Help with Equity Research sector choice

UKtop's picture
Rank: Senior Monkey | 77

Hi there,

I've been offered an equity research job and I'm lucky enough to be able to choose between two teams: banks and oil.

None of them are especially interesting to me (I would go for software or biotech if given the choice), but I'm quite excited about having a full time job anyway. Both teams are well ranked and nice people... my concerns are that banking is a rather dull and peculiar industry (in terms of valuation), and oil it's a dying industry.

I would appreciate any comments on which one would they choose and why... thanks!

Comments (16)

Feb 7, 2011

Wow... You realize that tech stocks haven't moved in a DECADE - that's REALLY boring. Pick the group where you like the people better - down the line you will recognize that these are pretty important sectors

Feb 7, 2011
ILOVENYGUY:

Wow... You realize that tech stocks haven't moved in a DECADE - that's REALLY boring. Pick the group where you like the people better - down the line you will recognize that these are pretty important sectors

Thanks for the advice. Both teams are relatively big and seem to have a bunch of nice people -which I've only briefly met-, so I can't really make that a deciding factor. I guess that the reason why I find tech attractive is that it is very much forward looking, whereas oil and banks are quite traditional. But anyway, unfortunately tech is not an option, so that's off topic.

Feb 7, 2011

Personally, I don't think you can go wrong with either. Both COULD be fairly interesting going forward as regulations and rules take shape in the banking sector and oil, though it can be rather drab, has its tentacles in a lot of other areas. Since the fit aspect of your decision doesn't really seem to be a deciding factor, I would go oil. Any exposure you can get to energy, at any level, could be useful going forward if you want to exit to something else.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Feb 7, 2011

Try to get the scoop from the junior people in the department - which group has a better work dynamic, which one of the seniors will give you more attention (both good and bad), which group is better respected inside and outside the firm - where did the folks who used to work there end up? b-school/hedge funds/corporate jobs etc...

Feb 7, 2011

If you want a counterpoint to oil - post the crash, financials should be quite interesting to look at as they rebuild themselves - banks are not going anywhere and will be a huge chunk of the S&P forever and ever - you always want to cover a big sector in transition

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Feb 7, 2011

Thanks a lot guys, you are raising very valid points.
-Getting to know the teams -and particularly the juniors- better would be ideal, but since I'm at uni abroad and have to give them an answer by e-mail is not really feasible. I've spoken to both team leaders on the phone.

-Banks are always going to be there is spot on, and transition may lead to further interesting mergers and division spin-offs. Also, getting to know how financing companies work seems to make sense for a career in finance.

-At the moment I'm leaning towards oil a bit more, in the hope that maybe after a couple of years I can transition to some sort of green energy or "clean" natural resource sector, both of which I find more appealing. Does anybody know the likelihood/feasibility of a research analyst switching sectors? I guess once you are experienced in X, it's going to be a hard sell to convince someone to employ you in Y...

Feb 7, 2011

you can always switch sectors particularly early on - go and work for the guy you have the best vibe for

Feb 7, 2011

early on being defined as first 10 years of your career :) Relatively easy as an analyst or an associate, harder once you have coverage but still possible - ie Barcap banks analyst used to cover autos

Feb 7, 2011

Both banks and oil companies are deeply hated by your average Joe out there, so none of them would do anything good for your social status. :D

On a more serious note, I think ILOVENYGUY is right. At the beggining, who your work with is going to be more important that what sector you cover. You are going to be doing crappy work anyway, not making the call on Barclays or BP.

Feb 7, 2011

Both banks and oil companies are deeply hated by your average Joe out there, so none of them would do anything good for your social status. :D

On a more serious note, I think ILOVENYGUY is right. At the beggining, who your work with is going to be more important that what sector you cover. You are going to be doing crappy work anyway, not making the call on Barclays or BP.

Feb 7, 2011

Go for the banks. You don't deserve to work in energy if you're so stupid as to say it's "dying", lol.

Feb 7, 2011
alexpasch:

Go for the banks. You don't deserve to work in energy if you're so stupid as to say it's "dying", lol.

It was just an expression... in the sense that everyone is looking to get rid of oil at some point in favor of cleaner energies. I will most likely die before oil is no longer used, but in my opinion it's importance as a sector should decrease with time.

Feb 7, 2011

Hmmm exxon market cap is $420bn, Chevron $200bn, Conoco $100bn - yep, headed for extinction and fast

Feb 7, 2011

Also consider if you like to travel or whether you'd rather stay in your city.
Once you know what you are doing, oil will probably require you to travel more. Note that business travel is nothing like being on holidays; you only see airports, hotels, taxis and conference rooms...

Feb 9, 2011

both are great sectors, and both have a number of closely related sectors (banks: asset managers, insurance cos, etc Oil/Nattygas/MLPs/etc)

Oil is huge dude, and it's not a dying industry by any stretch of the imagination. Oil will have more of a macro supply/demand type of analysis going on. Geopolitical issues are an issue.

Banks are technically difficult to value. Those balance sheets can be killers and things can get pretty technical. But banks are also really fun to cover and it's like being an investigative reporter covering wall street. like, which bank has the best fixed income desks...you'll know the answer.

Feb 16, 2011
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