Fate of Equity Research
Is it still worth it to look to ER as a sustainable career for the next 5-7 years?
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and it's the safest capital markets job you can get you keep your job even in downturns, not like IB or S&T where only the best survive
it also depends on the sector you cover, avoid shitty ones like biotech, healthcare, airlines, automobile --> these are not what one would call sustainable
ER has been on the downslope since the beginning of the decade but it hasn't disappeared and won't do so in the next 5 years. If you want to do ER for 3 years and shift to the buy side you don't have much to worry about.
WTF r u talking about serial monkey? ER is just as risky as taking a position in IB and S&T. ER has lost the same percentage of people during this downturn as any other FO division. Also shitty industry's to avoid? What are you basing your information on. As a junior you should really pick an industry based on your senior rather then the industry you cover.
To the OP. Yes ER golden age has passed but it is still an excellent area to start your career in. It will always be here in the foreseeable future, public companies will still need coverage, buy side clients will still need access to management and analyst expertise, sales and PWM will still need reports and ideas to market, and not to mention as a training ground for future buyside analysts. To get out of ER is to get out of the equities business.
I knew it wouldn't be too late before somebody with more bananas than I do gets mad at me
by ER being less risky, I meant that you are not measured agaisnt your daily P&L It's easier to survive as an average (or mediocre) associate or analyst in ER than in other fields. by shitty sectors, although I respect analysts covering these, they tend to generate very small interest from the buy side and are the first sector to be cut out when downsizing. oh, I forgot: Paper & Forestry products doesn't seem promising either. sorry if I'm biased, I cover a sector that represents 1/3 of the TSX
"As a junior you should really pick an industry based on your senior rather then the industry you cover." --> true that
but if given the choice, don't get pigeon holed in the aformentioned shitty sectors
kudos to the vast amount of bananas accumulated, I guess these things are as good as Facebook "friends"
what's wrong with those industries, especially hcare?
Who said anything about bananas? I only have a lot because I've been posting on the site for along time and it should have no bearing on the validity of my comments but rather what you should look at is what I am actually saying.
To your first post I was making reference that you provided no reasoning for your points. Now that you made them I do see your logic but I don't totally agree with it. I also work in ER and observe that interest isn't generated by the industry but rather your senior's relationships with the buy side clients and in turn his relationships with the company he covers. I don't know much about the Canadian markets but it may be different since there is less company diversification in that market.
I ask because In class we had a speaker from Blackrock come in and he said that as regulation bears down and costs need to be cut, ER would be first to downsize. According to him, one possible fate is that buyside firms would employ their own research.
That guy from Blackock has no clue what he is talking about. There are tens of thousands of buyside firms and only dozens maybe hundreds of research shops including the big players.
There is no way that every buyside shop starts doing its own research on 5000+ companies around the world.
This is the way the finance business works and ER is not going away any time soon. Sales, trading, and PWM need research to be able to carry out their own work inside a BB.
Just today I talked to a sales guy who said how important it is for him to get good research so he can be successful at his job; if your bank does good research and gives good recommendations than so will the sales guy, which will lead to retaining more clients. Without research the PWM guys would be completely lost.
Autos and healthcare both have huge interest - especially on the credit side...Distresseddebt/high yield transactions and equity issues for over-leveraged companies are becoming more and more common. Research people get a lot of props for their coverage of such transactions. But yeah I do kind of agree.
But personally I would like industrials, transportation, and aerospace, but thats just me.
Anyways yeah ER analysts get paid the same as analysts in other FO positions their first two years, the job is less stressful, and you basically just sit there and learn and you have a ton of exit opps.
Its not as cool as making deals or making trades, but you get to work with bankers and traders and they suck up to you a lot to get more access. Its funny how banks work.
S&T and IB have higher betas than ER that's what I meant
might be over-simplification about which sectors are hot or not but given the fact that your bonus depends on the amount of trades generated and on the # of banking deals relating to your coverage, you are better off in some sectors than others
the bananas comment was a joke, don't take it personal, I appreciate your comments.
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