Personally, I do not understand the huge draw to equity research. I’ve been involved in the space for the past 9 months and I have come to realize it is not for me. My question - if not equity research, then what? Lately I’ve been exploring private markets, alternative investments, investment consulting, portfolio construction, corporate treasury/development and so forth. I believe that public markets are efficient enough that most people will not find alpha through fundamental and/or technical research. Of course exceptions exist, and the EMH has some rough corners, but overall I do not see much value in trying to buck this trend. I think real value comes from tactical asset allocation strategies. I’m a second year MBA student whom is graduating in May. I take Level 2 in June and I’ve completed the CAIA. Overall I’m looking for insight and ideas. Also, for those who have specific ideas for me, I’m open to relocate anywhere.
What don’t you like about ER? How do you expect your job functions will change if you were an analyzing any of your listed “alternative investments” ?
I loved my time in corporate planning/business development before making the jump to ER. For me it really hit all the key points including exposure to senior executives, getting to work on M&A transactions and target screening, long term strategic planning, and a fair amount of market research. There was better work/life balance but also lower total compensation and a much flatter career trajectory than ER. I’d probably take a pay cut to go back to corp planning/bus dev if the right opportunity came along.
Alternative investments contain illiquid markets where information is private and asymmetric. Transaction costs are often larger. Greater alpha can be realized and many of the institutional money managers I’ve spoke with lately claim a the alt space is the new direction. There is a big difference between a DCF equity model and a macro economic long short strategy. I’m looking for alternatives to ER. I don’t wish to be persuaded to remain in space.
QuantJock, do you have a split personality? who are you talking to?
wake2000 Wrote: ------------------------------------------------------- > QuantJock, do you have a split personality? who > are you talking to? Huh?
how have u been in ER but a student at the same time ?
It’s for a portion of the school’s endowment. I cover 2 stocks.
i really like schools that allow students to run a portion of their endowment. good on u
Quant, what don’t you like about ER?
Quant - it all boils down to what your priorities are in life. Every career has its pluses and minuses, and you have to ask yourself what suits your objectives better.
QJ, have you thought about trading? It’s got all the components of ER, plus more. E.g, you actually get to make the decisions. It’s also a fair bit more exciting on a day-to-day basis. Also, keep in mind that you don’t need to “beat the market” to add value. A strategy that makes money, even if it underperforms the market, adds value if it has a low correlation to the rest of your company’s portfolio.
thommo77 Wrote: ------------------------------------------------------- > Quant, what don’t you like about ER? ER is just too narrow for me. I focus on two stocks in two sectors within the midcap space. Companies that have a market cap of $500M will have half a dozen analysts covering them. When I evaluate new ideas, I often wonder what I will find that the other six have not. Furthermore, have you ever taken a look at earnings estimates? The six analysts on the company will be within pennies of each others estimates. If you really think about it, ER is almost self fulfilling. Management will release guidance, analysts will project future earnings, and the free cash flows will be discounted at the WACC to find a present value. The CFA loves to say TA doesn’t work due to self fulfilling prophecy, but what is so different about FA? There are sleeping giants out there if you wish to take the time to turn over thousands of rocks, however I neither have the interest nor desire to spend the time. I’m not trying to knock ER, but I just feel it is not for me. I’m seeking other opportunities and I wish to bounce some ideas off those on AF.
I’m definitely not trying to persuade you one way or another-just curious what you hope is different. I’m under the impression that the type of analysis is similar (especially if you’re on the buy-side). QuantJock_MBA Wrote: ------------------------------------------------------- > Alternative investments contain illiquid markets > where information is private and asymmetric. > Transaction costs are often larger. > > Greater alpha can be realized and many of the > institutional money managers I’ve spoke with > lately claim a the alt space is the new > direction. > > There is a big difference between a DCF equity > model and a macro economic long short strategy. > > I’m looking for alternatives to ER. I don’t wish > to be persuaded to remain in space.
QuantJock_MBA Wrote: ------------------------------------------------------- > thommo77 Wrote: > -------------------------------------------------- > ----- > > Quant, what don’t you like about ER? > > > ER is just too narrow for me. I focus on two > stocks in two sectors within the midcap space. This is why I love working in real estate. Every deal i look at is unique and I invariably learn something new w/ every deal. As others have pointed out, this is somewhat of an opaque asset class, which makes the potential to outperform much greater. The analysis that goes into underwriting an acquisition is very basic, yet it’s a skill to be able to spot real estate that ‘works’ and come up with the appropriate price. My longest job tenure before my current job is 3 years - usually leave when there’s nothing left to learn. I’ve been here for 3 1/2 years and feel like I’m still at the bottom of the mountain, at the same time i’ve learned a ton in those 3 1/2 years. maybe getting on the buy side in an alt class like real estate would add some day to day excitement for you.
I like the insight jbaldyga
QuantJock_MBA Wrote: ------------------------------------------------------- > thommo77 Wrote: > -------------------------------------------------- > ----- > > Quant, what don’t you like about ER? > > > ER is just too narrow for me. I focus on two > stocks in two sectors within the midcap space. > Companies that have a market cap of $500M will > have half a dozen analysts covering them. When I > evaluate new ideas, I often wonder what I will > find that the other six have not. > > Furthermore, have you ever taken a look at > earnings estimates? The six analysts on the > company will be within pennies of each others > estimates. If you really think about it, ER is > almost self fulfilling. Management will release > guidance, analysts will project future earnings, > and the free cash flows will be discounted at the > WACC to find a present value. The CFA loves to > say TA doesn’t work due to self fulfilling > prophecy, but what is so different about FA? > > There are sleeping giants out there if you wish to > take the time to turn over thousands of rocks, > however I neither have the interest nor desire to > spend the time. > > I’m not trying to knock ER, but I just feel it is > not for me. I’m seeking other opportunities and I > wish to bounce some ideas off those on AF. Quant it appears you are talking about primarily sell side research here where I tend to agree with your observations. However, I think the buyside is much more dynamic which is why the majority of folks on the sellside look to leave and move to the buyside. On the buyside, there appears to be more opportunities to add value where you can research stocks that are not covered on the sellside.
Have you considered investment consulting? Seems like you are looking for variety and consultants are more generalists than specialists so the day to day has a good bit of variety. If you want to still do research you could look for a manager research spot at an investment consulting firm as well. There are consulting haters on here but it works for a lot of folks. My shop (one of the bigger ones) is big on the CFA and the CAIA is gaining support as well. MBA would be a plus but not required. You can pretty much pick your city (NY, LA, SF, CHI, ATL,BOS, etc) will all have an office for at least one of the bigger shops. Work averages 60 hrs a week and a good bit of travel but its pretty reasonable overall. Get to play golf a couple times a month, entertain clients a couple times a month. Pay is good but not outstanding. If you make the effort to network there are a lot of different paths you could transition to down the road. Just my 2 cents for an alternative
you should buy me a bottle of rosay Quant Jock
I would enjoy consulting. What is your advice on that? I spoke to someone at one of the big consulting firms and he mentioned that alternatives is where their direction is going as well. This particular individual’s firm recruits at top B Schools. What chance would a non top 10 B School be considered at one of the larger shops?