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refrain from giving your opinion unless you currently work in sales and trading at an ibank. not trying to be a dick but a college sophomore telling me that "there is no money in equities" when he has no idea what he is talking about is not helpful.
thanks in advance for the help
there is no money in equities.
Classic.
It's automated. Not a lot of money in it, obviously its all about the flow and nothing else.
Life is easy, pay is lot compared to Eq. Deriv's but all the same its a good gig.
Highly likely to be told a computer is replacing you someday. You'd be better off going to buy side fund management if interested in cash eq
there is a huge prop component now which is a driving factor in the growth of the desk
thoughts?
People on a desk will try to sell you on that desk, in general. Google "consistency bias" or read Cialdini's book.
I've never traded equities except in my personal account. In my mind, its a pretty pure trading role. You have to be able to gauge the market. You have to have an idea about how it's going to trend. And yes I can see it having a goodly prop component.
I think if you don't want something very quant, it could be a good fit, if you like the people on the desk. You'll make good cash, and the trading skill will be transferrable to other desks if the automation ever comes through.
Earnings potential (this is idle speculation) will probably not be huge with a capital H, but you'll make more than enough to live comfortably on.
prop desk is interesting - and could regenerate cash, but otherwise it's idle speculation. Stilll good money all across the board.
pros: awseome atmoshphere, everyone rocks and likes to party and hang out, hours are great, I see some of the more senior guys leave as soon as the bell rings. It can be very exciting. And hate to say it, I know most people on this boards think equities is beat, but look at the senior management ranks of any bank on the street, odds are there will be a handful of ex equity traders very high up in the bank.
cons: pay is slightly lower than some other desks (but not as much as some of these anti-equity guys might think). There is a risk of automation, but its still pretty far away. not much travel. communication with the buyside is limited to their traders, not their research analysts or PM's who actually create the trade ideas.
Because..if you're doing fundamental value work...and equity HF is by far the easiest HF to start, and economics are tremendous:
The appetite for seeding deals and HFs in general is tremendous. Get seeded to start a long/short fund with your buddy, get a prime to "lease" you space in one of their "hotels" (minimal overhead), run even a small amount ($50m) .. if you make 25% on that, at 2 and 20, it's $3.5m in revenue. If you grow to $200m, it's $14m in revenue. Then it's off the the races...talk about potential...
Not only that, but also these business are incredibly scalable in terms of fund size but do not require big infrascture or big teams. It's a gold mine for equity guys with little risk..even if you go for it and fail, you just go back to your little seat on the equity desk you came from..
Hoya, how sustainable of a model is that:
The S&P Long/Short index is (correct me if I'm wrong, don't have all of my access) projected to yield about 15% this year. Massachusetts is investigating UBS gifts and low-rents to HFs (http://online.wsj.com/article/SB118298981733850848.html?mod=2_1154_1), and even though they are a little more commie than most states, others could follow suit. Also, how long is the 2/20 cartel going to hold up, particularly without spectacular returns.
Newer in the industry than you, but looks like that sort of plan might be a thing of the past couple of years. Do you mind if I ask what you see out there that can help this continue?
Glory of working in equities, notice I am posting this from home at 7:30.
Randomwalk,
Your points are valid, but I still think my argument holds water nonetheless for a few reasons
1) you're right - with S&P has been strong of late - but it's apples and oranges. HFs have a long and short side - the common saying in HFs is "you earn your performance fees in up markets and your management fee in down markets." A fund is supposed to earn returns only after protecting capital. Not only that, but in down markets is when you will raise assets - if the S&P is down 15 and your long/short fund is flat, money will pour in.
2) HF hotels have been going on for years - I don't see anything explicitely wrong with them, especially for a small fund.
3) 2 and 20 isn't going away anytime soon, especially for top funds. Not the 20% incentive fee anyway, which is where most of the money is made. FoHF fees are falling, but top and midde HFs are turning away money left and right there's so much demand. Institutional money is drueling over this stuff. What will change first are liquidity terms, then fees, if they ever do change.
4) I'm not arguing this is perfect, or things won't change. I'm just showing the upside to an equities background, as opposed to an ibanking one. The upside, I'll argue, is in fact far higher and more easily (though still very very difficult) attainable at that, without killing yourself and wasting your 20s.
I work in FI and I'm out of here by 6 each day.
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