Some Perspective Needed
Hi guys,
Would appreciate some guidance on my current position.
I'm a 1st year analyst (first job) at a buy to hold, IG debt fund which is exceedingly risk averse and bureaucratic. I have no faith in senior management and velocity of transactions is dire due to internal bottlenecks and the aforementioned bureaucracy.
The fund does have a significant amount of liquidity and being on the buyside with our capacity in this market is an obvious advantage, in addition there is some a good amount of contact with nearly every bank's sales force (networking), due to a small team I have a fair amount of responsibility and the perks are rather nice.
My conundrum: do I, if the opportunity arises*, jump? How much value is there getting into any sellside institution in a FO role if it's related, however loosely, to my preferred area. What is the value of "getting your foot in the door"? How good do I have it in my current role?
Cheers for any help in advance
*I ask with the future in mind and without offers in the pocket because I'm getting dangerously close to being found out about interviewing else where, have been confronted once before on the issue.
I went through an evaluation process like this a few months ago. The firm I work for is not overly conservative, but it had enough significant flaws (from my perspective) that I decided to look around. Fortunately, the situation resolved itself and I am now fairly happy, but I also drew some important conclusions about trying to move around on the buyside in today's market.
I am somewhat risk-averse from a career perspective because I know people who worked in the industry pre-Lehman that got tossed and never got back in. In order to win in your career, you must first not lose. So a key consideration would be how stable another firm might be if you are considering a jump. Where I work, it would be virtually impossible for me to be let go or for the firm to blow up unless I do something stupid. If we have another major credit storm, that's extremely valuable. Most likely if there are cuts at any firm you join, the new people will be the first to go. I interviewed with a well known firm that has had two major blow ups in the last decade, and there was no way I would even consider working there even though the job was fantastic.
If you move, there's no guarantee that the new firm will be better. A lot of firms are poorly managed (including some so called "top" firms). As a junior, you're probably not going to know enough (or be told enough) to know what you are really getting involved with until after you jump. That's true for almost any role, but you are in the most vulnerable position at the junior level.
Part of working on the Street in general is "sucking it up." The work is hard, the personalities are often difficult, and the hours are extremely long for most people. Either accept that any or all of those aspects could be part of the job for years to come, or do something else. It eventually gets better, but not one year in.
I personally would avoid the sell-side at all costs unless you fear losing your current job. It's probable that many of the banks will make (further) cuts, especially if Europe shits the bed. And sell side is vastly inferior to buy side -- it's not real investing and your learning opportunities will be lower.
Net, net, probably stick where you are at unless you get a great opportunity somewhere else (no harm in looking but don't get caught) and learn as much as you can. The long-term winners out of this shit storm we're in will be the people who survive. Financial services is going through a structural contraction right now that is going to last YEARS. You don't want to be on the wrong side of that.
Excellent reply. Thanks.
My current gig is very stable, but am increasingly conscious of getting pigeonholed at the top of the capital structure and not being able to move down into Lev / HY / Mezz* later on since it's an area that my fund doesn't focus on..?
I agree, unless the good position came up I won't move the sellside, and even then it'd have to be a stable institution (which by definition aren't easy to get into) . I'm mainly questioning the ability to move internally within groups and the power of getting into a good institution in a FO role related to the ideal? It varies case by case no doubt.
*This area is what I'm far more interested in as looking at IG gets very tedious - no element of putting your neck out / risk taking / competing against the market when buying to hold.
I have spent my entire career on the equity side, so I can't comment much on the debt side of the market, but I can relate to your question. The first place I worked on the sell side had all sorts of arbitrary restrictions on what analysts could recommend -- over $1B in cap, in certain industries, within certain dollar price ranges per share, etc. It was crazy, they were determined to play in the most efficient part of the stock market, and because it is a smaller regional shop with no banking presence, the firm was always the last to know and got the least helpful information from management (IMO Reg FD and the Global Settlement work great in theory, but not so much in practice -- GS, etc. of course get better treatment).
So I knew I wanted to move almost as soon as I started working at that firm. But coming from a non-target with no network, I knew I needed to prepare for that jump, so I passed the CFA 3/3 and probably read 20 or so other books on investing to prep for the buy side. I cold called, sent emails, and applied for every job that looked interesting until I got the job I wanted. Of course, it is much more difficult today, so you may have to be patient.
There's no silver bullet answer to your question. Paradoxically, making moves early in your career is usually harder than at the more experienced level (5-10 years of experience) since you don't know enough to add much value, yet those moves are among the most important to set you on the path of good "knowledge compounding." A job that allows you to work with a good mentor in a stable environment where you can learn a lot is worth 5-10x long-term what a mediocre front office job would provide you, irrespective of firm name and comp package. Real investing is still very much an apprenticeship-driven business.
The best advice I ever received in this business was to find a serious investor who was willing to teach me, and that's what I would recommend to you. That's probably not going to be in IG, because serious players don't play there. Waiting another year or two while you find the right job isn't going to kill you as long as you don't idle -- make sure you are learning all the time and moving up the curve even if you have to do it yourself. The first set of people I worked for were kind of useless (despite fancy degrees from H / S / W, etc.) but I didn't let that hold me back. If you keep compounding your knowledge and looking for the right opportunities, you can't help but win over time. But that is much easier said that done, so it depends on how badly you want it.
Once again cheers for the input.
I'm very much feeling that I should wait for the right, not just first, opportunity. The analysis of each role / opportunity is the difficult issue. I'm cognizant of headhunter relationships, not wanting to repeatedly waste the time of their clients but it's hard to fully evaluate the role without meeting the firm.
And much like yourself I've sat L1 CFA (waiting for results) and have taken a case study upon myself for a deal that interests me (LBO, turned sour, lead to restructuring, now has promise, for which I have all the docs) which I'll attach to applications.
If all else fails I'll set up a due diligence firm specializing in, but not limited to, graduate jobs, I'd make a killing off of WSO (myself included).
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