Comments (10)

Mar 5, 2014

I've worked in both buy and sell side for several years at top tier and BB firms. Wow I can't believe I sat through that. Thank god for Youtube HTML5's 2x speed function.

Ok he starts off really slow and is really annoying... stop telling everyone they "need to realize this" or "need to know this".

As for the content, I gotta say he's mostly right about the problems of the sell side, but I think he way upsells the buy side and trading your own money. Obviously, since he runs a grinder for prop traders and he would love nothing more than to have all these kids sign up with their money and put on 4-6x leverage. Then he can cherry pick the smarter ones and let the bad ones burn out without cost. Wow.

Anyway, he's taken a very very dark view of sell side trading... despite what he's said it IS still possible to get promoted to Director or MD and make the 7 figure (locked up) pay, but yes it's much harder and lower than before. Also I think he comes from liquid FX or Equities markets because there's still lots of sell-side skill in illiquid credit or fixed income products.

On the hedge fund side, his pay #s are for a top tier established fund... and even then they're relatively optimistic these days. He skips over issues with client withdrawals, drawdowns, and the fact that you can be fired very very easily on the buy-side. Underperforming Jr or Sr PMs can be let go in 6 months to 1 or 2 years very easily.

This guy seems to work with the assumption that someone is an unbelievable trader capable of generating 20% returns with low variance every year in their career. Yea great then of course trading your own or at a HF is going to get you better returns.

In the end, I actually agree with him that if you really want to be a trader and take risk these days, you're better off on the buy side. However, if you are 1. not sure about your risk taking abilities 2. not from a target school or not getting noticed by buy-side 3. want to do research/sales/structuring etc then sell-side is still viable.

Mar 5, 2014

There's no way those compensation numbers are real. $65K for incoming analysts and a $8K y/e bonus!?

Mar 5, 2014

It's on the low side, but these days First Year S&T can usually expect 65-70k salary and 15-35k bonus. It's come way down since the 65-95k bonus days of 2005-8.

Mar 6, 2014

lol although his points about IB made sense, it was pretty funny how he talked up trading one's own money by assuming someone would make 20% returns per year on 5x leverage...no mention that one bad year could wipe out everything with that leverage

Mar 10, 2014
cauchymonkey:

lol although his points about IB made sense, it was pretty funny how he talked up trading one's own money by assuming someone would make 20% returns per year on 5x leverage...no mention that one bad year could wipe out everything with that leverage

Agree, his points about sell-side make sense. His points about buy-side make sense. His points about prop trading are ludicrous. I wonder what he's selling?

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Mar 6, 2014

Yes, it's definitely not what it used to be and he was in the industry back when it was 'the good times' so I guess it's easy for him to put it down nowadays.. Also, the point about being a contractor for two years. I'm pretty sure all grad programs are like that regardless of the industry?

Mar 7, 2014

So I've only had the patience to watch 2 out of the 5 videos (thank god for 2x speed). He does bring up a few good points, however I think a vast majority of this is with equities (even the graphs he pulls up are for equities). I interned at a FI floor last summer and many of the specifics he mentioned about market making were vastly different. He seems to make the assumption that traders must take a position from the client. At least from what I saw in FI, if a trader doesn't want to take a position from a client, he simply wouldn't do the trade...The only time when we would take it would be if it was a very large and important client or if he had a really good relationship with the salesman. The salesman would then return the favor by pushing the trader's axes hard. so basically most of the positions that they had, they wanted to have. So that greatly reduces the "negative choice portfolio" that this guy loves to talk about.

Mar 8, 2014

Snore. Pushing his propshop as the only way to trade.

I thought he was funny back with BBCs Million Dollar Trader, but now he's spewing common sense for anyone trading more than 10 times a year. I understand that UG students are impressed by his speech and those are his audience. Not guys with more than a few weeks of work experience.

Mar 10, 2014

I think he brought up some points about the sell side that make sense but he also embellished a lot to try to almost scare the students from taking jobs on the sell side. Granted I don't know much about what the industry was like 12 years ago and am sure today is different but some of his points are flat out wrong. In the first video he says that commissions are down 80% and thus pay is also down 80%. Someone with more experience can correct me if I'm wrong but intuitively if banks downsized and trade the same volumes with less traders (with the help of algos) the commission to pay ratio wouldn't be perfectly correlated.

He also says that there is no skill in equity market making because of algo's which frankly isnt the case because if it was the market makers wouldn't be paid six or seven figures if there was zero skill involved. I get that the pay is lower and that there are less traders on the sell side, but to say that there is absolutely no skill in it is ridiculous.

Just my two cents (and I only watched the first video so he may address these points later)

Mar 12, 2014
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