Hi guys,
As most are preparing for upcoming IBD BB interviews in LA/SF, I thought it would be helpful if someone could provide insight on how important it is to nail the stock pitches and market knowledge questions. I know I'm not the only one whose kryptonite is this section of the interviews as they aren't as straightforward to prepare for.
I purchased the WSO Package but they don't include sample responses (i.e. an actual stock pitch) - only guidelines. What kind of answer would suffice for, "Pitch me three stocks?" Also, how should you try to best answer questions like "What's going on in the markets right now?"
Thank you all in advance!
*To be more specific, I'm really asking are they looking for number memorizations (price, market cap, P/E, EPS, etc) OR are they looking for mostly qualitative reasons to invest in (i.e. Graham's parameters for what makes a good investment; Buffett's screening criteria...etc)?
They are looking for you to: A) Have a response B) Have a logical reasoning with support, whether that be numbers or qualitative
You'd be surprised at the number of people who either have nothing prepared to talk about or have really lousy reasons to invest in something.
You need to understand how businesses work and make money in IB and this question helps determine that.
The question isn't as common as you might think, at least in my experience. If you prepare it, you should have both qualitative rational as well as the numbers supporting it. The qualitative is much more important, and you probably won't be asked "what's the PE", but you should know it all. It's not hard... Questions about the state of the market in general or macro trends are quite rare, as a lot of guys in IB don't even know how to answer these questions...it's just not really a focus.
Interviewed with all the BB firms for IBD in SF/LA last year, got a question about the markets once. I don't know if NY is any different, but there's no need to spend too much time preparing for it
The knowing the markets question is exactly that... know what is going on in the markets and be informed about it. Just dont be a parrot. From what you posted it seems like you are trying to create cookie cutter answers - dont do that. It makes you sound canned/uninterested and wont push you over the edge to getting a job.
Take a step back and thing about both parts you are worried about. Identify 3 stocks (and 1 short) that you would put into your personal portfolio and have a few reasons why. Worry more about identifying catalysts that make the stock attractive rather than spouting off a bunch of ratios and other garbage that a guy in an interview will not care about.
As for the markets, divide it up into a few sections and read up. Know what is going on with regards to GDP, unemployment, Quantative Easing and the Fed/Bernanke/Yellen, Europe, Debt Ceiling, housing etc. It is very unlikely that you get asked a very specific question, rather be more focused on the bigger picture by knowing the building blocks.
M&I has a good series of introductory articles about pitching stocks that might help.
Stock pitches and general market knowledge are good to know, but not super important. It will be more relevant if you have something on your resume that alludes to it, such as membership in an investing club or something like that.
I've personally never asked someone to pitch me a stock or what is going on in the markets unless it's something they ought to know because of something listed on their resume.
I had prior ER experience, so I was asked to pitch a stock or explain theses on certain equities in all the interviews I've had. I doubt they would ask for three as that would dominate the technical portion of the interview. Know 1 stock, and know it reasonably well. Pick a stock in the industry you are interviewing for.
My format would be:
It's pretty simple. In my experience, you're not expected to be a market genius--just think of it as writing any other paragraph for a research paper. Again, the advantage you have is the same as any ER analyst--you don't have to be correct, just reasonable. Be able to talk through your reasoning for valuation, the business model, and a few basic things about the industry.
Hope this helps.
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