Admitted to CBS... Should I pursue the buy-side?

Associate 1 in ER

Starting school this Fall, background is in ER. Dream career is working at a value oriented HF or traditional asset manager. Not as interested in the multi-manager platforms since I wouldn't have pursued an MBA.

Beyond even obtaining a role post-MBA , there is the concern of being irrelevant as a fundamental equity analyst in 15+ years. The industry is obviously changing, and tbh does the world really need another person determining the right P/E multiple for Target?

All that said, I enjoy the investment process and the job's lifestyle compared to other roles. I see it more as a craft that I can develop over my life, rather than a means to earning a paycheck.

Hypothetically - let's say I had a choice between MBB or a solid buy-side role. What would you recommend I take. Nothing intrinsically draws me to consulting outside prestige and exit opps.

If the right choice is MBB, then I won't finish up the CFA and instead of focusing on pitching stocks I'll work on casing instead.

@models_and_bottles , @jankynoname , @West Coast Analyst

Comments (13)

Most Helpful
Jan 17, 2020

The industry is declining so it's not a career I would recommend pursuing today if you're heading to a top MBA program, which incidentally provides the best career reset opportunity you will have in your life.

This isn't a 15+ year issue, it's happening today. Net flows have been massively out of active products into passive over the past 2-3 years, and that trend is only accelerating. This has negative implications for comp, lifestyle, and job security. The days of being an analyst at a long only fund and collecting huge paychecks with a relaxed lifestyle are over in my opinion. I can't tell you how many sell-side ER people I know that have been let go and the buy side is starting to see it as well. There will be pockets of success / firms doing well but the trend is clear.

If you're not drawn to consulting then consider other careers. I'm not sure why you framed it as a binary decision between buy side and MBB. There are huge variety of career opportunities out there especially at a top MBA program, don't limit yourself.

    • 4
Jan 19, 2020

Well it is certainly an industry in decline, but if you enjoy investing and get into a good mutual fund, overall its a better gig than being a consultant or working in biz development at a tech company.

And if you are good at what you do and get into a good hedge fund, its still a great career I would say.

Jan 17, 2020

You would be well poised to recruit for MBB, clearly, but I don't think you would enjoy it if you're only focusing on prestige and exit opps. The work is relatively unique, and you will probably not enjoy a couple years there unless you can find a nice niche that reflects your interests (potentially FS or corporate finance projects).

CBS offers you a great platform to explore new opportunities within and outside finance, that's what I would focus on.

Jan 18, 2020

Market-beating isn't an industry. It's a game . . it's all about knowing more than other smart people and taking value from them. It is zero sum at best and actually negative sum if we want to get precise.

So I don't think it can be approached with this classic MBA "find your career" roadmap . . ie questions like what's the lifestyle I prefer, what's the "future of the industry" etc. I think that's the wrong approach entirely.

There is no natural order of things where alpha generators should exist. If mistakes in pricing didn't happen, there would be no alpha generators.

So for someone to choose to make a career of beating markets, it should really choose them. In other words they should be naturally observing pricing mistakes that are just too attractive to ignore.

That's how I got into it anyways. I was in IB and thought I always would be. But after looking at client financials and seeing how foolishly investors (both private and public) were evaluating companies, I had no choice. I couldn't sit around at my IB desk pontificating anymore, I had to just go do something about it. I actually like the "career aspects" of IB . . somewhat stable job, fast pace etc . . but the opportunity was too big and I got tired of staring at it. It was like an itch that needs to be scratched.

Same thing with almost any entrepreneur. I don't think entrepreneurship is an industry. Good entrepreneurs, IMHO, are practically sucked out of normal careers and forced into an opportunity because it comes screaming at them. They see it without even looking, and can't stand not doing something about it

So to me, when I see someone asking whether beating a market is a relevant career path, it basically tells me they're not seeing the opportunity and it isn't right for them.

    • 3
  • Prospect in IB-M&A
Jan 18, 2020

Do you think investing needs a lot of natural talent that can't be compensated through hard work?

Jan 18, 2020

Not really.

I do think it needs a certain type of mindset that's geared toward skepticism, critical thinking, contrarianism . . basically you need to think differently than others because there's no chance to do well if you think like everyone else. So if you want to call that talent then I suppose it's talent, but in any event it's needed.

Of course, when you think differently than others, and those others are smart and diligent people, then there's a good chance you're just wrong. So in addition to being contrarian you need to also have a way to be sure you're right. And that's where the hard work comes in.

    • 2
Jan 19, 2020

Great comment.
What type of Hedge Funds do you see succeeding in the future? Is there a future for non-quant hedge funds?
Where is the highest upside? Quant Or L/S Equity Space? Which role is easier to maintain? Where is it easier to become a PM? Your views on the longevity of each role in the next 10/20 years?

Jan 19, 2020