What do Investment Bank Employees Invest In?

Hi all,

Recently received an offer at one of the BB American Banks. Compliance have contacted me and informed me it is next to impossible to buy and sell equities once you start the job. I assume this is the same at all other banks.

I was wondering what everyone invests in and what a first year analyst should be looking at as good alternative investments. In addition, I would appreciate knowing what compliance rules are in place at other banks.

Any advice would be appreciated, thanks.

 

Not able to invest money as free as you can do otw is probably one of the biggest caveats many people don’t see when they consider to move to M&A IBD....

Forget bonuses and nice base salaries (which in fact you can also earn elsewhere). Being limited to rather exotic asset classes will mean a VERY BIG constraint to your personal wealth management in the face of a long run career in IB. Fact.

 

Forget standard stock market trading. And forget privacy in your investments. Factually, your stock (and sometimes even your ETF) trades need to be approved by one of your bosses. Horrific for all personal long/short trading strategies... At least one of your bosses will know. Fact.

Even more horrific: It‘s not you who is determining a final timing of any buy/sell and sell/buy but the final approval of your boss/your regulators...

Examples? High vola and short but good time window to get your position flat? bad luck for you! Invested in a certain company you are about to get staffed on for a deal? wanted to hold the position which is currently down 10% in your portfolio for +5years because you actually believe in the long run fundamentals of the company? Either close it prior to your deal, push back (and miss the deal on your job) or „freeze“ it as long as you are on the deal plus time x - bad luck for you! Restructuring case inbound and you have been long on the asset for yourself actually? Congrats, it’s your own freezed financial coffin you are now working on!

Bottom-line: Severe constraints for major investment strategies and asset classes. Set back to all real attempts towards financial independence. Fact.

 

Couldn’t be more true. I have made serious money for a 21 year old simply through the market and now that I’ll have a good salary to put into it I’m getting that luxury taken away. The true way to build your own wealth is through good investments. Glad your on the same page as me. What do you/ would you put your money in.

 

After 6 years, I have no perfect solution for this. At a certain point, you give up l/s stock picking because it’s just not worth these additional grey zones around compliance approvals/execution timing and can crush nice percentages of your performances in high vola periods...

Reality is you are kinda forced to stay away from it and over time, you will loose your passion to identify and pick single stock, simply because you cannot participate in monetary terms. Super toxic and very smart bi-product of the system, as you are in fact moving away from attractive means towards financial independence (your cash flow diversification) and rather narrow around your current income streams (money for time, with time working against you).

ETFs still stay an option and so does real estate (in general terms), but that’s it in terms of vanilla assets I would say. You cut your risk return profile towards „market“. Or you just need way more equity to actually access the (RE) market properly...

 

Stocks, Bonds, ETFs. Berkshire Class B for around 200 a share or class A for $300,000 for one share, treasury bonds or treasury notes, or generally ETFs. Realistically, no one will this opinion with me saying this. I think every investor should buy 1 Bitcoin and hold onto it forever. Also, the crypto market is extremely volatile, you don't want place all your money in something like that. A lot of my finance friends think it is a speculative asset that can't be valued, I just don't talk to them about that since there are no cash flows or revenue created.

"It's okay, I'll see you on the other side"
 
Funniest

my paycheck:

401K - 0% savings - 50% vintage watches - 15% uniqlo / suitsupply - 15% girlfriend & other charities - 10% trader joes / rent - 9.9% runescape gold - 0.1%

What concert costs 45 cents? 50 Cent feat. Nickelback.
 

He did that at my request.

As a JPM holder, I humbly requested that Mr. Jamie_Diamond never retire (hopefully Jamie Dimon will follow suit)

Director of Finance and Corporate Development: 2020 - Present Manager of FP&A and Corporate Development: 2019 - 2020 Corporate Finance, Strategy and Development: 2011 - 2019 "An investment in knowledge pays the best interest." - Benjamin Franklin
 

You need to see investment as insurance - invest in asset classes that are negatively correlated with your job; stuff that might do well when the SHTF

  • long gold/silver

  • long duration with minimal credit risk (30Y UST maybe)

  • long bitcoin :P

 

Not sure what the above are talking about

I'm regulated - have all the relevant investment banking licenses and i can basically trade any stock that (i) we don't IPO or have a secondary offering on (bank wide) an (ii) that is not in our specific group's coverage universe (i.e. if im in the TMT group and lets say the Industrials Group covers General Motors, i in the TMT group can trade General Motors)

It typically goes like this

  1. I go into the compliance system and say i want to trade "x" stock or bond or option or future contract
  2. In a minute it gets approved (both compliance and the head of my group can see the trades)
  3. I trade it (min hold period is a month)

U.S. Treasury Notes and ETFs and CD's do not need to go through compliance - you can just trade it and there is no min holding period (although it gets logged by compliance)

I think other banks may be more stringent but i can trade pretty frequently on the private side

Just want to make sure people don't get the wrong impression - private side trading is pretty common; the only major rule to not violate (generally) are dont trade on insider information and you cant short securities unless it is to hedge (as we want to make sure our clients / companies are doing well); i.e. look pretty bad to bet against one of the bank's clients

-
 
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