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Dream job....turns out to be a dead industry

I obtained my CFA certification for the simple reason- I wanted to be an equity research analyst (sell side or buy side).

But now that I finally broke in, and have been here for some time, I realize how bad shape the industry is in.

Buy side keeps getting hit but shift to passive, while sell-side (where I am) faces structural challenges from MIFID-2, as well as declining volumes. My firm just laid off 4 teams last week, and this comes after a talk by our Director of Research that bank is “investing in research”

Now, I am trying to strategize what to do and how to do? What possible exit ops are there and what will be most fulfilling (has to be somewhat related to directly investing in public/private i.e. not IR)

Any suggestions? Are you guys looking at exit ops?

Look into Data Science / Machine Learning.  It’s a growing field and is the future of Finance & investing.

I hear ya bud.  ER was brutal; long hours for declining pay.  Unfortunately you may want to explore another career.  Marathon is on to something as I know a few people that have gone the data science route.  Not sure how the pay is, but the work-life seems a lot better.

I personally am trying my hand in a start-up PE fund so we’ll see how it goes.

dude i mentioned in another thread that I am taking programming classes.  learn now before the wave of programmers and AI come barreling in because by then it will be too late.

Be yourself. The world worships the original.

Really depends on the firm but SS I would generally stay away at this point, buy side seems ok if you can add value. 

you will never be as good as someone with a computer science background. It is just plain dumb to start learning programming as if youre gonna pick it up overnight.

CFABLACKBELT wrote:

I hear ya bud.  ER was brutal; long hours for declining pay.  Unfortunately you may want to explore another career.  Marathon is on to something as I know a few people that have gone the data science route.  Not sure how the pay is, but the work-life seems a lot better.

I personally am trying my hand in a start-up PE fund so we’ll see how it goes.

I am starting to think that PE is the one area with tailwinds instead of headwinds. I’m in a similar situation as the OP, except I don’t have long hours at all and my firm is very committed to the business and sector I cover. 

Eff, I was considering equity research as MBA internship and possibly career move. Maybe I’ll just stick to PE and network my around to find another firm post business school.

Ramos4rm, CFA, CAIA

StallionDis wrote:

you will never be as good as someone with a computer science background. It is just plain dumb to start learning programming as if youre gonna pick it up overnight.

+0.5… though, I don’t think it is ever to late to start learning. If you think like that, that’s when you know you’re dead in the water. 

"Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom." -Viktor Frankl

StallionDis wrote:

you will never be as good as someone with a computer science background. It is just plain dumb to start learning programming as if youre gonna pick it up overnight.

well that is obvious.  I or other finance folks are not taking some ~30 session programming classes to fight for jobs at Microsoft to be the next engineer to code Windows 11………We learn so that we can code simple formulas, automate few things, make rules for the computer to scan stocks with certain criteria we designate, or put trading instructions so we can get rid of execution traders who in my opinion is about as worthless as ……………

Look at analysts or PMs at top funds (top here is subjective) such as two sigma or citadel.   They have not only spectacular resumes - finance focused - but also have working knowledge of coding. 

Be yourself. The world worships the original.

^This.  With a lot of the nested logical functions we use in excel for modeling, it’s basically a mild form of coding.  I think some are just suggesting taking it a step further with actual coding.

been saying this for a while….

also +1 to benzo’s post

"You want a quote? Haven’t I written enough already???"

RIP

StallionDis wrote:

you will never be as good as someone with a computer science background. It is just plain dumb to start learning programming as if youre gonna pick it up overnight.

My advice would be to learn the basics of Data Science and how to code Machine Learning algorithms (which are not nearly as difficult as it might sound) and then combine that with your domain expertise (probably some form of Finance for most people here) – and that will help to keep you ahead of the curve.  There will always be stronger programmers out there – but they also likely won’t have the domain expertise and experience (which does still count for something).

Python and R have pretty sophisticated libraries that can do a lot of heavy lifting “under the hood” so that you can run Machine Learning algorithms with literally just a few lines of code.  It is important, though, to have a good grasp of the principles and mathematics that are underpinning those algorithms.

These days, really if you don’t continue to learn new skills you’ll eventually get ground under the wheel.

Ramos4rm wrote:

Eff, I was considering equity research as MBA internship and possibly career move. Maybe I’ll just stick to PE and network my around to find another firm post business school.

PE>Equity Research

"It is a rational thesis that we are all within a dream; it will be a mystical sanity to say that we are all awake." - G. K. Chesterton

So the two options that came to my head were:

1) Big Data/Data Aggregator startups for hedge funds

2) Private Equity

The first option is close to data science, but the only problem is I wont have any pre-requisites for it. I know someone who went there and their interview process was fairly long and comprehensive. I think i will need some time to build up my abilities in that area before I can actually realistically make that move. (and BTW i am brushing up on Python so I am trying to do this)

However, i think that the danger for my own job is a lot more short term. My boss isn’t II ranked and not the best analyst (but has a huge ego), so chances of him getting cut are pretty high.

The reason why I liked the second path better was that I  want to at least be in a somewhat finance-heavy job. Plus, I started looking into PE (and growth equity), and it seems like a really good way of generating good returns long term. BUT then everyone in IBD wants to PE, so it just becomes very difficult to make that transition (from EQR).

I agree with Isaiah_53_5 but EQR to PE is a tough move. Any advice on how I can actually make that move?

ER to PE is incredibly difficult.  The process is often very formulaic and often very pedigree driven.  As you put it, most deal guys in PE come from at some point IB and/or have some operational or corporate transactional background.  Worse, you sometimes can get boxed out of PE and regulated back to IB or consulting after your fund’s vintage is up.  

You might be able to square away an entry or early analyst role as you essentially have all of the same skill sets from EQR.  Aim for the industry you cover/know.  As you get older, it gets much harder because you’ll lack deal and/or operational experience, as well as, a network to source opportunities.  

Isaiah_53_5 wrote:

Ramos4rm wrote:

Eff, I was considering equity research as MBA internship and possibly career move. Maybe I’ll just stick to PE and network my around to find another firm post business school.

PE>Equity Research

Not a fair comparison….PE is sub category within an industry while equity research is a specific, very niche job.  You might want to compare:

PE vs HF

PE vs HF vs mutual funds

or you can compare jobs to PE VS HF:

private debt/private equity research VS public equity and public debt or distressed research or event driven research

private funding or marketing to sell your holdings VS Investor Relations or COO at hedge funds

Real estate acquisitions analyst VS public equity research or debt.

Be yourself. The world worships the original.

StallionDis wrote:

you will never be as good as someone with a computer science background. 

Well, that’s just vague and objectively wrong.

It’s whatever, just make it count.

- kDot

continuing from my previous post on possibly replacing traders with coding - these traders really really got to go….IN MY OPINION they are neither front office nor back office but they themselves insist they are part of the investment team….

Me: (after final talk with PM and other analysts) I still believe in the upside potential of this position due to blah blah looking at its competitors blah blah blah.

PM: Ok. I have thought about this quite a bit this week.. blah blah blah.  let’s go 2mm shares on this. today.  Hey trader, 2mm shares of ____.

Trader 1: Ok. but considering blah blah is there really a good upside to this?

Trader 2: been talking to my contacts at ____ and ____ (both are sell side traders) and these guys told me this company might be a bit you know _______.

PM:  No. I disagree. blah blah blah. Hey trader, Buy 2mm of ______.

Trader 1: Ok.  we bought 2mm at price of_____

The most annoying about traders:  they jump into the talk as if they know what they are talking about. They really want to be part of the investment team. 

I think the public and the media has wrong idea of “traders”

Yes, prop traders and traders of 80s, 90s, and 2000s are more like PM with discretion.  but today’s traders at buyside are not front office and sell side traders are no more and no less than sales people.  These guys need to go thanks to coding.

Be yourself. The world worships the original.

This is already happening, most of my firm’s counterparties are cutting back their trading division and automating everything right now. 

infinitybenzo wrote:

continuing from my previous post on possibly replacing traders with coding - these traders really really got to go….IN MY OPINION they are neither front office nor back office but they themselves insist they are part of the investment team….

Me: (after final talk with PM and other analysts) I still believe in the upside potential of this position due to blah blah looking at its competitors blah blah blah.

PM: Ok. I have thought about this quite a bit this week.. blah blah blah.  let’s go 2mm shares on this. today.  Hey trader, 2mm shares of ____.

Trader 1: Ok. but considering blah blah is there really a good upside to this?

Trader 2: been talking to my contacts at ____ and ____ (both are sell side traders) and these guys told me this company might be a bit you know _______.

PM:  No. I disagree. blah blah blah. Hey trader, Buy 2mm of ______.

Trader 1: Ok.  we bought 2mm at price of_____

The most annoying about traders:  they jump into the talk as if they know what they are talking about. They really want to be part of the investment team. 

I think the public and the media has wrong idea of “traders”

Yes, prop traders and traders of 80s, 90s, and 2000s are more like PM with discretion.  but today’s traders at buyside are not front office and sell side traders are no more and no less than sales people.  These guys need to go thanks to coding.

That’s the impression I have as well. They always want incremental information to take to the team and sound smart. I’ve always thought it was strange 

oh yeah they love to sound smart at the same time love this line himself “that guy tries too hard to sound smart”

klaudnine  you work at a bank?  where will all these sell side traders go now? do they have any other skill set other than clicking few buttons to buy and sell?

Be yourself. The world worships the original.

I’m at a fund, we trade through them, recently whole departments have been laid off lol, it’s not good. They got no transferrable experience really other than going to another place less ****ty doing similar stuff. Some move into more relationship management type of roles, everything is getting automated all you need is really just a few guys so clients can call you if there’s a problem, some do appreciate that convenience. 

I think the issue is when multiple PMs might want to do related trades, and a centralized execution function is necessary to prevent unintentional adverse effects to one portfolio or the other. Other than that though, the PM should be able to trade liquid products by himself with little effort. 

“The aliens on Mars cloned Hillary Clinton.” - Turd Furgeson

infinitybenzo wrote:

oh yeah they love to sound smart at the same time love this line himself “that guy tries too hard to sound smart”

klaudnine  you work at a bank?  where will all these sell side traders go now? do they have any other skill set other than clicking few buttons to buy and sell?

From what I’ve seen, The good traders on the sell side seem to be sales people, where they generate trades through relationships and information flow. Especially when people are dealing in smaller cap names and need discretion. There is also marketing and getting associated with certain names. But most seem to be former college athlets with  no transferable skills. 

rawraw wrote:

infinitybenzo wrote:

oh yeah they love to sound smart at the same time love this line himself “that guy tries too hard to sound smart”

klaudnine  you work at a bank?  where will all these sell side traders go now? do they have any other skill set other than clicking few buttons to buy and sell?

From what I’ve seen, The good traders on the sell side seem to be sales people, where they generate trades through relationships and information flow. Especially when people are dealing in smaller cap names and need discretion. There is also marketing and getting associated with certain names. But most seem to be former college athlets with  no transferable skills. 

bingo.  ”traders” do not exist on the sell side, they form relationships to sell strats that dudes with Phds created.

This is a great thread. Answered a ton of questions that I was trying to address. Was wondering if someone could elaborate on the details of some of the points discussed above re:

- Data Science: I get that this is related to mining data for info and then coming up with an investment rec, using technology more intensively. Could someone confirm if my understanding is correct?

- Data Science is a very broad term - what are some of the programs that would be helpful in working with “data science”. i’ve heard python is good and am trying to work on it. Any other suggestions?

- Any suggestions on how to learn the programs? I’m more of a classroom learner so taking online/in-class courses would be a lot more beneficial than trying to aimlessly do it by myself?

- Lastly, with re: to machine learning - completely agree that a lot of functions will get farmed out to the bots. Other than traders on the IM side, as discussed above, what are some other ways machine learning will change the face of IM?

Thanks - and def keep this thread going! Its great.

You should consider a move to asset management. i.e. working for a pension fund, insurance company, private bank, endowment, family office etc. It’s a growing part of the industry with a good work/life balance. Your experience in equity research should be applicable whether you are investing in public equities or other asset classes.

It might seem like a jump to go from equity research to assessing investment options for a pension fund/endowment but it’s not really. The investment process in analyzing a new private equity fund commitment or co-investment for example is quite similar to deciding whether to buy or sell a public equity. 

Marathon_runner wrote:

Look into Data Science / Machine Learning.  It’s a growing field and is the future of Finance & investing.

Either you know OP has a decent quant background or you are speaking out of your ass.Data Science ( such a stupid name ) and ML need extensive backgrounds in CS,Math and Statistical techniques let alone domain knowledge. By taking courses online you don’t become a date scientist. If by taking those courses you can win a Kaggle competition or brush up your github portfolio then do it by all means, but telling someone to work in ML is simply bad advice.