The Future of Investment Banking

Career Opportunities & Internships Investment Banking
1

<p>I want to politely laugh at those who think that the financial sector (investment banking, to be more specific) is heading towards its demise and those who think that the current economic maelstrom is the metaphorical equivalent of an old fart on his deathbed. </p>

<p>Yes, the economy is in a recession. Yes, the financial markets are in a frenzy. Yes, investment banking is being adversely affected. Comps will go down. Hiring freezes are an almost guarantee. Job cuts are imminent (if not apparent). Frankly, the whole US economy is in deep trouble due to years of fiscal irresponsibility on the part of the private and public sector alike. This much is clear. And, to any of those who are seriously considering investment banking as a career, it is also very blatant that the hours are horrendous, the lifestyle often unbearable, the comp relatively very high (yes, even in today's markets), and the analyst work is generally tedious and "boring."</p>

<p>All of this has been brought to light, and in a sense magnified, with the recent events in the global markets. Rightfully so, I add, because the financial world is definitely in need of a reality check that Wall Street certainly is not some impregnable avenue to heaven.</p>

<p>However, it is even more important for advocates and naysayers alike to remember that the financial markets are inextricably tied to the economy. It's basic macroeconomics. If the economy is healthy, the financial sector (see: investment banking) is healthy. If the economy is poor, the financial sector will suffer as well. The economy is cyclical which means recessions, slowdowns, and downturns are all inevitable. Also inevitable, then, is economic growth and a resurgence of the financial markets.</p>

<p>So, to all those uneducated and clearly ill-informed masochists who are too quick to celebrate the demise of the investment banking field (here's looking at you, barrons and laxattack), put away the party hats and swathe your mind around this thought: investment banking is a lucrative field that will not go away any time soon. And if you need me to explain to you why, obviously you have NO IDEA as to what investment banking is all about. </p>

<p>Please, let's stop talking about how investment banking is no longer relevant or how the hours are brutal. The first is false and the latter is a fact made clear multiple times. The bottom line is that those who are dedicated and truly interested in finance will continue to pursue a career in investment banking despite current market conditions and despite the grueling hours. Those who are inadequate and incapable of succeeding in a tough and competitive field will continue to point out the unglamorous aspects of the job and laugh when thousands of people lose their jobs a la BSC. But, if you're like most people and you're not one or the other, then my advice to you is to keep an open mind and go after the job that best suits you, finance or not. </p>

<p>OK, you can put your party hats back on.</p>

2

<p>Deep stuff.
Now a question: I want to go into finance, but I have been thinking more and more that I would like to do some traveling, at least for the first couple of years of my career. What do you suggest, for someone coming out of an Ivy League school (or the equivalent), as a career? I am interested to learn more about consulting, I have a friend who worked for Boston Consulting Group, and would travel to Dubai one day, and Singapore the next. How competitive is this market, what are the hours like and the salary? Thanks to all who reply.</p>

3

<p>I have significant DIRECT experience using IBanks for various projects. It was through that I learned two things--they don't know that much about the industry at hand and they have no regard to reality in pricing investments to be sold to the public or other institutions. That is why I don't like them. If they carried out their functions in an honest professional manner I would not have any problem with them. Time after time we have seen proof that that is the last thing they do. Thus they have run this country off a cliff several times in my lifetime without enough punishment to stop them from doing it again.</p>

<p>So explain to me how the two latest Wall Street debacles--the Dotcom and Mortgage mess were not all of the above?</p>

4

<p>
[quote]
I have significant DIRECT experience using IBanks for various projects.

[/quote]
</p>

<p>Your ignorance on the subject continues to astound me. Investment banks are not TurboTax kits you buy for $19.99 at the local Office Depot. Unless you work for an institutional client, there's no way you "use" investment banks for your own "projects"--that's not the way investment banks operate. The rest of your post just lost any ounce of credibility it might have had. </p>

<p>
[quote]
So explain to me how the two latest Wall Street debacles--the Dotcom and Mortgage mess were not all of the above?

[/quote]
</p>

<p>Either you're unintelligent or you're ignorant, but either way it tells me that you need to do some more research before you talk. You're like that kid in my philosophy class who didn't do the reading assignment and tries to incoherently talk his way out of things. Do your homework.</p>

<p>The Dotcom bust and subprime crisis were NOT "Wall Street debacles." They are economic problems caused by the private as well as the public sectors. </p>

<p>Oh, and before you post again, please think. Thanks.</p>

5

<p>When we used the Ibanks we hired them to market our assets in various formats--some went into public investment vehicles, some were debt financing deals, and others were outright asset sales. And yes idiot, i worked for one of the largest intitutional investors in the US (Hint: The Rock). What did you think I was talking about? IB guys were always calling and wining and dining us.</p>

<p>The prime movers behind both the Dotcom and current crisis were the investment banks. Do you even read the papers?</p>

6

<p>Man, You Guys Are Clearly Not In Sales!!!!</p>

7

<p>And to add insult we also "used" most of the top law firms so I can comment on those too if you'd like. Actually I have great respect for the work of most top law firms.</p>

8

<p>Thank you for explaining to all of us how the market suffers from cyclical volatility. This is new and exciting information, and is not at all the basis of every long term investing strategy of the last 50 years.</p>

<p>The dotcom bubble was started by Wall Street, although whether they're responsible or not is debatable (I don't think they are directly, although PWM people did a poor job advising clients). The subprime crisis was financed by Wall Street, and I agree that it's less their fault than it is the fault of shady mortgage companies, compromised appraisers and incoherent and mostly non-existent regulation.</p>

<p>Anyone who's going to do well in this industry knows that it will recover. The topic that's worth discussing is what the time frame is, and whether or not the actions of the Fed are setting us up for a depression. It's also worth wondering what's going to happen to the middle class--which over the last 10 years has been obliterated, and what has been left is the upper middle class and the lower middle class. Those making below <$70,000 a year for the last decade have arguably been in a depression, and it'll be interesting to see if a market recovery is tied to a surge in the middle class--or if it's another pseudo-bump prompted by the wealthy, which absolutely never lasts.</p>

<p>I mean, I'm pretty much a conservative, but even I recognize that Reagonomics and trickle-down economics is ridiculous. I'd like to see the next president significantly cut taxes for homes with AGIs of <$90,000, while enforcing taxes on HFs and repealing Bush cuts. It probably makes me sound like a liberal, but if there's one thing we've proven time and time again it's that we can only have a strong market and a strong economy simultaneously when the middle class is strong.</p>

<p>

This is spot-on.</p>

9

<p>The mortgage companies were supplied with funds and encouraged to write loans by the bankers. The appraisers and brokers were just pawns in the big money game. If they did not write the deals and OK them the bankers would find somebody else who would. The brokers and appraisers make peanuts compared to what the bankers made.</p>

<p>The good news</p>

<p>Bloomberg.com:</a> Worldwide</p>

<p>And the old news</p>

<p>Outlook:</a> Merrill's humiliation provides the City with a wake-up call - Business Comment, Business - Independent.co.uk</p>

10

<p>I feel like I am arguing with a third grader. </p>

<p>To blame the Dotcom bust and the mortgage crisis on Wall Street is like blaming Kennedy for Bay of Pigs: it's easy to point to the biggest name, when the truth is that there were multiple parties at fault. To say that Wall Street was the "prime mover" is also irrelevant. In fact, your whole "I dislike Wall Street" statement is irrelevant to my initial post. I could care less about your personal grudges with overworked analysts who probably get paid/laid more than you. Not my problem.</p>

<p>I do have a problem, however, when you attempt to deter future financiers by posting links that show how many jobs are going to be cut. Again, I elucidated in my first post that job cuts are inevitable in a market like this. The funny thing is that you seem to ignore the fact that other sectors and professions are going to have job losses as well; the financial sector is just feeling it right now because of their proximity to the mess.</p>

<p>Post all the links you want, barrons, but my initial point still stands: </p>

<p>
[quote]
The bottom line is that those who are dedicated and truly interested in finance will continue to pursue a career in investment banking despite current market conditions and despite the grueling hours. Those who are inadequate and incapable of succeeding in a tough and competitive field will continue to point out the unglamorous aspects of the job and laugh when thousands of people lose their jobs a la BSC. But, if you're like most people and you're not one or the other, then my advice to you is to keep an open mind and go after the job that best suits you, finance or not.

[/quote]
</p>

<p>And, yes, by "inadequate and incapable of succeeding" in investment banking, I am referring to you.</p>

11

<p>
[quote]
Thank you for explaining to all of us how the market suffers from cyclical volatility. This is new and exciting information, and is not at all the basis of every long term investing strategy of the last 50 years.

[/quote]
</p>

<p>Uh, real cute attempt at sarcasm. Sucks that you failed miserably.</p>

<p>If this is such common knowledge (which I agree it is), why are there people posting about the end of investment banking and the apocalypse of the financial markets?</p>

12

<p>Yes, life is judged by the paycheck and how often you get laid. Now who sounds like a third grader? You were totally proven wrong and now resort to childlike putdowns. You are embarrassing yourself. And I am referring to you.</p>

13

<p>Let's not stop at Dotcom and subprime barrons, we can go back to junk bonds, S&L, The Great Depression. The one constant in all of the above? Wall Street played a large part in causing all of the above.</p>

<p>I'd like to see some stricter regulation in the finance industry. If they're gonna get bailed out when they **** up, they'll play by the rules and they'll like it. I mean when an investment bank securitizes subprime mortgages and peddles them as anything other than junk rated, that's flat out fraud and a breach of investors' trust, who put their faith in those banks that they'll be honest with them.</p>

14

<p>Sorry, futurenyustudent, I can't take your posts seriously. You must've written "ibanking is overrated" like fifty times in three threads. You should consider getting it tatooed across your face; you have no credibility or image to protect anyway.</p>

<p>To all the Elliot Spitzer's of the world, nobody cares about your personal vendettas with Wall Street. Stick to the topic at hand, please.</p>

15

<p>Yeah, don't take historical precedent seriously. That's why we're in this mess in the first place.</p>

<p>If you think that subprime mortgage bonds deserve an AAA rating when those who are paying that mortgage have no documentation of income and have often financed 95% or even 105% of the value of their homes, I sincerely hope that you will NEVER become a financial analyst. And let me know who you are so that I don't hire you as my wealth manager. This isn't a vendetta.</p>

16

<p>Wait, so obviously you're not "good enough" to be an investment banker, but now you're showing the whole world that you're too much of a bloody idiot to be a lawyer? Oh god. My apologies to your unfortunate parents; what did they do in their past lives to deserve such an excuse of a child?</p>

<p>
[quote]
If you think that subprime mortgage bonds deserve an AAA rating when those who are paying that mortgage have no documentation of income and have often financed 95% or even 105% of the value of their homes, I sincerely hope that you NEVER become an investment banker.

[/quote]
</p>

<p>Where in the world did I say that mortage bonds or MBS deserved AAA ratings? Seriously. Where? What was the point of that? </p>

<p>Harvard Law? You are aiming too high. Have you thought about the nursery across the street?</p>

<hr>

<p>Again, my initial post still stands.</p>

17

<p>

How is being the prime mover in a failed market irrelevant to responsibility for the failed market? There's a good argument for why Wall Street isn't really responsible for the tech crash, but that's not it.</p>

18

<p>tetris, you're taking what I said out of context.</p>

<p>It's irrelevant in the sense that it has nothing to do with my initial post.</p>

19

<p>My point is if you think that Wall Street isn't to blame for the market failures in 29, 87, 97, 01 and again in 07-08, you need to have your head examined. And yes, telling me that a subprime mortgage bond is anything other than a junk bond IS a breach of trust. Investors trust our investment banks to be honest with them. Investors trust bond rating agencies to be honest with them. The SEC REQUIRES AND INSISTS that they be honest with investors, or else face huge fines. I hope the people who peddled those mortgage bonds as AAA papers are banned from the industry. Don't give me that "buyer beware" crap: when I buy a car, I expect the car to be in close to flawless working condition, safe and free of defect. And if there is a defect, the manufacturer damn well better fix it. If the car is unsafe, they damn well better let me know and fix whatever's making it unsafe. Otherwise, they'll find a process server at their door.</p>

<p>We can hold car manufacturers responsible for knowing peddling defective products, we can sue doctors for ****ing up a surgery, we can sue lawyers and accountants for malpractice. Please explain to me why investment professionals, who are selling a PRODUCT (i.e. the investment) shouldn't be held at least partly responsible for this mess. They may not be completely at fault, but they still peddled "AAA" papers that should have been rated junk in reality.</p>

<p>Believe whatever you'd like. But those who don't learn from history are doomed to repeat it.</p>

<p>Did I say I was good enough to be an investment banker? I said I dislike that industry in general.</p>

20

<p>And I STILL say that everything you write is irrelevant to the initial post. Good God. I am going to pray for you.</p>