Trading Markets
Would love to hear thoughts on this from experienced people in this industry.
It seems to me that S&T has arguably a more transferrable skillset compared to investment banking throughout different markets (e.g. trading rates in Toronto is probably not much different than trading it in HK). As such, it's quite common to see traders move from one market to trade another market whereas we don't see bankers switching markets as often unless it's a career move upwards with more management responsibility.
Does this logic make sense? In essence, the specialized skillset on a globally traded product allows one to have a relatively flexible career across markets, whilst the specialized skillset on a specific industry sector of a market would often pigeonhole the specialist into that particular market (not that it's a bad thing).
I'm hoping for a career in finance that would provide a bit more flexibility in terms of switching markets in the long run and was wondering what everyone's thoughts are on this.
Also, there seems to be a view of S&T being a dying industry in this forum but I am unsure how much of it is just due to the nature of this forum being heavily composed of folks from the US. It seems to me that the regulatory environment and lesser liquidity of markets outside of NYC (LON/HK/SG) would make it a favorable set of conditions for one to have a solid career in S&T in those markets. Wondering what your thoughts are on this.
Oh and lastly - Happy New Year!
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dude it's new year's day, give people some time to respond to your post
Transferring within industry isn’t what people typically mean when they say transferable skills. You can take IB skills to PE or VC… not many fields where S&T is directly transferable to. Most people are lifers. Maybe exit to consulting? Please note the “intern” in my title.
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Makes zero sense. Good traders become niche traders who know their market inside and out. Years of experience and seeing cycles does that. While the change is possible earlier in your career as you can learn something else. Or ofcourse if you rise to the Sr MD roles where your job is to invest in good traders and not trade anymore.
Outside that, many get pigeon holed and lack skills to do other things. Bankers are basically a boot camp to become the best corporate drone you can be and have much wider transferable skills to many industries.
Thank you for the reply. Although I agree with your point of view that investment banking would teach you the valuation skills that are transferable to more industries, would it be fair to say that, at a higher level (i.e. VP/D+) at least, the transferability of skillsets from one market to another (say from New York to a different market like Dubai, HK, SG) seems to lean more towards trading vs investment banking?
From my understanding, at the level of VP/D+, maintaining/originating relationships for the franchise becomes fundamental for a banker to succeed. It does not seem clear to me how a banker can succeed in NYC for example and be able to move to a totally different market to originate/maintain new relationships equally well. Now even if the banker had roots in whichever market they choose to switch to, the downside risk that comes from uprooting your current set of relationships to originate/maintain a totally new set of relationships seems to outweigh its benefits.
On the other hand, in S&T, the understanding of market cycles and being an expert in the market to which your product is traded seems to allow a lot more flexibility when it comes to switching markets (at least for markets in which that product is traded) simply because that, although the way the same product is traded on different markets may differ slightly (i.e. liquidity conditions, capital flow controls, etc), the fundamentals of the product which is traded do not differ.
Now, this thought that I was wondering about is only discussed for S&T/IBD. However, it seems to me that the same principle applies to the following buy-side strategies too:
IBD ~ PE
S&T ~ Macro HF, L/S HF
In summary, the argument goes, at the higher level - one relies more on the network and relationships built and the other relies more on the knowledge of product fundamentals and how it trades in different markets; and due to this difference - at the higher levels - one allows for more flexibility vs the other when it comes to switching markets (at least for markets in which the product is traded).
Nope, VP level is not that high and is where the job moves from knowledge to general sales. Most bankers by then are either planning to exit or fully switch to sales/relationship skills as you mentioned.
A trader is too handcuffed in depth knowledge of one sector to make a move by VP they would have to take a demotion and relearn a different/geography which is a risk on its own.
Bankers do not just go to PE many exit to other roles you can find on here. A trader who switches to the buyside HF, you are basically handcuffed and stop learning at that point your job is to solely perform. It is near impossible to switch strategies/mandates on the buyside they do not hire you to do that. You are hired to be a killer in the very niche area you know best and perform.
To be clear its near impossible for a macro shop to hire L/S 5 yoe person. Near impossible for someone who did commodities for 8 years to join a macro shop. And so on..
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