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So You Think You Are Wall Street Material?

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So You Think You Are Wall Street Material?I promised to write some career advice for readers about getting a job on Wall Street. I decided first to write an article about whether you want to work on Wall Street or not. Not everyone is Wall Street material, and I am not referring to skills, but rather mentality and perseverance.

This article is not in anyway intended to offend any of my loyal readers, many of whom are analysts on the sell-side, at hedge or mutual funds, asset managers, wealth management etc. Anyway this post is focused on buyside so Ill let the sell-siders off easy today :) I hope people in the industry also find this interesting and can share their insights.

Let us first start off with what I would describe is the typical career path of a buyside analyst. This is by no means the only path or the path that everyone takes, but this is very typical especially the first two years in i-banking as described below.

Go to a top undergrad and get good grades

Work 2-3 years in i-banking at a top institution

Work another 2-3 years in private equity

Go and get a top MBA

Get a job at a hedge fund, investment management firm etc. You really decide at this point (except in this economy).

Maybe get a CFA along the way, start a family, and maybe even open your own hedge fund when you are in your mid-late 30s.

Sounds like a good plan, right?

Lets talk about the first two (sometimes three) in i-banking. Although I said the above, is not the only path that people take to get an analyst job, almost any firm requires the 2-3 years of investment banking.

While working as an investment banker, you will typically work 100 hour weeks. This is not an exaggeration. While I am lucky not to have worked in investment banking, I have countless friends who did. Some worked even more than 100 weeks.

Here is an example from my friend. His boss looked at his model on Friday at 5PM. He said he needed to totally re-do it. My friend finished fixing it up at 2am on Saturday morning. Another friend who worked for a big i-bank was interviewing at our firm. He had to check every time he got a new email because he needed to be back at his desk in 20 minutes if his boss needed him.

The reason firms want investment banking experience is because you do tons of financial modeling. This can or cannot make you a better investor, depending on how you use it. Modeling out cyclical companies for 2020 is nothing short of insanity IMHO.

You will typically be working on M&A or IPOs, sometimes you will do different things.

Lets do some math; there are 168 hours in a week. You will be at work 100 hours of that week. You have 68 hours left. That is less than 9.7 hours of sleep assuming you do nothing else, and does not account for work travel time. Imagine doing that for two years and you get a sense of the difficulty.

If you do the math of a salary around $150,000 a year, it is not even that good. You likely will get kicked out after two to three years of training to move into a different division or firm.

Many people go into private equity. Private equity is a little bit less intensive but is usually 70 hour weeks. PE depends a lot on what type of firm your at, but again lots of financial modeling and long hours.

MBA at top school. You have to score high on the GMATs which takes a lot of studying. The questions aren’t difficult, but the questions and answers are written in a way to make it confusing, you have to study to master it. Then two years in MBA with lots of studying, tests, papers etc. not much fun.

After that let’s say you move on to the most long term oriented value hedge fund. Your hours will still be pretty long. You will still need to be quick and do tons of research and keep on top of companies, even if your firm holds them for five years. You will have to listen to conference calls which are always before or after the market close. This means no 9-5.

There is a lot more I can write but I think I got the point across.

If you are still interested in joining Wall Street after reading this post, stay tuned for part II, where I give my best advice for landing a job. In the meantime check out ValueWalk’s career center, and Street of Walls has a lot of good reading material on private equity, investment banking, and hedge funds.

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