Investment Banking vs. Physical Trading
The title is relatively straight forward, but I am having trouble deciding what path is best for my interests as well as my future goals. I have been lucky enough to receive offers to a well known Investment Bank as well as a graduate trading position at top tier Physical House (Glencore/Traf). I am much more interested in the work at Physical house but am worried about narrowing my career opportunities at such a young age. Investment Banking to me seems like a safer option as it would allow me to branch out to numerous other fields/industries.
I was hoping to get any insights for why someone might have chose either investment banking or physical trading. As well as any insights into the future of physical trading specifically in oil and precious metals.
Thank you in advance.
I just love the myth that you're not narrowing your career opportunities by doing IB. Making decisions is always about narrowing your opportunities.
bump
Being bad at your job is career narrowing. Correlated with not enjoying what you do.
I am in physical trading and really couldn’t imagine doing anything different. There are still plenty of doors that are open for future career moves as physical trading gives you a vast skill set to make you valuable. Also, commodities are so intertwined that when you trade one, you’re really learning about five.
Thanks for your response! How much traveling is typically involved with your work? One of the things that draws me towards the physical trading is work done in unique places that most people would never visit.
Additionally, how do you see technology and smaller margins affecting the industry/pay.
Traveling comes along more when you get promotions and actually have knowledge to share with people. Not sure what you mean by “unique places.”
Low margin environments are tough, even for ABCD commodity traders. Right now we are seeing the washout of the ethanol industry. Small plants go bankrupt and bigger companies acquire in a JV’s. Eventually the tables turn and margins come back. If you’re with a big shop, it shouldn’t affect your pay.
Online physical commodity exchanges, in my opinion, are still in their very early stages. They won’t be commonplace until everyone gets one board and, right now, are just a pain to the big houses. Relationships with your buyers and sellers is still paramount in the industry.
If you've specifically got into the graduate program of Trafigura I would advice you not to take it. Traf usually makes you go through their rotation and its as far away from a desk as you can be. Traf prefers to hire experienced traders to their desks unless you have some big name connection.
Apart from that it depends on what excites you? Is it markets or is it learning about company structures. They are very different from each other. Also physical trading in metal is pretty different from oil (I'm guessing you got an offer from Glencore).
I have not worked in IBD so I cannot comment on that side of the business. However, getting into physical won't exactly narrow your career with the caveat being IBD may open up more doors. But with physical trading you will still have the opportunity to branch out into stuff like trade finance or logistic operations.
At the end of the day it depends on your interests.
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