I just left research last week after being an associate for 2 years, for a great analyst I must add. I left voluntarily as I already had another job on the buy side lined up. Research isn’t about research, it is about selling and only selling, it isn’t about being honest about ratings. One of the main ways for a sell side analyst to get paid is by having management visits, so the last thing that an analyst wants to do is piss company management off by saying something in a report that the company may not like, so in general they are very complementary, they want to keep the access and they want to get paid. The only thing that the buy side trusts the sell side for is as an information conduit. You have a sell side analyst covering 15 companies and a buy side analyst responsible for 75+. The buy side analyst depends on the sell side analyst to be a conduit for info, that is about it because they cannot stay up with 75+ companies. The buyside knows that ratings are a joke, they discount 95% of what analysts say. They know the game, don’t think they are naive. It is so funny that so many of you think that equity research is different from sales, that is laughable, research is sales but it isn’t called sales. Analysts are on the road marketing or are in the home office making 20+ calls a day to the buy side, if that isn’t sales what is? You guys want to feel superior to the S&T staff, but what function of a bank has a major say as to whether an analyst gets hired, it is the S&T boys. Commissions are down and frankly I doubt ER will recover. It will always be there, but it will be smaller and the compensation will never be what it was like in the past. I have no idea why so many of you guys are dying to get into equity research unless you have no idea what actually goes on or have no idea how the game works. Plus after you have done it for 1+ years, it is boring as hell as you just do the same stuff over and over again. The glory days are over along with the pay. The only cool thing is being on CNBC and Fox Business, but after an analyst does that for the 20th time they don’t even care about that stuff anymore either.
I agree completely - The buy side discount the research material completely. I work at a hedge fund on the desk, and I can tell you that portfolio managers are putting on the opposite to what analysts are recommendation. You only have to look at Dick Bove (described by Bloomberg as a veteran analyst specialising in financial companies) saying that Citigroup was a once in a lifetime buy at $30. Citi now at $3 and Dick Bove is mysteriously quiet about it preferring to focus on BoA. All in all research is a suckers game - I would not touch it with a barge pole.
I have not worked in ER- But I have had people curse out loud when reading them. Goldman Sachs oil will hit $200 also comes to mind - These guys are complete clowns
Not dying to get into sell side. I wish i can skip the whole thing completely but I was told that is my best bet. I know a few associates and I’m not even interested in doing the whole stint to be honest. I would however like to be on the buy side researching companies for the sake of making money, as oppose to churning out meaningless reports day in and day out.
Well, I would estimate that at least 50% of ER associates have no desire to be analysts and they are all doing it as a gateway job to something else like the buyside, but knowing this, it is even harder for ER associates to get buy side jobs. Quite a few of the buy side people that I spoke to started out on the buys side, I would say that the vast majority of the buy side never worked on the sell side. So, the whole thing that you have to work on the sell side to get to the buyside is kind of BS in my opinion, but it is something pretty popular to tell people. I know Numi made the jump to PE from ER, but he is the extreme outlier. I know 50 bankers that are out of work and would love to go to PE or even back to IBing. The glory days of excess are over and finance will always be there, but it will never even get back to being close what it was the last 20 years. The reason the sell side is a gateway to the buyside is because you talk to them so much that you can develop relationships with them and if they like you enough then you might have an “in” to get a gig over there. Fact is I doubt anyone gets a job on the buyside without knowing someone, and if the sell side allows you develop relationships with the buyside than that can help you.
I agree for the most part but think that working on the sell side has value that you will appreciate once you make it to the buy side. You understand how the game is played better than people who never worked on the sell side – you know how management typically acts and how notes are written in a particular style, and it is easy to spot deviations from the norm. When you spot abnormalities, it can provide actionable opportunities for you as a buy side analyst. Working on the buy side is a lot more valuable, but working on the sell side for a couple of years is not worthless.
Could not agree more with thefork. I started a career in sell side 4 months ago and am hating it. This is not what I had expected. There is lack of satisfaction. Its really not the best thing to do and I fail to see its future. Hope to make a move soon, but, its difficult in times like these.
well, if a sellside analyst is well respected and actually is a go-to guy for the big buyside shops (hence big shareholders) like Fido, Wellington, MFS, CapRe, etc), that alone will get him the juice to set up management non-deal roadshows. I still think you need to see continued consolidation on the sellside though, as u never need more than 10 analysts actively covering a name, since thanks to Reg FD and easier access to data/information, there’s no way u can have 15+ analysts all adding value. But every analyst is different, and an associate’s experience will be framed significantly by the analyst they work for (you could make this argument for most jobs coming out of college/MBA probably). Some are total shills, some are totally intellectually honest, but most are somewhere in-between. The amazing thing is how the street has such a terrible memory, and that Analysts who get picks totally wrong (like Bove with C, or virtually all the Tech and Internet Analysts who had strong buys across the board in 2000) aren’t shown the door. Its like mediocre pro coaches who always seem to land on their feet even though its obvious they’re not very good. Still, from a career point of view I think sellside ER is probably the best job u can have since it can lead in many different directions from IB (I’ve seen ER associates move over to IB analysts), to buyside, up the ladder in sellside ER, and most importantly, into corporate finance gigs, and there’s pretty strong precedent of sellside analysts moving over to companies they covered (although this does feed into the whole conflict of interest and not wanting to have Hold or Sell ratings on coverage).
i think a lot of buyside analyst come from the sellside. I checked the bios. at least 50% have some sort of sellside experience. plus, i had an interview with the buyside who told me its advantageous to come from the sell side.
Agree with everything you guys have said. Last week, I pointed out a big error to an associate friend of an analyst whose research report was sent to me. Felt really good knowing that the analyst didn’t know what the hell he was talking about when trying to explain tight natural gas reservoirs. However, it looks like the analyst grossly overestimated reserves potential of a company because he has a relationship with management. So unethical…
Hopefully the company he overestimated was yours Ali 
kcin Wrote: ------------------------------------------------------- > Hopefully the company he overestimated was yours > Ali Was a shitty little private that was getting taken over by a small-cap, so the information is pretty material.
gaurav, Did you make it to Saudi Arabia ?
gaurav, Did you make it to Saudi Arabia ?
Glad that you remembered. Yeah, am In Riyadh for the last four months, appeared for Level 3 from here itself. Have covered two companies in Saudi, prepared small reports on four banks of qatar and quarterly statistical reports on the Saudi and GCC markets. Also, am involved in preparation of small daily report on global equity, commodities and currency markets (prepared a model which sources data from Bloomberg and performs the calculations). In addtion to this have prepared technical analysis based stock selection models for the GCC markets, though am not planning to make these technical models public. I would be glad to share my reports with you guys. But as you can reference from the earlier posts, the level of satisfaction is less in sell side and that too in this part of the world, where markets are highly sentiment based and technical analysis rules over fundamental analysis. So am looking for opportunities in corp finance or asset management. Drop me a mail at gaurav.aquarian@gmail.com and I shall send you the reports prepared by me till now or check the reports at http://www.falcom.com.sa/index_en.htm
I just completed 6 months as an Equity Researcher (sell side). This is my first job, and I can see that I agree practically with everything that is being said here. It does get boring after a time and if we try to be truthful nobody is interested. However, from personal experience I believe that Equity Research is a great place to learn (as a first job) and be creative in thinking. I have learned a great deal both by myself and from my senior colleagues. But I would rather move out after an year or so.
What are the most valuable skills that you’ve learned so far in your job?
- Attention to Detail 2. Interpretation of Management Interactions 3. Importance of Disclosures and Disclaimers 4. High Importance of Presentation and Fancy Writing in Sell Side Report 6. Practise of your financial knowledge and skills Some revelations which I have realized about the role 5. After all the Effort there are very few people who care to read your reports 6. Most of the information you work on are publicly available and already discounted for 7. You are not generating any direct revenue for the company
More or less agree with gaurav For me the biggest improvements came in 1. My understanding of Financial Statements 2. Quant (was always average in mathematics) 3. Application of financial theory Another thing in my firm is that, the analysts do not necessarily have to stick to one specific sector. This has a lot of drawbacks, but for for a newbie like me working with different sectors helped me get broader knowledge.
Agreed that Sell-side will get monotonous after a while . But, it is still one of your best bets of getting into a hedge fund or asset management down the line if you weren’t able to get a buyside gig straight out of college.