Stay Aggressive

More than anything, you'll find this industry is about being aggressive. Maybe it's the same in every industry, but I think it is especially true in this one. It is up to you to step up and take what could/should be yours. Responsibilities don't just get handed out. They're usually given to the first person who steps up and says "I'll do that." In fact, even if it is outside of your current description, the guy who steps up and takes ownership will be th person who gets the assignment. There can be downside in being too aggressive--being labeled as a cut-throat bastard, being seen as not knowing your place, being labeled as immature, etc. But in the cases I have seen, senior people are willing to give you a shot on most things. If you can prove you can do something, then it's yours.

The skys the limits if you can convince people that you can handle the responsibilities that are available. Once you have responsibilities, you can ask for the commensurate promotion, more pay, etc with impunity.

Tracking Markets

I was recently asked how to track markets when you are not yet a market participant.  Those of us connected to the markets pay tens of thousands of dollars a month for up-to-date news and user-friendly interfaces.  If you can't spend a few hundred thousand dollars a year for data feeds, are you toast?  Well, yes, if you're actually trying to day trade off that crap data then you're screwed.  If you're a student just trying to track markets and maybe doing a bit of personal trading on a day-over-day basis, then there are lots of good free sources.

My personal favorite datasource when I was a student was yahoo finance (finance.yahoo.com).  They actually have a very good database of historical prices, historical financials, current financials and slightly delayed prices.  You can track all sorts of market from here.  Their news may not be the most timely, but there are better places to find news.  There are lots of free stock tickers out there you can download to set up a personal set of tickers to track daily.  Beyond whatever equities you decide to track, I would suggest tracking the following on a day to day basis:

• 2y notes
• 10y notes
• S&P 500
• FTSE
• Nikkei
• 30y mortgage rates
• 3m libor
• fed funds rate
• EUR
• JPY
• GBP

This should be enough to get you started.  There are some more obscure things to track, but these will give you a general idea of how the US markets are moving and a peripheral view of the rest of the world.  

For news I'd use www.cnn.com, www.bloomberg.com and www.wsj.com.  The most timely of these sources may be cnn and bloomberg, but if you're checking once a day the wsj actually does a great job of synthesizing the important parts.  Generally speaking, you really don't start caring about the daily specific moves of securities until you have some skin in the game (i.e. you're actually involved in the market and are dependent upon it for your livelihood).  One way to get involved is to have a small (SMALL) speculative account to keep yourself in the game.  You can do this as a stock portfolio or as a futures portfolio (I tend to like the latter, but that's because I'm a derivatives guy who does this stuff professionally--don't do this unless you really understand futures.  Taking delivery by mistake can be a bitch).  For most people I'd recommend just having some stocks in a small spec account (couple thousand) and tracking them daily.  I would tell anyone who isn't a professional trader NOT to be day trading and NOT to be leaving limit orders in the market.  

As a student, I tried to get myself involved in markets, and I think it helped a bit.  One of the old-fashioned things I used to do (and still do in a modified form) is writing down the closing levels of the various indicies and securities I tracked every day.  Then you have a personal record that you are forced to look at daily.  The physical act of writing them down makes you reflect on them.  You start to notice patterns and you notice trends in the market as well as stories that the market reacted to.  

Good luck.

Your Bonus and Your Future

There's a lot of talk amongst people about how they will be spending their bonuses this year. One thing that raises a red flag in my mind is the number of people who are looking to buy things with significant leverage. Be it a condo, a vacation house, a car, etc. I am the first to say you should be living your life to its fullest. Nothing wrong with spending fairly lavishly while you're making the big bucks. In fact, I'd recommend it--there's nothing like spending while you're young.

Here's the catch though, you can't be spending a lot on credit. As someone in the finance industry, one of the most volatile in the world, you simply need to play a little bit defensive in the debt game. A lot of places in NYC won't let you buy with high leverage because of the number of finance folks who commit to a lot of debt and then can't pay off in the future. I've known too many people blown out of the industry and have seen the devastating effects of high debt with no income. If you use leverage, make sure you're investing in something with a reasonable upkeep cost or positive cashflow. Keep in mind that you could be out of a job tomorrow, even if you think you have a relatively protected job. I've seen highly profitable people and extremely cheap labor blown out the door with little to no warning.

Enjoy your bonuses, you've earned them. Spend lavishly, you can. Heads up on that debt though, you haven't made a living of it yet.

Big Losses and Big Excuses

I'm kinda annoyed by how many excuses are being made for these people heading up big firms. Particularly the CEOs of Merril and Citi have come under fire. People are asking if they were taking excessive risk in order to get short terms gains. Others are asking if the right risk management controls were in place. Others yet are wondering if they were trying to hard to catch up to Goldman. Fact is, the answer is NONE OF THE ABOVE.

The single reason these staggering losses are coming out is STUPIDITY. Anybody else wonder why Goldman was ranked 13th on CDO distribution? Anybody wonder why they didn't hold any? Same goes for Deutsche. Anyone wonder why they didn't hold any part of the CDOs they originated? The truth of the matter is these folks at Merril, UBS, Citi HAD NO IDEA what they were getting into. You can bet on the fact that Goldman had a conscious decision not to enter into that market aggressively because they decided the tail events were too painful, and we all know they are not a firm to avoid risk. Let's all quit making excuses for these companies and just realize that it was a LACK OF UNDERSTANDING and perhaps more specifically A LACK OF GOOD MODELING that fell them. I had done a little bit of work with CDOs, and it was annoying to see how so many firms were using the same mediocre model. You can be sure Deutsche and Goldman had some development time to create some specific models and then realized they didn't want to be a part of the imminent collapse.

That being said, you can be sure there are some opportunities out there. I'd be willing to bet that Goldman will start accumulating some of this subprime mortgage and CDO stuff. Just like when they collected CDO equity tranches in 2005 during the autos crisis, they'll swoop in to pick up a lot of this stuff cheap too. In fact, they may even buy a whole company to manage the specific operational issues with these products.

Whitespace

Various people have always complained about how unfair it may be to ask a fresh college grad not to have whitespace on their resume. I'm not sure if this is necessarily an unfair thing to ask. Many college grads have full resumes filled with competitions, clubs, sports and jobs they participated in (yes, they're participating in jobs, quit bitching) during college. I don't think it's unfair to ask a student to have participated in two reasonable commitments during college. I think two is enough to fill up a resume. People are often in fraternities/sororities, sports teams, maybe a part-time job, maybe an internship, and a competition here or there. The key is to put the right amount of detail into your resume. Don't rehash the same thing over and over again (as some people I've seen have done) and don't write down meaningless bullet points like "assured continuity of business as usual" (yes, I've seen that as a bullet point).

So what sort of detail should you give? Remember in grade school when they told you that the key to a good expository is to give the "who, what, when, where and why?" That's pretty much it. In particular, "who, what, where" are usually the most important. You should make sure you always discuss the "who" in each line you state. Were you addressing clients? Management? New hires? Students? The what should be detailed. Was it a $10M account or a $10Bn account? Was the PnL +25M or -15M? Was the audience 8 people or 500 people? Were you serving 10 customers a day or 1000? As to where, did you do this at your firm? Did you travel at all? Were you at an off-site? When and why can be a bit redundant. Most of us won't care why. And the answer to why is often "because my boss told me." If you took the initiative to do it yourself, you should probably mention that. Initiative is often associated with risk--taking initiative means you're willing to take some career risk, which is good. As for when, it's usually during business hours, so no one cares. You might mention the when if it's past normal hours or something, but don't get too cocky with this. No one likes the asshole who stays late just to stay late. One thing not mentioned above is HOW. You can include HOW you did things to strengthen a resume. So you were a waitress? HOW did you make customers happy? HOW did you gain more tips? HOW did you decrease the wait time at the restaurant?

The details you include in your resume are important and can show a lot about how you dealt with various trials. In particular they can show how you are different from someone else who may have taken the same task, and that is the key. You need to differentiate yourself in the particular role you may have had. If the next guy would have done your job just as well, then you're basically a commodity. If you added special value in that role, then you're a valuable asset.

Good luck.

Ups and Downs

Every industry has it's business cycle, but none are as volatile or trying as the cycles in finance. I'm seeing more and more people come in who are simply not fit to be in finance. One kid I know almost cried when he found out how many people were being axed this year. He got even more emotional when he found who exactly got dropped. It happens, people get fired, they find new jobs, we move on. If you're the type to cry over a couple co-workers going to a new job, you probably shouldn't be in finance. In fact, you pretty much need to be able to take all sorts of shit from your boss and/or clients without getting emotional. I've also seen guys and girls take days off because their significant other broke up with them (actually I've only seen one guy and one girl do this). No forgiveness there either. If a family member dies, fine take a few days off and come back. No whining and no crying at work. Breaking up with a girlfriend of one or two years? No, not good enough. This may seem cold, but it's part of the industry. Missing one day can means millions of dollars on a trading floor on the wrong day. Missing a day in investment banking. . . probably won't make as stark or immediate an impact, but it may delay a key deadline.

Finance isn't really a friendly industry when it comes to your personal life. Make sure that's the sort of enviornment you want to be in before applying.

Stupid Interviewees

Learn my example. Here's what not to do:

Interviewer: Tell me an example about a time when you had to perceive where you had to assess the risks in a situation and communicate the risks to others.
Interviewee: I play online poker. So I am familiar with having to take risks.
(Silence)
Interviewer: Can you explain to me how this relates to my question?
Interviewee: You said give an example about a time when I had to assess risk.

Moral: Listen carefully to the question and don't give stupid canned responses.

Interviewer: Let's say a duck is sitting in the middle of a circular pond with radius R. The duck can swim velocity V. There's a wolf on the circumfrence of the pond that can run velocity 3V. The wolf can't leave the circumfrence of the pond. Can the duck escape?
Interviewee (immediately): No.
Interviewer: Do you want to explain your thought process?
(silence)
Interviewer: What makes you think the duck can't escape?
(silence)
Interviewer: How far does the duck have to travel?
Interviewee: I don't know.

Moral: Okay so this one was just an idiot. Generally speaking though, when giving a brain-teaser they're more interested in your thought process than your answer. Brain-teasers are inherently slightly unfair, so we look for people who think methodically/systematically and creatively.

Interveiwer: Why didn't you stay with (some firm on their resume).
Interviewee: I didn't really get along with my boss or my coworkers. I also found my job really boring. You wouldn't believe what a slob he was when he was eating at the desk. He farted a lot too. In fact, I don't know why I went there in the first place. Then I got fired.
Interviewer: That was candid. . .

Moral: Never talk shit about former employers. In this industry there's a good chance they know your old boss. Also it reflects poorly on you to say bad things about others. It's even worse if you elaborate and spread gossip. Never say "I got fired" if you can't give good reason for it (market downturn, scapegoat, etc). Try to spin your last job in a positive light and highlight what you learned from the experience.

Interviewer: What makes you think you're right for this job?
Interviewee: Well, I am extremely interested in finance. I've taken managerial accounting, corporate finance and introduction to private equity at the business school.
Interviewer: But this is a trading position. You understand what foreign exchange traders don't really look at corporations.
Interviewee: I feel like it's all the same.
Interviewer: Uh. . . no. . .

Moral: College kids love to give their canned responses and talk about what they've done. You really need to pay attention to each job description and not give canned responses. The more creative and personal a given response the better. We can tell when you're being genuine or just spouting shit (even when it's not this obvious). I hate it when kids spew crap about playing poker showing how they're not risk averse in a trading interview. Everyone fucking plays poker these days. Just because you play your $5 game with your buddies doesn't make you a risk taker. Maybe if you were playing $500 games while a student that'd be a different story. . .

Interviewer: What other positions are you interviewing for?
Interviewee: I am also looking at investment banking jobs at (firm A, B and C). I am looking at private wealth management at (firm D and E). I am considering consulting at (firm F, J and K).
Interviewer: That's quite a lot of different areas. Why would you want to do sales and trading over any of those?
Interviewee: I'm not sure yet. I am trying to keep my options open. Actually I'm currently leaning toward consulting.

Moral: Always sell yourself as most interested in the role you're currently interviewing for. Yes, you need to LIE. The current role is always the shit. Even if you're also entertaining the idea of being a prop guy at Goldman, when you're interviewing for consulting at some bumble-fuck nowhere company that's your dream job. You give some bullshit answer like "I don't think trading is for me. I'd much rather analyze individual companies and help managers make specific decisions. Big companies aren't really for me either. I feel like we get much more personal attention and responsibility at a smaller firm." Practice these before your interview.

That's all I have time for right now. Good luck folks.