of respect as the guy in the street handing out junk leaflets.[/quote}
You may not quite understand this yet, but if you're successful, the opinions of others don't affect you. If you really don't like finance and it's not what you find interesting, just leave. We get these threads every now and then. It's not for everyone. But also keep in mind, the grass is always greener.
Also to add on to this, almost all of the models I've used have been templates with preset calculations and input spots that I made very little manual changes to. It's really not that intensive.
I agree with simple LBOs to get a quick IRR calc. Just need to update 5-10 variables and you're golden.
But you'll put in a ton of effort pulling together a full operating model in an M&A process. You'll spend several days developing a template based on company SKU data and fixed v. variable expenses. Then you'll spend a couple weeks tying all historical data to the QoE and stress testing assumptions with management.
While two companies may have a similar go-to-market strategy / business model - each one will have a different opinion on how to best position the business in a sale process. This could be looking at price v. volume analysis, tying revenue to publicly available industry stats for credibility, or focusing on the company's OE v. aftermarket mix in relation to the perceived state of the market.
It's not the math that's hard, it's the zero tolerance for error. Trust me, I updated a model for FY around when I first started that had about 500 assumptions that I needed to change, and I had maybe 2 small mistakes. Barely changed the output but I got absolutely reamed by my boss
Who hurt you?
That's why you should start your own ibanking boutique and change the world with Sobolev Spaces and discrete mathematics.
Show those losers what real business is all about!
Are all of these quantitative hedge funds using ridiculously complicated algorithms really creating alpha or is it a big dog and pony show for fees?
Sell-side modeling is bullshit - no one on the buy-side takes serious stock in your crap assumptions. Modeling on the buy-side is critical to understand projected return sensitivity to certain variables. You build the model to test for which variables are most critical, and then discuss the certainty of assumptions behind these variables. Everything is an educated guess, but the goal is to invest in idea with higher certainty than the average while achieving the same targeted return.
Grow ERV by 3% per year and get to 18%. Done. If this can't be done increase occupancy to 99% over the hold and you get to 18%. Done. Who are we kidding? We have to deploy cash for the management fees no matter what. Carry is icing on the cake.
As long as you got a half assed proposal and manage to bull shit through your IC you are gold. Let's not kid ourselves. Sell side modelling is bull shit and so is buy side modelling. I respect bankers just as I respect my peers on the buy side, but as OP mentioned it's not rocket science - what differentiates you from the rest is your network and your ability to sell whether you are on the buy side trying to source or on the sell side trying to get deals done.
I imagine somewhere over on NASAOasis they can be this reductionist about the work the bottom 80% do there. Not saying I disagree with you but I’m still impressed by most bankers/consultants etc.
The NASA's job is basically to look at rockets being launched to space on a big TV.
Ehhhh I don't know. I left IB to work in a so-called quant shop that hires a lot of aerospace PhD's, and I laughed at their "models" the same way you laugh at the IB models. They thought pulling in thousands of rows of data and scrubbing the shit out of it just to calculate a reliable standard deviation was a "model". I remember they would flex hard about using the right st.dev formula in excel (I'd get shit for using the population one instead of the sample one) even though the end result would be the same regardless of which formula you use.
I don't pretend an LBO is complicated but at least there's some logic in understanding how it flows and which parts of it are more important for which kind of business.
Outside of Renaissance Technologies, I have yet to see a quant jock do anything impressive in finance. Most of them seem to be really into factor-based investing and smart beta which is all snake oil.
Not a huge fan of quant myself here, but to say that "outside of ren tech, you've set to see a quant jock do anything impressive in finance" is ridiculously idiotic. Jane Street, Two Sigma, and DE Shaw are all quant shops that absolutely crush it, to name a few. And there are many more that you've just not aware of
I should've known some douche would latch onto the literal meaning of what I said and interpret it tightly just so they could call me an idiot. Well played.
I see a lot of quant jocks, and most of them are full of shit. Happy now? Thanks.
Two observations:
The math in models is definitely not complicated. What's harder, I'd say, is finding the self discipline to go through the literally thousands of cells and make sure that every single one is correct, that the calcs are consistent, etc. That it doesn't require quantitative genius doesn't make it easy
Anyone who has worked in banking can tell you a story or 10 about some analyst with mind boggling academic credentials - STEM degree from an Ivy, for example - who can't find his/her way out of a paper bag. I still don't understand how that can happen, but it does.
I feel like I'm the only person in the world who actually appreciates the value of models over time lol... The math isn't hard, it's the creative and conceptual side that's challenging. If you're just playing with old templates, you're missing out on the real critical thinking aspect.
I think people are too caught up in the technical nuances of modeling and get disenchanted realizing all the work is based on pie-in-the-sky ideas. At the end of the day, modeling is about building simulations that rationalize an idea being executed.
Models are meant to be wrong because they can only capture a limited amount of moving variables but that's a good thing! It's a means to benchmark your thinking against actual results and pinpoint what in the real world you're not factoring in or didn't consider.
It's a visual language meant to communicate a idea in one straightforward medium: Excel, and it goes far beyond just financial returns and numbers. I've modeled out dance routines, execution timelines, and entire supply chain flows. Not many other tools in the world can summarize life on a spreadsheet.
The math isn't the hard part.
oh well.. it triggered me as the one who used to be the lead modelling contributor for my company. Well, I guess if you show me your model and let us run it in front of the client 'on time' let me see if it can work seamlessly (if you do and you can build it in less than 5 hours - then I give you a thumbs up (just a simple corp val with few assumptions)).
I have seen those who admittedly are 'good' to the point of 'putting a book about modelling'. One day one of these persons shows me his model (for an interview) and oops.. just when I took a glance look, it cant even change the start date of the model seamlessly. Try building up a real working operating model from scratch my friend and those who think this way don't understand how your model can work in the first place.
True, modelling is not a rocket science - yeah it is not like trying to discover a black hole and interpreting its image, but what the 1st year analyst OR the older bosses who never work on one dont appreciate is the fact that it has to be able to be 'running seamlessly' with logic that is working (and represent the image of professionalism of the company). and as it is a client-driven model, you have to put your full thoughts on how to make sure it is error free, logically explainable and make sense. I have seen those that also cant model well and dont even understand the numbers they put - as they have this mindset - "ohh.. just putting this input cells and assumptions here and there and Shazam - there you go the NPV, the IRR, the EM, etc" - unfortunately, that is the worst way of learning.
To answer your question whether IB is a stupid job.. oh well.. go and ask yourself - if you are smart enough, you should not be even working for a job. I know it sounds harsh - but I have thought all along that - all jobs are a bit dumb anyway - see your friends who work in big corporations, are they doing something great? those at the upper echelons play politics, and those who are below rarely contribute in meaningful way. I guess, unfortunately, working life is like that. The question is just coming back to you - if you are smart, help us to be smarter then - help those in IBs on even elsewhere to work smarter - put features to your model, streamline your research so that proposals can be done faster, create ways to reduce redundancy / reinventing the wheels, and if you are smart and have time to complain here (I also think I need to stop now) - please use your time better to think of the 'smarter world' you dumb *ss