Is it true that the golden days of trading at investment banks are over

When did you realize that you wanted to go into trading? I'm still a senior in high school and I'm really interested in finance but I'm not sure if I should commit to this career.

Anonymoose:

Prospectful still is not a word

Anonymoose:

Prospectful still is not a word

Anonymoose isn't a word either, correct?

For me, the answer to the question "Is Wall Street over?" depends on what you mean by "Wall Street." If what you mean is the "Liar's Poker" style antics of the 1980s, or boiler rooms like Stratton Oakmont, then yeah, I think that financial industry is gone and not coming back. Basel III and Dodd-Frank have made it nearly impossible for the big banks to be as profitable as they once were, and the culture of finance is changing. (As one young banker told me: "The bosses who do lines of coke off a stripper's ass don't exist anymore.")

But if "Wall Street" is defined like it was before the 1980s – as a place where bankers underwrote offerings, managed HNW accounts, and did other basic transactions – then the industry could have a bright future. In my opinion, Wall Street isn't gone – it's just losing its edge.

With regard to M&A, financial sponsors won't have access to as much capital under new regulation, so deals will be smaller, and BB IBDs will become obsolete. PWM and commercial banking will take over the large banks (already happening), and you will only see "boutique" banks doing all the deals.

BTbanker:

With regard to M&A, financial sponsors won't have access to as much capital under new regulation, so deals will be smaller, and BB IBDs will become obsolete. PWM and commercial banking will take over the large banks (already happening), and you will only see "boutique" banks doing all the deals.

Sorry but this is pure stupid nonsense.

delete

I am sure if we count up the times when Wall St. was 'gone' we would be well into double digits.

Hmm, I think that all this talk of "Wall Street" being over is just scare tactics. I truly believe that there will always be a "Wall Street" environment because what we see in the finance industry is such a fluid, dynamic business. I mean there will always be people seeking the high salaries that are typical of the jobs in higher finance work, but to me, I think the challenge of doing a good job in such an intellectual workspace will always attract people for the right or the wrong reasons.

I think that, for that reason, Mr. Roose's book will be really popular. For all the vampire squids out there, the hot topic is what actually goes into the job of analysts and associates. I think that people have this idea in their heads about what the work entails, but really there is no clue in the mainstream. I know that the people in the WSO community have more of a grip on the work involved, but I know for me, books like this one or Greg Smith's, or Turney Duff's were real eye openers, even Monkey Business was a good read. Finally, I just want to say that there will probably never been an end to "Wall Street: because outside of all the money, drugs, and other tales, no other work can capture a person's intellect quite like the dynamic universe of the stock market.

The best days of Wall Street are certainly in the rear view mirror for me.

Which one of you fucktards threw monkey shit at @"Kevin Roose"?

Just pre-ordered the book, bro. Can't wait. I think I might be one of the first people you told about it way back in November of 2012. Been waiting a long time.

Are you fucking serious?? The best days of wall street behind us?? The market was just down fucking 326 points today!! What a fucking short!! As the markets get bigger there will be more volatility and more money making. Times are only getting better!

AdrenalineJunkie

The easy money is getting squeezed out from regulations. I don't think the hate toward the Street is going to continue too much longer, but the damage is already done. I really think the all-encompassing global BB is done for and a retarded idea for firms that keep trying to achieve the status.

People will figure out the businesses they're most profitable in, strip the rest, and try to not to blow up.

this sounds like a decent read. whoever is throwing MS seems to have no compass since eddie got hit with some and i likely will or even commenting on this thread. either way, definitely looking forward to the book. thanks for posting.

All the shit being slung is truly unwarranted. I had to spot Dick a SB just to get him back up to par!

I don't think so. I think it's just getting started (post-crash, obviously).

The way I see it, so long as we have demand for allocating capital, we will have a strong financial industry. It may look different because it has to adapt (just like it's been adapting all this time). But over? I'm going to go as far as saying "not a chance".

the criminal banks will always be in business

My guess is that in the near to mid-term, the "fun" aspects of Wall St will continue to decline. Equity comp that vests over a bunch of years just isn't quite the same. I'm guessing that a lot of the nonsense that I experienced just 10 years ago will no longer fly. The long-term is more uncertain.

What I do see is that a lot of the most talented people I know have already left "Wall Street" jobs or are actively considering doing so. I also see a lot more of the type-A MBAs that used to covet banking/PE attempting to start companies - is this a fad or something of a more permanent shift?

Maybe he is throwing MS around because he really really wants the signed copy of the book?

I don't believe it's dead at all. Just like every other industry, it is constantly changing. If the players don't adapt, they get left behind. As aspects of the business get cheaper (ex. brokerage commissions) or are turned over to cheaper labor or machines (back office jobs shipped to India, algorithmic trading), there are those who use those changes to their advantage, or innovate and find new ways to make money.

I've been told by older contacts in the industry that it may not be as FUN as it used to be, but there's still plenty of money to be made.

Just pre-ordered this book, heard about it from this thread. Pretty pumped to read it.

Wall Street will always be around, the street has been boom and bust for centuries. Periods of speculations like the original railroad stock issues are followed by periods of retrenchment. M&A advisory will continue to be profitable, same with ECM and DCM. My suscpision is that the Street goes back to being a profitable albeit less flamboyant place, alternatives will be increasingly like AM in general, there will be increasing price sensitivity and competition on price particularly at less impressive funds. Brokerage and wealth management will move from commissions more towards global fee arrangements or towards hourly fees. With less easy money sloshing around people will likely be less flamboyant

disagree.

I think this is a perfect time to be in finance. After every bubble everyone says wall street is dead, college graduates are less likely to apply for jobs making it easier to get in and you can't forget the whole purpose of wall street is to make money. After the tech crash everyone thought the game was over.

Second, the money is going to be made not at BB but hedge funds, PE/VC firms, and boutiques. Banks are selling off their credit portfolios due to the new regulations and hedge funds are buying them. Also alternative assets are going to be the future as long as yields are low.

I think the best days of working on Wall Street are over for now. Regulation has created new roadblocks for institutions to make money. However, without being able to predict the future, I think we will eventually see deregulation again as we did in the past. In the 1930's we regulation in the form of Glass-Steagall only to see the industry deregulated again by the implementation of Gramm-Leach-Bliley in the 90's. The point is I think as the financial crisis gets farther and farther into the rear view mirror, we will eventually see deregulation once again. I think this could return us to pre-2006 days because I view regulation as the biggest roadblock. Just my two cents....

There will still be money, but it won't be nearly as lucrative (excluding for the best of the best) or glamorous. BB's can't prop trade anymore, hedge fund returns overall suck, and trading is largely being replaced by machines. While the industry is shrinking, the competition for spots will continue to get worse. You're competing with flocks of graduates from overseas (mainly China) who will trade their souls and work for nothing in exchange for that prestigious finance job to bring honor to their family.

When breaking into the industry is just as competitive as ever (analogous to how competitive it is to break into a top school nowadays - you didn't use to have to start a non-profit organization in a third world country to get into an Ivy), the hours and other aspects of the job are still shit (eg. being confined to NYC, boring, unfulfilling work), and the money isn't there, the value proposition begins to diminish. The culture has already transformed from the fratty "sniffing coke off a strippers' ass" days to that of a bunch of nerdy Asian/Indian Ivy league graduates who've sacrificed their childhoods and social/sex lives to get those coveted spots. Finance isn't cool anymore.

I think BB banking has taken a hit and will never recover. Talent is leaving en masse and new regulations are going to prevent BBs from underwriting significant portions of new financings. Those financings are going to go to alternative capital sources that are not regulated -- think debt funds, CLOs, etc. Gone are the days of BBs taking a fee in high leverage (above 6.0x) situations.

I do think there is still money to be made, but in alternative areas of finance -- boutiques, funds, etc.

Kevin Roose is a godly financial journalist people. Young Money will soon take its rightful place among the financial literary canon. Go kevin!

http://www.kevinroose.com/

@hankyfootball thanks for the link, I'd briefly seen seen some of Kevin's other pieces (e.g. Last Temptation of Ted) but never connected the dots. Overall I bet those were some pretty cool assignments.

I'm a political junkie, so I try to be up-to-date on the regulatory environment of different industries. I think it's very hard to tell if the best days of Wall Street are behind us. On one hand, you would assume the nation would put oversight and safeguards on financial services to make sure they don't get crazy again (I know that is a hard pill to swallow). But on another hand, we all know the rich and powerful wield a strong influence on Washington, so policy may never hurt financial services toooo badly.

I've heard the same nonsense in 2003 during the last crunch - this is one is longer, but that one had far more layoffs, and older people in the industry heard the same nonsense in 1990 and before that in 1974. Its a cyclical industry and profitability will always come back. And the markets that are profitable are richer than ever - you can't hire a good D1 in Houston for less than 2 million dollars. I left investment banking for the buyside a year ago for the opportunity to build a business and create lasting equity value, but I don't think investment banking is dead at all. And I miss the banking culture, its harder to recreate in a small organization.

rain MS on this guy

random joes reading his book and asking me about IB thinking they know it all

New guidance out of the OCC, interest rates will most likely begin to rise next year and if the recent move by the ECB isn't a sign we've hit peak credit I do not know what is. Add in being overdue for the next recession, increased competition in finance and more regulation.

I'd say the glory days are over in most of finance. Though I know some credit guys that are chomping at the bit. Gonna be a nasty industry in the not too distant future.

BEAST MODE TRADER:

The traders that were making bank pre-2008 at the BB firms were prop traders. With Dodd-Frank and Volcker rules prop trading doesn't exist at banks anymore. So any trader at an I-Bank now is either helping make markets or placing orders for buy-side clients. There is barely any discretion involved besides trying to fill them at a good price.

False. There's still a decent amount of positioning your book. This requires proprietary views. Most of the desks I've interacted with take some sort of proprietary risk. It is true that there are very few desks whose primary mandate now is to take this kind of risk and make money, but a lot of flow desks do have views and express them while trading the flow that comes in. However, I imagine pre-08 they could put a lot more capital to use to express these views than they can now.

If bank traders were just dummies making prices and executing client trades, i imagine it would be very hard to make money in the long run and would not be a very good business model.