I realize that there are some posts on WSO that have lists of books to read for specific strategies in finance or things like that. As an undergraduate freshman without any financial/economics experience, how can I quickly learn up to the point where I understand how investment banks, hedge funds, etc. all work and all the related financial terms? Would a textbook in corporate finance be sufficient?
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textbook in corporate finance should be phase 2. Phase one I would start with some more accessible books that are more entertaining and will spark your interest.... once you've read those than the corporate finance textbook / accounting books / valuation books etc. that you'll read to gain some fundamentals will be a LOT more fun.
If I were you i'd start with (1) Barbarians at the Gate (understanding of M&A and Private Equity) (2) Liars Poker (bond trading, precursors to the financial crisis, half of an investment bank) (3) Monkey Business (corporate finance, the other side of an investment bank) (4) When Genius Failed (Hedge Funds, quant stategies etc..)
you're not going to gain a huge amount of technical knowledge from these... though you'll gain some... but before you read these reading the technical stuff is going to have no context whatsoever.
Also, aside from Barbarians (which is long), you should be able to read each of these books in under a week no problem. In 1 month if you've read all 4 of these books (and you're still a freshmen, etc... so it's no rush), then you'll be ready to start studying some finance texts and all that.
just my advice... others may think differently.
The Vault guides for investment banking / private equity / hedge funds should give you a big picture overview of the industry and the key players. Generally quite short and easy to read (at least compared to a text book).
You mean this? http://www.vault.com/pdfs/uk/2009_InvBanking.pdf
Yeah, get yourself a copy of the Vault Guide. It's available online. Then buy a good valuation guide and you're set. Make sure you set up Google Reader to scan the FT and Dealbreaker / Dealbook.
The vault guides are good because they are very brief, and this info isnt rocket science so you dont need a huge book to learn it.
One book I would recommend to everyone going into S&T is Traders, Guns and Money. I think it has a great mix of story with technicals. So its very enjoyable but also has a learning edge.
I'm in a similar situation. I recommend Fiasco as well. It's entertaining, although Traders, Guns and Money probably teaches you more about derivatives.
This PPT provides a good overview of Investment Banking, PE, etc. in general: http://business.illinois.edu/~s-darcy/fin230/ppt/Zilbergleyt%20Presenta…
investments by bodie, kane and marcus after you get the context down
after understanding the book above take a class that uses Options, Futures, and Other Derivatives by Hull.
http://www.amazon.com/Options-Futures-Other-Derivatives-John/dp/0132164…
Happy hunting.
Lol this is the 3rd time I've seen the Hull guide mentioned. Get the vault guides and start reading financial news. I would scour investopedia and bionic turtle. This is something that takes time to fully absorb.
I'd go with what International Pymp said. Monkey Business and Liar's Poker are the best to start out with. If you like Monkey Business, then read the Accidental Investment Banker next. If you like Liar's Poker, then maybe read The Greatest Trade Ever or When Genius Failed. After that, figure out which aspect of finance interests you the most and read a book about it. For example, if you think Private Equity is interesting, then read Barbarians at the Gate. If you want to know more about certain events that occurred like the sale of Merrill Lynch, then read Crash of the Titans. It really depends on which aspect of finance you're interested in. For me, I got bored with Liar's Poker so I knew that the corp fin side was more interesting for me.
get the vault guides online for free. that's all you really need to know at this point in the game. read wsj and the economist for the bigger picture. try to get a finance-related internship (where you probably won't do much technical stuff) and then leverage that into SA etc. you'll learn pretty much what you need at that point.
after getting the context down by reading some of these "story books" as I like to call them, you should read the news ON TOP OF books like Hull. You can read WSJ all you wont, but I doubt you'll learn even the basics like put call parity or how program trading works.
Here is a good site that has different videos describing Investment Banking, Equity Research, Asset Management, Sales & Trading, and more. The site/videos have a welath of information - including the lifestyles of a positions in each field:
http://www.seo-usa.org/Career
Buy all guides, buy some books mentioned above, read investopedia tutorials, keep up with wsj/dealbook, etc.
Just keep googling, looking up certain things like fixed income, LBO, random walk, etc. Anything that comes to your mind and that you read.
The only way to understand and learn is to read everything that is available to you. Soak it all in.
Here's how I have started:
Step 1) WSO. Read every thread (that makes sense to read) in the industry-specific boards you're interested in. It'll give you perspective on the industry.
Step 1.5) While reading WSO and Vault guides, pick up those books Int Pymp named in his first reply, they're kind of a fun way to learn about the industry
Step 2) Vault Guides. Gives you a bit more in-depth and specific looks at the industries.
Step 3) More technical books. (I haven't gotten here yet, sadly...)
To the ones that recommended Monkey Business, can you respond to the claims about the book really exaggerating facts and even discouraging individuals to join the industry after reading? I've heard this from reviews online and also one or two people I have encountered who had read the book.
It's a classic... I'm sure as with any work that is based on true events that certain anecdotes may have been embellished, but if you've read it then you know that it is all within the realm of feasibility with regard to the industry of IB. As for the claims that it discourages individuals from joining the industry... no shit! It doesn't sugar coat the fact that many aspects of the job are tedious/stressful/exhausting/infuriating. If you want to get a realistic sense of what you're getting into, then the book is a great informative piece. If you want to delude yourself into thinking that things will be "different" for you or that it can't really be "that bad," then maybe look for a book with a title akin to "How to Make Money Easily Without Working Hard or Making Sacrifices" not sure if that one's in print though...
Agreed.
If you can't see past the embellishment and you get COMPLETELY discouraged... imagine how easily you are going to get discouraged on the job. If that type of person got staffed on Christmas Eve, I don't even want to imagine the emotional breakdown that would happen. Newcomers should be shown that it isn't the glamorous lifestyle that the public makes it out to be, and the job can really kick your tail if you let it.
If you actually want to learn the industry... you need to ignore everything everyone else posted and subscribe to the Wall Street Journal. Books and guides are great for learning an industry -- however, it is my opinion that they should only be used when you can really "walk the walk."
Knowing that you are a freshman with no experience (I was in the same spot, didn't know a stock from a bond), you need to read the Wall Street Journal nonstop until it hurts. Articles will probably not make much sense to you, this is normal, look up EVERYTHING you don't know (try investopedia.com) and day by day you will start to painfully learn all of the jargon. I promise you, simply reading the WSJ will get you more in-the-know than any "guide" will. You will have plenty of time to figure out what networking and interviewing are all about when you are a sophomore/junior/senior.
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