How Not to Make Friends

We like to believe Wall Street is a meritocracy. And in many ways it is. Very little is more truthful than a PnL, a flood of sales credits, or a won deal. While an element of luck definitely exists, on Wall Street one create's one's own luck. The meritocracy doesn't not, however, mean one can wander around burning bridges everywhere. Those who know me will find this post amusing because if there is anyone rude, obnoxious and apolitical, it would be I. One will find that I have made some of the right connections and somehow I have managed to be as I am while getting the right people to respect me and, in some cases, like me.

How does one navigate the jungle of politics in a Wall Street firm? Surely everyone's noticed how people often bring their friends with them when they jump firms and promote their friends. Often those people are not the most competent, but they are the most trusted by the guy in charge. Trust is ridiculously important when dealing with millions of dollars. You need to know that the guy you put in charge will tell you when he fucks up, so that you can help him resolve the issue. Wall Street politics survives on the trust that one man's word "done" creates a contract that instantly may be worth millions of dollars. Management needs to be able to trust his people with that responsibility. It's the backstabbing, PnL hiding, contract rescinding, double talking sleaze bag that no one wants on his team.

As one progresses, another important characteristic to have is the judicious use of the carrot and the stick. A lot of people get reputations for heavy use of the stick. People will loudly point out mistakes, berate and belittle others. That's fine, mind you. I'm not going to say you shouldn't do that. In fact, humiliation may be one of the fastest ways to teach a lesson. One must, however, to maintain respect also use the carrot in a judicious manner. Learning to give praise where it is due in a generous and sincere manner builds trust and respect. People need to know that you will fairly belittle and praise. Using the carrot and stick in a well balanced manner makes your praise that much more fulfilling when you give it while it makes your disappointment that much more stinging.

Here are some things you should never do:

1) Double back on a deal you just made.

2) Hide a mistake made by yourself or someone on your team.

3) Share details of something internal with outsiders.

4) Kick a man when he's down.

5) Point out a mistake someone else already caught.

6) Tell someone they're right when they're not.

7) Go over someone's head (to their boss) without telling them first.

8) Date your boss' or client's daughter (or ex-wife, yikes!).

9) Give praise where it's not due.

10) Give punishment where it's not due.

11) Steal

12) Embarrass someone with praise.
13) Help someone at another firm at a significant cost to your own firm.
14) Take credit for someone else's work.
15) Sleep with an analyst in your own group.
16) Sleep with anyone in your own group for that matter.
17) Blame someone for your mistake.
18) Argue a point to exhaustion without proof to back you up, especially when you're wrong.
19) Skip an easy/free opportunity to help out another person in the firm.
20) Not Take credit for your own work.
21) Let a friend get bashed when they're not present.

That seems extensive enough, no?


Building a good reputation as a loyal and trustworthy coworker can mean the difference between being promoted to the next big job and staying in your current role for ages. To some extent, you don't have to be liked as much as you are respected for the above characteristics, although it always helps to be liked (who wants to work next to someone for 70hrs a week and not like them?). Never let yourself get caught with a poor reputation in terms of your trustworthiness though, that will kill your career on the street faster than anything else.

New Year

It's a new year. And what's that mean for Wall Street? Well, those who haven't reset their annual numbers in December now reset their numbers. Everyone's on a fresh slate. PnL, sales credits and deal closings are all zero or close to it. From today on, anything that happened last year for deals, trades, etc all are forgotten and you get a new chance to shine. Last year's rock-stars are no longer and need to prove themselves once again. Market liquidity comes back and bankers are back on the phones with new-found zest. There are few industries where each year brings a completely new set of risks and rewards. If you sucked last year, you could be the star player this year. If you were the star last year, you could blow up this year. It's a whole new game.

So what's this mean for you? It means you need to stop thinking about last year and start thinking about this year. Letting last year's victories and follies mess with your mind is the best way to screw up a new year. If you got on bad terms with someone, forget about it. If you screwed up a trade, don't think about it. If you lost a deal, it's history. There are new winners to be made.

What if you're still looking for that job? Well the new year brings opportunities for you too. Payouts happen between now and February, which just happens to be when people start moving around too. People quiting means openings in various positions. Firms have to hire to replace those who leave, and there will be a lot of people leaving their firms this year. February to April is the biggest hiring season for the Street. Look forward to it and pursue aggressively.

Good luck to all in the new year.

Not High School

It often annoys me when new analysts and associates are still at the psychological level of a high-school kid. Look kiddies, high school ended four or more years ago. Get over it. You're no longer in the "cool crowd" and it's no longer cool to be hazing the nerds. I see this most commonly from the greased up European guys and "high maintenance" girls (no offense to anyone who believes they fall into one of those two stereotypes). The sad thing is it's most commonly those nerds who get ahead these days. Wouldn't you want to be friends rather than enemies with the guy who's going to be climbing that corporate ladder fastest? I dunno, I think I would.

Seriously though, analyst training and associate training can be stressful enough with out going back to the cliques that develop in high school. Most people get over themselves during college, I think, but a select few groups still feel the need to create the hostile environment that comes with the cliques. There's nothing wrong with finding a group of friends (yes, friends tend to be of similar demeanor and have similar interests), but the silly high school style antics need to be extinguished. I know when I have a new analyst that seems to have not gotten over the high school mentality I tick him down one notch in my mind. I'm certainly not going to have someone that immateur promoted closer to managing people. That would be a disaster.

Weekends

The most interesting thing about the weekend is the options it allows people. The chunk of free time available to individuals and how they use it really distinguishes one from another. At work everyone may seem equally determined and intelligible, but how they choose to spend their free time separates people into distinct individuals.

Many of the most successful people I know live breathe and die their work. It envelopes every aspect of their life. On weekends they inevitably end up in the office to do work of some sort. Usually they go voluntarily to fix something up to be better/faster/smarter on Monday. Top traders have their second workstation set up at home so they can trade from home. This makes it even easier for those folks to continue to improve their work at home. I'm afraid I tend to separate most i-bankers out of this category because they are forced to work weekends, as opposed to doing it out of the desire to make their models more robust (I'm sure there are a few bankers out there that research better ways to model and value companies, but I just haven't met many).

This drive is what puts people ahead--taking their own time to gain more knowledge, make models better, optimize their machines. Often the same people start looking at the rest of their life in a similar fashion. Every interaction is a deal, a structure, a trade. Every person is a counterparty.

Is it worth it? Many bankers, traders, salespeople become drones at work and try to live their life outside work separately. Others allow finance to consume them and start thinking of everything as if it were a transaction. Which has become more consumed by their occupation?

Where are you going to fall? Are you a two year "see what it's like" person? Are you a life-long financier? Are you just doing it for the money and fund your outside lifestyle? Whatever you may be, wear your title with pride and do not judge others. Two-year trials are made fun of as "quitters" or "weak." Lifers are known as "losers" or "souless." Those doing it for the money only are known as "sellouts" or "whores."

None of these motives for being in finance are "right' or "wrong" in themselves. Really every occupation has their array of motives. Clearly I've made my choice. I spent my free time writing, reading and thinking about trading. My passion is the markets and my personality is competitive. I know this makes me happy. I know plenty of people who aren't happy in their current role and have plenty of choices that would make them happier. Don't let finance be your default. Make it a choice.

New Analysts

The flood of new analysts have been unleashed onto Wall Street. Various training programs have been over for a while and many have started to get acclimated to their new life. Some things I've noticed over the years that I'd like to comment on:

1) You may think you're hot stuff, but you're not. Don't go bragging about how good you are to your co-workers, it will just annoy them. That goes double when you're out with friends. Triple if your friends aren't in banking.

2) Spend wisely. Just because you're now in banking doesn't guarantee anything. Things change, people get fired. Tread lightly. That doesn't mean you shouldn't enjoy yourself (definitely enjoy yourself), but always have an out in case things don't work out. I've seen too many lives devastated by this mistake.

3) Be nice to those who support you! Being an asshole to you middle office, back office, trading assitants, publication people, admins, etc. won't get you anywhere. In fact, it's the support of these people that you'll need to get things done most efficiently. Your work is only as good as those who support it. Remember that they can make your life more difficult, why incite it?

4) Remember the traits of others that train you and that you admire. You will want to shape your career and work persona toward those whom you admire.

5) Have fun! Don't just work all the time. I've seen too many bankers (not to be racist, but this is especially true of the Asian nerd variety) who don't have some fun once in a while.

6) Take risk! You'll never get noticed if you don't put yourself out there. Sometimes you'll get stuff wrong. That's okay, at least you tried.

7) Meet people. Get your name out there. Make sure that the senior people in your area know who you are. You won't regret it.

8) Band together. Make friends with people in your class and a few classes above and below you. Eventually you and your friends will be running Wall Street (it's a small small world, and everyone knows everyone, trust me). It'll pay to know as many desk-heads as possible.

9) Have patience. You won't know everything at once, and you won't be doing everything you want right from the start. It's good that you want to, but trust that it will come when you're ready.

As a newbie on Wall Street your chances of survival are fairly slim. Those who make it to be the big-shots on the Street are few and far between. We're always looking for that new guy who can come and take our place. As I always say, I'm not doing my job if I don't train you to take my post when I take the next job up. Come and get it.

Market Timing the Job Market

For anyone following the industry, it is clear that Wall Street has had some tough times. Unfortunately for those looking for jobs right now, it may be the worst time ever to be looking for that new job. A lot of layoffs are occurring in the structured credit and mortgage markets. Even some investment banking / M&A areas are slowing their hiring in anticipation of a downturn. That means less hiring in equity capital markets as well. So what are you to do if you find yourself in the unfortunate position of looking for a job now?

I think it would be tougher than usual, but all the same tricks apply. Find a good headhunter, leverage connections and be persistent. All the same, you may find a lot of places have hiring freezes on right now. What do you do then? Get relevant experience. If it's an option, go get a masters degree for a year or something (I'm sure the job market will pick back up soon enough, it always does). Get work experience at a smaller boutique firm. Try working for an analytics company or even a consulting company. There are lots of options if you are willing to use a detour as a way of keeping your career moving forward.

Have patience. Even if things look bleak now, the bonus cycle comes up in 3-6 months. There's always a frenzy at that time. After that the summer comes again for new hires. For those without the luxury of just waiting, get a job in a somewhat relevant field. In your future interviews you can always state that you found your job because Wall Street was in the credit debacle of 2007 when you were first looking. Once the cycle reverses, you can find a job and seem like you were at least keeping with the times in the market, despite the fact that your unfortunate timing kept you from getting that first analyst or associate gig.

Good luck.

Speak Up

People often complain about how they "knew" something beforehand. For those of you who don't know the first friday of every month is "payroll day." It's the day when the Non-Farm Payrolls number and unemployment figures come out. Days like this a lot of people complain about how they "knew" something (like the payroll number coming out low) but didn't act on it.

Here's some advice--quit whining. If you have something to say, fucking say it. In fact, even better, act on it. If you have a book you can trade on, buy something. If you don't, at least start a betting pool for "closest to the pin." I made my name as a junior guy by winning betting pools. I won enough betting pools on economic numbers that people decided I might make a pretty good macro trader. At one point I had a bunch of people together making a daily pool on which way the markets would go that day. It's the next best thing to trading a book.

This doesn't only hold to market related folks. If you're in banking and you "know" something. Speak up! Let your manger or senior folks know. Yes, you're sticking your head out there, but as we always say, "no risk, no reward." Stick your head out there and prove that you've got what it takes to be a decision-maker. Show that you're not some idiot whose only useful role is punching numbers into a spreadsheet and drafting power point presentations. You only seem like a douche-bag if you whine about knowing it afterwards.

Some of you might say that you've got no upside because your manager or seniors won't give you credit anyway. Well, if that's the case you're both working for the wrong people and probably not seeing the long term view. If you keep getting these calls right people can't help but listen to you in the long run. Just get it right and get it out there. Your credibility will build.

Nothing is more annoying than someone who whines about how they should have done something because they "knew" it beforehand. Quit whining and start acting.

End of the Internship

For those of you who may be interns, congratulations to the end of your internship. I think most programs are finished by now (if not they're certainly finishing up).

Some comments on how the end of the internship process is/was handled.

Hopefully you will keep in touch with many/most of your fellow interns. They are the beginning of your Wall Street peer network.

If you got an offer, be careful about telling others--they may or may not have gotten theirs--but don't lie about it. I'll leave it up to you to find a clever way around that problem. Certainly don't boast about it.

Some firms tell the interns on their last day whether or not they get an offer. If you don't get the offer, that's not an invitation to leave immediately. The people you met there can still provide valuable advice and references in the future. Leaving early makes you seem like a cop-out and/or a sell-out (even if you already are a sell out by going into finance).

Collect business cards, if you hadn't already. You may want to contact these people later in your career. I had contacted people from my first internship two years later. They not only still remembered me, but they provided advice I could not have received elsewhere.

Even if you didn't get an offer, smile--you still went through a Wall Street internship, which puts you one step ahead of half the people who will be applying for a full-time job in the fall.

Go have some fun. You just made a good chunk of money in your internship. You should get your intern friends together and go out for a night. Celebrate your success!

Look forward to seeing a bunch of you around next summer.

Ah For Good Advice

Love this guy's blog. He gives some good advice here:

http://www.informationarbitrage.com/2007/08/making-your-mar.html

I'd write more about this on my own, but markets are crazy these days. All in due time.

Mix and Match

So rumors abound these days about various companies (e.g. Countrywide) nearing default. Suddenly it came to mind for me to use some of my past training as a credit quant. I'm sure you know by now, I trade primarily fixed income and currencies with some dabbling in commodities. Why am I looking at credit? Well, the credit problem is clearly driving all markets right now, but there's more to it than that. I was looking at specific credits (specifically an old model I once looked at on ABCP default rates). Stuff I can't trade at all.

So why spend time on this? Well, when it comes down to it more information helps everyone. As part of the team, if I can help anyone in the company, that's money in the bank (quite literally. . .unfortunately not money in my pocket though). Eventually I wouldn't be surprised to find myself trading a bit of credit as well. You can never foresee your career path, so there's no reason to limit your view at any time. If you're working in one area but you've found something interesting somewhere else, take some time to pursue it. Even if it's on your own time (as if often will be), that knowledge and that curiosity will serve you well in some role in the future. Who knows, it might even let you make a cross-division connection, which is how these large institutions justify their existence. People who can mix and match information and resources from across an organization are the ones who become leaders of organizations.

"Big picture, mate."

Analyst/Associate Training

I've been hearing a lot of negativity about training, not only from my own bank but from people in other banks as well. I find this to be quite a misfortune. Training ought to be a real treat for hungry analysts and associates.

The two most common complaints I hear are "they try to go through so much material I can't possibly learn it all" and "I'm never going to use this anyway, so I don't care." These are both shitty ways to look at training. First of all, if there's too much material, look over it at night instead of partying every night. I know training's all about partying while life is good (I did it too, but trust me, life gets better), but if that's the case you can't complain about the information overload. Second, there is no such thing as useless information.

The key to taking advantage of training is paying full attention during class (stop playing those sudoku puzzles during class, quit checking your e-mail or facebook accounts, don't read your favorite magazine during class) and just soak up everything you can. You might not remember everything five years later, but you might remember a lot of it. I know the only time I've ever learned accounting is from training, but I can still identify cashflow statements, balance sheets and income statements as well as produce one from a combination of the others. Do I use this in my day job? No. Do I think it's useful information? YES! If I ever start a company I'll certainly need to know my accounting, and when I talk to the credit folks it helps to be able to speak their language. I even sometimes help the credit analysts with their analysis when the new folks don't remember some of the details. You don't necessarily have to study every detail if it's not going to be terribly important for your job, but you should certainly learn what you can.

That being said, as a new analyst or associate you never know where you career will take you. You might be going into M&A, but five years down the line you might transfer to a credit structuring desk where it'll suddenly be real important that you know what a reverse repo is. You might be going into trading, but you may well end up at a PE firm having to deal with the operations and accounting of a firm. The skys the limit for a smart person who is open to learning everything.

Of course I've heard a good bit of support for training as well. I give kudos to the usual firms, Training the Street and Adkins, Matchett and Toy, for their good work again this year. I hear the TTS record for that formatting exercise was broken again this year (while I mock the formatting exercise because I believe good information is good information no matter how it is formatted, I have to admit aesthetics are a large part of the human experience and thus it is important to a good many respectable professions.). For those of you engaged in these trainings and topping the class, hats off to you.

Location, Location, Location

There was a comment I had not responded to for a while. I figured I should give it a proper post because I think the question lingers on many people's minds. The question was: "I am interested in your insight of New York versus London versus Asia. If given the opportunity to join a desk in any of those markets, which would you choose (and what desk)?"

There isn't really a clear distinction between NY, London and Asia markets. I assure you if you start in any of the above, you will eventually get the opportunity to go to the others if you are good. In fact, most top guys I know have traded in at least two of the three markets. While the London and Asia markets may seem particularly hot right now, these things are cyclical. In the long run it all evens out.

The desk also does not matter too much. Trading is trading, sales is sales, banking is banking. No matter what the underlying product is, the skill set learned is what is important. Be it risk management skill, sales and patience, cash flow modeling/forecasting or the art of the deal; it is that skill set that will be portable from job to job. I assure you none of the products are really all that complicated despite what people may try to tell you (and I've traded and modeled a lot of products).

Complacency

Everyone knows complacency kills, but too many people say it without really understanding what it means to have to combat complacency. Many people at the top of their game start to "play defense." Being the top dog suddenly means to them that they need to protect their methods from everyone else. Basically, they make sure others don't catch up to him. I think the modern world has shown this to be the wrong approach.

Here is the question. Let's say you sell a product that it might take the competition four years to be able to compete with. What do you do? Most companies sit on their great product for four years and make continuous upgrades to it. Sooner or later the next guy comes in with the next great thing making them obsolete. People in finance do the same thing. Some guy has a great valuation or pricing tool. They make the best prices for the street constantly. Then someone else comes up with the next great thing and they're left in the dust.

You might be reading this and saying "duh, that's how business works, through competition." I say to you, bullshit. That's not how business has to work. You can continue to innovate through your leadership. If your product is going to be the top dog for four years, make that product obsolete yourself in less than four years. One thing Steve Jobs is famous for is taking his i-pod mini and making it obsolete with his i-pod nano in 18 months. No one else would have the chops to make a product and then make it obsolete himself, but that's how you stay on top of the game.

Finance is largely the same. Do you have any clue how entrenched and complacent financial companies often are? Step in and innovate. Business leaders are innovators, and the first financial company to make a breakthrough in ways to raise capital will make a killing. Notice Goldman made their TrUE exchange? Everyone considers them to be on top of the capital raising game, but they are going to make the usual avenues of capital obsolete by producing the next new thing.

Don't sit around learning the ways of the old guard. Think about what the alternatives are. Do fixed income people really believe that spreadsheets are always going to be the way to go for pricing? Do equity guys really believe that there is no new innovation to be made in their markets? Do bankers really think that the old-school handshake and phone call will forever be the way the deal is struck? Things will change. Be the one who changes them, not the one who gets blindsided by the change.

Merits of "corpfin" and M&A

I feel like I've not taken enough time to elaborate on the merits of corporate finance and M&A (i-banking proper). Most of my posts have been about sales and trading (clearly because of my love of trading). There are significant reasons to enter corporate finance, though. I considered it for a while and decided I wasn't ready to make the necessary sacrifices, but there is a good reason to give it a shot.

Corporate finance and M&A are the best way to understand the workings of corporate america. Nowhere else will you learn more about how companies are structured, financed and operated. Once you've seen how a company keeps its books and understand what every line means, you can go operate your own company with a good bit of confidence that you know what you're doing. You may not know a thing about the daily operations, but you will know what makes a company tick. You will know how profits are built up, and you will know how to fund the company.

Why is all this that cool? Well, corporate finance folks can pretty much jump to any company and be useful (not true at all for traders, and moderately true for sales people). With the corporate finance background and a little bit of experience "on the ground" running a company, you make the perfect private equity person (you know a good bit of finance and a good bit of how to run the company. I, personally, think being in private equity would be a blast (hell, where else can you be the chairman of multiple companies?). Of course, you'd have to be one of the top guys in a private equity firm. I think being one of the analysts in a PE firm would be about as interesting as being in i-banking.

For all those of you who have decided i-banking is for you and you are willing to put in the hours, congratulations. You're in for a rough ride, but if you come out the other end still loving it I'm sure I'll see you at the top of the food chain.

Getting a Foot in the Door

One of the most common e-mail questions I get is of the following type:
"Hi my name is XXXXX. I go to a no name college, so I find it difficult to make my way into a bulge bracket firm. How would you suggest I approach my job search to maximize my chances of landing a job at a bulge bracket?"

I figured I'd address this question because it is, indeed, a difficult one. Bulge brackets recruit heavily at top schools. The banking and s&t analyst/associate programs are like a who's who in the Ivies. So how do others make it on the street? A lot of big shots on the street are from (forgive my wording) "lesser" schools.

Unfortunately I can't help on the i-banking side too much. One good thought is going to a boutique firm first. A lot of boutique firms pay more than bulge brackets anyway (Jeffries comes to mind). In addition, a lot of boutique guys end up in bulge brackets (that move is what we call a buy-out). There is a good reason as to why i-banking is much harder to get into for people who did not go to an Ivy league school. A big part of i-banking is relationships, and it's just fact that people at Ivy league schools are better connected. Better connected people eventually bring in the bigger deals (if you go to Harvard, how many CEOs do you think you'll know in 25 years as opposed to the guy who went to podunk university?).

On the s&t side it's more about your risk taking skill and intelligence. Granted it's still heavily Ivy league weighted, but there's more of an "equal-opportunity" ground here. As a few of my bosses have said, "the market is the great equalizer. You can think whatever you want, but your PnL tells all. The markets are very humbling."

A whole lot of people who are top sales/trading folks are not from Ivies. I think it's because they are often hungrier. They've got something to prove. The hungriest, I've found, are those who come from humble beginning and fought their way into an Ivy and onto the Street. Those guys are fierce. But anyway, I diverge. How do these guys get onto the desk? A whole lot of them started in middle office or risk, actually. That's where you learn how the guys take risk or make sales. It's where you learn the ropes, get a "street" education and figure out how to work the system.

Don't be afraid to take a middle office or risk position for a few years if you're interested in sales and trading. It's a great breeding ground, and the best always make it onto a desk. You just need to want it that much, have the patience necessary of a good front office guy and be aggressive in your climb to the top.

Vacations

Too many young people think it's not okay to take vacation. Those who do think it's okay to take vacation often take vacations that are too long. Let's think through the vacation conundrum. The firm will give 2-3 weeks vacation to a junior person. I'd say you probably should not use all of it, but using about two thirds of it is perfectly normal.

Those who take no vacation their first year I just think are being silly (hint: Nobody really cares and it just makes you look like a tool). Some firms will have people one level above you who think it's a right of passage to not take any vacation your first year. Again, that's silly. The real decision-makers don't really care. If the person directly above you is that petty, you should probably consider another area or another firm.

Every once in a while I do hear a new person take two weeks straight off to go on a trip to Europe or something. I'm afraid that makes you look like you don't care much for your job. Two weeks is a lot in this industry. A lot of the S&T side's VPs and up need to take a straight two weeks off for regulatory reasons, but there's little reason for a first year analyst/associate to be doing so. There may be some exceptions for people with family in Asia working in the US.


Another problem with young people is often not using the vacation as vacation. Always doing work doing vacation does not make you look cool, despite what you might think. Some of the senior people might have to check-in frequently to make sure everything is going smoothly, but junior people just waste time doing so. Unless the deal is absolutely contingent on your being there (which it's not if you're able to take vacation) or you run your own trading book, you probably don't need to check in much.

Take for vacations, enjoy them. Spend a couple of long weekends spending some of your exorbitant pay. You will look more mature for doing so.

Sales & Trading vs Banking

A friend and I were chatting about this again yesterday, and I thought I'd post some observations about the types of people I think flourish in each area. I'm stereotyping and generalizing, so clearly anything I say is just something I tend to see frequently. It's not "necessarily" true (so maybe I'm being irresponsible posting it, but I hope my blurb here keeps me out of trouble), but it's like saying "Asians are better at math." Well, there are plenty of Asians who suck at math. Demographically, however, Asians do tend to be better at math. If you don't believe me, take a walk on MIT's campus.

I'm a statistician, so everything I say just reflects that I think the characteristics I see are "more likely" to fit in each area. The best bankers, salespeople and traders are probably just really bloody smart. I believe often that the best of each world could often be a pretty good player in the other two worlds too. I don't believe they would be as happy.

So here goes my stereotyping of bankers vs traders. This is largely for entertainment purposes.

Bankers love money. The amount of money they make fuels their pride. Bankers tend to be the flashy type who loves to show off, albeit in a subtle and intelligent way, that they make a lot of dough. Traders love money too. But for them the money is really a scoreboard. It shows that I trade that much better than the next guy. Bankers are also competitive in this way, but not nearly as cut-throat. Bankers are happy with making a whole lot of money. Traders have to make more than the next guy, regardless of whether it's a lot or a little total cash.

Most junior bankers think of their roles as temporary. I-banking is a feeder industry. They train and pump out analysts for other industries. Most of the people in banking look at it as a stepping stone. Many don't even care to get promoted after 2 years. Junior traders tend to want to be in it for good. They want the high-octane life and swings in wealth. Bankers would rather receive the steady and high cashflow as they work. Traders want that one monster year.

Traders are gamblers. They see odds in everything and calculate on the fly. Bankers don't care as much about such minutiae. They would rather lock in their high pay and not take excessive risk. Traders see the potential upside in every risk and will take the risk if they like the upside. Even the job itself is a large risk.

Firms get rid of mediocre traders as fast as they can because mediocre traders can lose a lot of money. Firms don't get rid of bankers, even if they're mediocre, because they can still produce a baseline amount of money with their time. That being said, banks get rid of bankers who's pay is rising too quickly because the newbie can do the job almost as well. Seasoned traders are paid a premium because they have somehow survived the trial of time in the markets.

Bankers work hard when they need to, but frequently they don't want to think about work when they are off the job. Traders make everything about trading. They "lift offers" when they see a good discount at a store, they see the effect of commodity prices in everything they buy, and you are "done" when you propose anything they agree with. Most people find this annoying, especially bankers who often want nothing to do with their jobs outside of the office.

Bankers are naturally better looking. In my experience, however, bankers don't look as attractive after a few years in the industry. Sales and trading people tend not to deteriorate as quickly.

Bankers often have the motto "work hard, party hard." Traders often tell newbies to "work smart, not hard."

Bankers love to boast about how many hours they worked. "I worked 100 hours last week!" "Yea, well, I worked 110!" "I worked 120!" They like to show that they are that much more dedicated to their job than the next guy. Implicit in the dialog is "I worked more, so I will get paid more." Sales and trading folk like to boast about the guy they fucked on their last trade.

Bankers have longer attention spans and can work for a long time at a goal. The big deal is won over hundreds of hours and weeks of hard work. Traders are only as good as their last trade.

Bankers build relationships. They value their colleagues as their "team" build a lot of camaraderie in the office. Office politics plays a key role in everything. It is very much a relationship based business, both as a whole and within each office. Sales and trading people can love you one moment and hate you the next moment. You can have a guy yelling at you for fucking up, and the next moment ask you out to lunch. You always start with a clean slate the next day with your fellow salesperson/trader. How you treat each other at work seldom effects whether or not you really like each other.

I did not comment much about sales people. I feel like there is a lot more diversity in personality in sales. What I do see as a common thread is the ability to act nice no matter what. They have the ability, should they choose to use it, to be always friendly and jovial. Some of them are wicked smart, some of them are dumb as rocks. What really matters is that they can get people to like them in a very short period of time. They are also greedy, but they are perhaps not as cut-throat as bankers. They get paid a lot, which annoys traders. If you want to climb the ranks of a company quickly, sales is probably the way to go.

Hopefully this didn't seem too biased one way or another. Just my observations, hopefully somewhat amusing. Another amusing Traders vs Bankers vs Sales discussion is here:
http://www.informationarbitrage.com/2007/01/the_wall_street_1.html
For those of you who don't already read www.informationarbitrage.com, it's definitely worth your time. This guy's smarter than me, more experienced than me, and funnier than me. He's writes a very opinionated and intelligent blog. I'm claiming I'm not in competition because he comments on the markets, economy and society. I'm just helping people get onto Wall Street.

You and Pay

I had a rather interesting conversation with a co-worker of mine this week. He told me that at a previous job he found himself unhappy with his management and wanted to quit. He decided that a good way to do so would be to claim he felt he was underpaid. When he brought up to his manager that he felt this way and was going to resign, the manager asked how much would be enough. He picked a random number out of the air that seemed absurd to him (about three times his pay), and the manager said, "Done. It's your fault you didn't bring this up earlier."

He still quit shortly after that conversation, and he's quite happy right now.

The lesson here is that money comes easy on the street. I, myself, was offered a good 50% raise to move to another firm not long ago. I stayed. 50% when you're relatively junior looks like a lot, but it will look like a lot more when you are senior. Would you rather move for a 50k raise or a 250k raise later on? Yes, that assumes that the 250k raise does not come later on anyway. Well, something interesting you see in the investment banks is that the most senior people have spent some 20years at one firm or another. Yes, 20. That's a lot. You will see that a lot of the big-time senior hires (the ones poached for $1M+) spent some 20 years at another firm. You'll find your pay catches up to your market offers very quickly.

That being said, the other quality you find in senior people is that they live and breathe whatever it is they do. The senior i-bankers love the deal. They want to be talking about that new issue ALL THE TIME. The senior traders love the markets. They always talk about their market, and when they're not they're using market terms anyway ("They're willing to pay what for your house!? Oh, you have to hit that bid!"). I've said it before, and I'll probably say it many more times: You need to love what you do to advance in this industry. Otherwise it will just wear on you.

Love what you do, and the pay will come. It doesn't matter whether you choose to trade, do sales, i-banking, tech, quants, it doesn't really matter. There's upside everywhere if you're good at what you do. Trust me.

Quality of Life

Over the past week, I've had about eight people talk to me about their jobs in I-banking. Investment banking in it's pure form is quite a beast. At every level of the I-banking ladder, your life is pretty much consumed by your job. Every job has its downsides, but I think future I-bankers in particular should carefully consider the leap.

I've seen a few very successful people who went into I-banking and a lot of burn-outs. People simply do not appreciate how much of a toll it takes on your body to work 80-120 hours a week. Hell, even 60 hours a week can take a toll on you. My advice would be never to go into i-banking unless you've done an internship and enjoyed it, but that's not practicable for everyone. On a more practical note, I would say everyone I know who has been successful in I-banking can be characterized as obsessive. They are the type of people who can drive themselves to live for what they do. For example, former football players who just did nothing but football related things in college. These successful people can put aside all else to focus on the task at hand (in i-banking the task is making money). They, in fact, derive their self-worth from that particular task. You have to understand that you will not be in shape after a year in i-banking. You will, in fact, only eat and work. They will often fool you with the "work hard play hard" thing. Well, fact of the matter is they really don't play that hard. Traders and brokers play hard (just ask the brokers on thursday night). The i-bankers I can't even grab dinner with on a friday because they're "too busy working."

Think hard before you go into the abyss of I-banking. You will be in the office as soon as you wake up until you are ready for bed almost every day. Weekends will no longer exist, you will work both Saturdays and Sundays. It's a rough life, but some people love it.

Spreadsheet monkey, that funky monkey

So for all you future sprea. . . I mean, investment bankers out there, I provide to you an example "model." This link should let you download the Goldman model for Dillard's Inc. I removed the last names of the analysts and their phone numbers so that you eager folk can't e-mail or call them to harass them about a job. Let me know if this is helpful and if there are other things you would like to see posted.

Click on the link. After it redirects you, there should be a button near the bottom of the screen to download the spreadsheet.
http://www.savefile.com/files/750148