College Kids: What is Investment Banking?

Career Opportunities & Internships Investment Banking
1

<p>Investment banking internships are some of the most sought after positions by college students, but do college students even know what investment banking is? Other students around me are always taking about how much they would love to intern for a major bank, but when I ask them what they want to actually DO while interning there, they have no idea what the job entails. </p>

<p>When you mention investment banking to the average college student, they seem to render a mental image of one of those pre-electronic trading pits at the NYSE. I don't think a single person I've asked, college student or otherwise, has given me an accurate description of what an investment banking firm actually does as a business. </p>

<p>If you are in IB or a related field, please do not reply on this thread.</p>

2

<p>I’m still in highschool, but I picture someone sitting beside a computer 24/7 with a small desk/table that’s full of papers and sitting in one of those rolly chairs (dunno what they’re called)</p>

<p>and frantically making random changes on excel. </p>

<p>Would you like to describe the process to us/</p>

3

<p>It’s pretty true that a lot of people (including those who apply) don’t really know what IBD or S&T actually do. And for the record, when we are talking to you about it, don’t say “I want to do IBD” or “I want to do S&T” and not know what they are/do. It comes off poorly in my opinion.</p>

4

<p>college kids are supposed to be clueless. but the fact that some know what they want as a potential career puts them above the grade of some frat guys whose weekends span 4 of 7 days a week.
it’s not like anyone on the engineering forum can tell you what google really does (details of creating the engine) or the different responsibilities you’ll carry when you’re doing upstream/ downstream petroleum engineering.</p>

5

<p>I’m in high school. Just off of the top of my head:</p>

<p>Investment Banks help to raise money for a business that needs it, and also help orchestrate merges. They receive a “success” fee for every successful project.</p>

<p>That’s the branch I like the most.</p>

<p>And then they sell securities and stuff in other parts of it.</p>

<p>I really don’t know all that much.</p>

6

<p>Investment banks, according to what I’ve learned in finance so far (I’m in high school)…</p>

<p>1.Underwrite securities
2.Advise companies on mergers and acquisitions
3.(sometimes) advise people on non-traditional investment vehicles, (i.e. not stocks and bonds)</p>

<p>no idea if that’s completely correct, or if IBanks do way more than that</p>

7

<p>Im in HS and from what I understand, guys in institutional sales have a “book of business” which includes all of their clients. When these clients, usually institutions, are looking to invest money they go and meet with one of these guys, and tell them what they’re looking for. The institutional sales guys then go to the traders and tell them what they need for the client. Then the institutional sales guys take that and make a proposal for the client. I understand there is more that goes into this, but i take it this is the gist of it</p>

8

<p>I want to play…</p>

9

<p>Divisions within Investment Banks (Morgan Stanley, Goldman Sachs, Credit Suisse, JP Morgan, etc)</p>

<p>Investment Banking Division (IBD)
-Capital Markets - Create IPOs or creates bonds for companies.
-Mergers & Acquisitions - Company buying another company</p>

<p>Private Equity (PE)
-Buy a company, restructure it (fire people, optimize efficiency, etc), sell it.
-e.g. Toys R Us</p>

<p>Sales & Trading (S&T)
-Sales - Understand what is going on, pitch ideas to clients, clients trade on ideas and firm makes money through the transaction “spread”.
-Trading - Buys & sells for the client, e.g. Buys at 1.15 sells to client at 1.16 to make .01 x 1M shares, so makes that up in volume. Most people think traders trade using the bank’s money or their own account, this is not true, most traders buy and sell for the clients. In “Proprietary Trading” (prop trading), you trade with the bank’s money.</p>

<p>Investment Management
-Private Wealth Management - Broker for high net worth clients
-Asset Management - Trading using a University’s endowment, Gov/Corporate pensions, etc. Mostly invests in Equities (stocks) & Bonds
-Hedge Funds - Invests in a many more things, currencies, derivatives, etc.</p>

<p>Research
-Research stocks, bonds, economics, etc and tell people what to buy/sell/hold.</p>

<p>Finance
-Look at the bank’s internal financial status and help to make sure everything is working properly.</p>

<p>Operations
-Settle all trades by the traders, other stuff to support transactions.</p>

10

<p>To be precise, even though you are often buying for a client, you are risking the firms capital because its not often that you immediately unwind the side opposite the client. Furthermore, even though the sell-side is primarily client facing, pretty much every desk takes some form of proprietary positions (or punts). Purely prop trading divisions at banks have largely been decreased in size and risk.</p>

11

<p>investment bankers help to broker deals eg.</p>

<p>my mom’s company is selling the travel channel and it is being handled by Goldman Sachs who will recieve a cut of the billion</p>