Wednesday, June 6, 2012

How Do I Get a Job on Wall Street?

An EPJ reader writes:
I’m in my 20s, have a BA in political sci. and am trying to get into the finance industry (I was about 6 credits from an econ minor). Right now the only types of firms that seem to even want to talk to me are remote prop trading firms (which are jobs I’d certainly take if the situation is right).I’m trading on my own and am trying to build up a track record for now. Where do you see the finance industry going and would you suggest anything to people trying to get into it (particularly those from the Austrian school)? I’m going back to grad school this year for a cert in finance (just to get something on my resume) with an eye towards rolling it into an MBA. I have mixed feelings about doing this as, while most people in the industry seem to have a business school background, there also seem to be a lot who don’t. I spoke to my futures broker in Chicago who said that the mood of the industry at the moment is fearful of regulatory requirements (I assume he's referring to the Volcker rule) and that I should probably bide my time, get an MBA and see if things change in 2-3 years. Any advice on this would be awesome.
I receive a lot of questions along this line and I have to tell you it is very, very difficult to get a job on Wall Street. There are many reasons for this.

First, Bernanke's roller coaster manipulation of the money supply makes it very difficult for Wall Street firms to plan, thus they are going to be very slow in hiring.

Second, the regulatory environment makes it extremely difficult for new firms to enter the industry, the banksters have it pretty much locked up. It's new firms that do much of the new hiring (Veronique de Rugy has an insightful article about this).

Third, everyone wants to work on Wall Street, so with the inability of new firms to open up, the banksters have the cream of the crop from which to make the few hires they make.

That said, if you are aggressive enough and sharp enough, I guess there still is a possibility. When I got my first job on Wall Street, I literally drove, on my day off once a week from my part-time job, three hours from Massachusetts into New York City. I literally walked in on firms without appointments having no clue as to who to see. I did this for most of a summer. I got lots and lots and lots of rejections, until I got a job. Now that I think back, everyone else at my firm seemed to have some kind of connection. I'm a seagull, but it is not for everyone.

There is the possibility of your starting up a small money management firm of your own, but most who do this, unless they really know what they are doing, will blow the money up. So unless you really are the next Warren Buffett and know it, don't even think about it.

The one area that seems to be less regulated is the venture capital and start-up sector, but you would really have to hustle to make it there and you will end up coming across a lot of flakes, small time con artists (as opposed to big time banksters) and you would have to be really sharp.

Bottom line: Given the regulatory moat that the banksters have put around Wall Street, to get in is very difficult.

I have Peter Schiff coming on the Robert Wenzel Show this Sunday, so I will ask him for his thoughts. I have other Wall Streeter's planned for future shows, and I will ask them, so listen into those shows.

If any Wall Street readers who read EPJ have any advice, please leave them in the comments.

21 comments:

  1. I work for a high networth wealth management firm in Texas (also in my 20s). There is really is no upward mobility here so I'm looking for other options. I'm learning SQL and going back to school for a computer science and management certficate (4 class) with the hope of finding a reporting/anlyst or MIS position. Any suggestions EPJ readers?

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    1. I don't mean to sound weird, but I find this really funny. I have been in the IT sector for 7 years and recently armed my MBA and trying to get into investment banking. Check out w3schools online for beginner SQL info. Email me at thanh.osu at Gmail dot com if you want to chat

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  2. Go into risk or audit. With the increase in regulatory requirements, risk management has become the bottleneck everywhere

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  3. Does anyone have any advice on how someone with an Econ undergrad who spent more time studying Mises and Murphy than Keynes and Krugman can market himself for a job? Should I highlight my Austrian credentials or hide them? Should I only be applying to think tanks and financial firms or are there other avenues available?

    (I'd like to do something entrepreneurial, but I haven't any capital or experience [or, I think, a strong enough idea muscle].)

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  4. I was a TA for a venture capital class in spring, a student presented a 5 minute summary of recent jobs growth law changes. It later struck me that multiple opportunities for providing services as intermediaries come up with these regulation changes. It may be worthwhile to watch the details of law changes and see what services can be provided. When laws are many and tyranny is descending many structural holes or opportunities are created. When political connections become important middle men gain. True the opportunities can be recognized by many but as often is the case knowledge of the fast changing spectrum of laws can yield benefits to the first movers. Check out Obama's jobs growth plan.

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  5. Don't do it. Follow Jim Roger's advice and get into farming.

    http://www.forbes.com/sites/steveforbes/2012/05/10/legendary-jim-rogers-brokers-going-broke-farmers-will-become-rich-very-rich/

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  6. "Bottom line: Given the regulatory moat that the banksters have put around Wall Street, to get in is very difficult."

    You've got to offer Wall Street firms something they need help with. Right now there is tremendous need for folks who understand market mechanics and regulation. Those that do can provide value in navigating Dodd Frank and other regulatory requirements.

    "Does anyone have any advice on how someone with an Econ undergrad who spent more time studying Mises and Murphy than Keynes and Krugman can market himself for a job? Should I highlight my Austrian credentials or hide them?"

    To be frank, Austrian understanding is irrelevant to getting a Wall Street type job, and depending on what you end up applying for, say research, then it may hinder your. At least where I am, the big question is what can you do with spreadsheets and VBA? What is your understanding of the mechanics associated with individual instruments (e.g. futures, options, swaps)? Do you know anything about VaR or at minimum do you understand basic fundamental statistical concepts? Alternatively, for credit analysis and the like, what is your understanding of financial statement analysis?

    In the long-run, yes, the Austrian analysis will give you a competitive advantage in understanding just what the heck is really going on, however, it is not sufficient for the basic skills needed for entry level folks to provide value to the firms they apply to.

    "Should I only be applying to think tanks and financial firms or are there other avenues available?"

    As one who once interned at DC's top liberalkochatarian think tank, let me suggest that they will provide you very few of the building blocks necessary to work with Wall Street, hedge funds, and the like. Financial firms are struggling, however, look deeply into commodity and energy trading. This includes oil, gas, gold etc, but also, look into electric power markets and natural gas markets.

    Any young aspiring market participant should look into electric power markets as they are highly challenging and interesting markets. Usually the lowest level, entry level trader deals in the hourly or real time market. This involves 12-hr shift work, but it's a great way to break into a far more fascinating industry than say fixed income or equities. The players in this industry include power marketers like Integrys, banks like Goldman Sachs, and utilities like PPL (utilities are less fussy about pedigree, ie Ivy League creds).

    Also, look into natural gas players like BP (big time energy trading operation, seem to be hiring all the time), and others. That said, in Houston there are a tremendous amount of energy trading jobs with energy companies and hedge funds. There's so much more to the trading world than trading equities and fixed income at some bank.

    Learn the fundamentals, block and tackle, and show value, and you'll get a job.

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  7. Anthony TrevisanJune 6, 2012 at 2:36 PM

    Please note, this is my personal experience. I make some generalizations so I could definitely be incorrect when looking at the entirety of the financial industry. I have only been in finance for 3+ years, so consider this when reading my comments.

    I am currently 26 and was working in clinical research but wanted to get into the financial sector back in 2008/9. I successfully made the move by applying to the Mountbatten Institute. This was by far one of the best decisions of my life, as it sent me to London for one year where I worked at Deutsche Bank, and then went on to Thailand to complete my MBA. After graduating, many of my classmates and I were able to come back and get jobs within finance. I now work for Moody's Investor Services in Manhattan. My classmates work at: Credit Suisse, Citi, Deutsche Bank, Morgan Stanley, Bloomberg, UBS, Black Rock, Barclays, etc… and not one of them had worked in finance previously.

    Note Split into to posts.

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  8. Anthony TrevisanJune 6, 2012 at 2:37 PM

    Post 2:

    This does not come without a few warnings:

    - You will NOT be getting a top level front office job. This is a very rough estimate, but I would guess that 95% of positions in finance are back office, middle office, and IT jobs. They pay well, but can be very monotonous.
    - As RW alluded to, the front office jobs are monopolized by the absolute top tier... Harvard, Duke, Yale graduates that were recruited directly from their colleges. These are the best and most exciting jobs in finance (traders, portfolio managers, financial analysts, etc), but they are extremely difficult to get.
    - Do not expect any employer loyalty at a big bank. I have seen/heard of cases where they wipe out hundreds of very good employees who have been with them longer than 10 years. They need to dump bloated salaries and hire young talent for cheap. I know of one Investment Bank that has cleaned house 3 times in the past 18 months.
    - The finance industry job hunt has changed dramatically since 2007. The street is still flooded with people that have a ton of experience and are willing to take pay cuts just to get a job. Employers can be extremely picky when hiring.
    - Even if you manage to get a front office job, your Austrian knowledge will not help much. They have existing models and processes that work off main stream assumptions. Prepare to feel frustrated when you look at a model you believe is incorrect, but nobody will consider your opinion since they all have 10+ years experience more than you.


    Make that 3 posts

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  9. Anthony TrevisanJune 6, 2012 at 2:38 PM

    Post 3

    - Specific to the Mountbatten Program: it was an absolutely amazing experience, but when you return after a year and a half abroad, prepare for permanent culture shock (I still have not adjusted and miss traveling every day). Additionally, the positions available can range from the most boring back office job to working on a trading floor with 1,000 other people.

    I now work in Project Management for Moody's, but have the option to pursue a few paths. I can work to become an analyst in Structured Finance, Corporate Finance, Sovereign Debt, etc. After 2 years, analysts are picked up by hedge funds, banks, equity groups, to analyze data and provide recommendations. I can transition into a job at a place like Bloomberg or ThomsonReuters. I have a few friends at Credit Suisse, Citi, UBS, and Deutsche Bank and we all talk about different job ops. Bottom line: I got my foot in the door through Mountbatten and am now creating options for myself.

    One last warning to all Austrian Economists. No one, and I mean NO ONE you work with will share your views on the economy. Ironically, hardly anyone in finance actually likes to talk economics. These are mostly middle/back office people who jumped at the high salary pre financial crisis. You are always 1-2 steps removed from the front office. People not in the front office usually only care about their small world and what they directly work with. That being said, if you get the chance to speak with someone in the front office, you can always impress them with having a ton more knowledge than most about macro econ, monetary policy, Fed history, etc. I would not recommend indicating that you support a return to the gold standard though. Overall, it is unlikely your job will have much to do with finance, more likely systems, operations, and compliance

    Finally, I should note that I am rather unhappy in my job. I am an entrepreneurial type person who would love to run my own company one day or work for a small/growing firm. Most of the big financial organizations are the very opposite of this... highly political and you feel like one tiny gear in a huge machine. You have very limited autonomy. I am currently trying to move into a commodities trading firm or will probably get out of finance all together. Once you understand how a free market should work, it makes it difficult to buy into the system and work for a giant firm that requires the government to survive.

    Sorry for the long winded response. I hope this helps. Feel free to email me any questions you may have: anthonytrevisan@gmail.com

    Good luck!

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  10. But if you must, Wall Street hires specialists and not generalists. Become an expert on a specific field ie: natural resources in Mongolia, farming in Africa, or industrial real estate in Brazil.

    Also, memorize the following books:
    How to Trade Stocks - Jesse Livermore
    Market Wizards - Jack Schwager
    New Market Wizards - Jack Schwager
    Stock Market Wizards - Jack Schwager
    Hedge Fund Market Wizards - Jack Schwager
    How to Make Money in Stocks - William O'Neil
    The Complete Turtle Trader - Michael Covel
    Pit Bull - Martin Schwartz
    Principals of Professional Speculation - Victor Sperendeo

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  11. Remote prop shops are far from jobs. They are usually scams and at best they are simply brokerage firms that offer you leverage.

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  12. Why does everyone want to get a job when they should really be looking for work. Figure out a way to add value. Since you understand Austrian economics and that the current system is headed for the crack-up boom then why skate there and not where the puck is going to be? You should get a copy of the 1998 book The Sovereign Individual: Mastering The Transition To The Information Age.

    For example, the entire nature of credit needs to be re-done. Whoever fixes this issue alone could easily become a multi-millionaire if not multi-billionaire. Largely, I think the middlemen (Wall Street & Govt.) are going to be increasingly cut out mostly because they do not add that much value and the economics of violence have changed.

    The only thing keeping the current system propped up is the fiat currency under-girding the fractional reserve banking system, without which Wall Street and finance in general would drastically shrink, and that monopoly is under siege by advancements in monetary evolution despite the great barriers to entry and moats like legal tender laws, AML/KYC, etc. Costs in terms of money, time and privacy are all coming down, for example look at BitCoin (www.weusecoins.com), despite the attempt to keep the costs propped up and massive credit liquidation from happening.

    If you want a particular lifestyle then you need to design it and you do not get to do that if you go work for some state-sponsored big firm and become their little bitch. Freedom is becoming an increasingly luxury good and it will probably be another decade or decade and a half before you can freeride off other's investment in freedom via the assassination markets (check Wikipedia) that will restrain the power of the State.

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  13. Q: I want to go work for the Evil Empire, how can I get my foot in the door?
    A: Why would you want to do a thing like that?

    Is this really an EPJ reader? Surprising...

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    1. There is a lot more to Wall Street than bad guys. Do you think Peter Schiff is part of the evil empire? Do you think Marc Rich is part of the evil empire?

      Conant what pristine industry do you work in?

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    2. Hahaha, right, because I have to work in a pristine industry for my comment to be relevant and meaningful. Nice ad hominem attempt there, bud.

      Don't even start with me, lightweight. You know nothing about me nor my background, nor the authority my observation does or does not carry.

      This is a blog that is highly critical of the Wall St world, that is highly cognizant of its dependency and love of routine bailouts and special privileges, of its intimate connections with the power elite and of its careless enabling of war and intervention of all kinds.

      And some "reader" sends Bob an e-mail begging for advice on how to make his big break?

      Come on! What on earth could possibly attract an Austrian, let alone a thinking, feeling human being, to this prison of a place? What good could be done here? What treasures could be hauled off from this sinking ship before the wreck creates a gaping vortex below and sucks you down with it?

      It is shameful, shameful, to even be on this blog asking such a question like, "How can I be a work-a-day slave and beneficiary of a corrupt, unoriginal place like Wall St?"

      This is supposed to be a blog read by the free-minded. People who think for themselves. People who have higher aspirations than to join into this defunct and dying system.

      Wall St is like government, largely because it increasingly IS government-- it succeeds by failing. And, like government, like the Fed, it can not possibly deliver the things it promises because of its very nature. The mechanical reality of Wall St is that it is a casino where the players enter and are destined to lose and the house slowly rakes them dry on turnover. That's the name of the game. Turnover.

      Why would you want to be a part of that when you know that's what it is?

      For more on this topic: http://valueprax.wordpress.com/2012/02/15/wall-street-mesmerized-perplexed-by-400-man-but-why-valueinvesting/

      To the OP... that's what you're getting in bed with. Stupidity. Rise above.


      (I speak in broad brushstrokes here. Please do not attempt to idiotically crucify me on a cross of specificity and exactitude, I know full well there are a few good firms and a few good men. Of course, that's my point. They're largely not playing the Wall St game but doing something different but related. They're exceptions to the rule. There will always be exceptions.)

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    3. Btw, anonymous guy asking for more personal details about me. That's rich.

      Get a life, sucker.

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    4. You called out Wall Street as the evil empire, it's not about names, it's about industries. I am not asking for personal details, such as where you live, just what industry you work in, since you seem pretty comfortable condemning Wall Street from your perch.

      What pristine industry do you work in?

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    5. I'm pretty sure that trading stocks is hardly being "a work-a-day slave and beneficiary of a corrupt, unoriginal place like Wall St"

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    6. Oh, do they trade stocks on Wall St?

      Fascinating!

      Anonymous, please tell me more about the mellifluous myriad ways in which they shuffle paper on Wall St! You're really opening my eyes here and getting me to completely rethink my criticism! I should think before I speak next time...

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  14. 1) Be specific about the role you want. If you don't know where you want to be, pick a role. Generalist roles are typically given to recent graduates and are difficult (but not impossible) to get if you aren't part of a recruiting class.

    2) Once you've chosen a role, start learning about it so you can speak intelligently about it. If you have no clue, hit up google or buy a vault guide to learn the basics.

    3) Network with professionals in that role. I personally cold call and cold e-mail. I do this all the time. Be sure to ask poignant and relevant questions. If/when you get someone on the phone, ask for 2 more people to speak with. I've had good success with this method. Just be specific in your approach and most people will respond. Remember, successful people love nothing more than to talk about their success and the higher up the food chain you go, the more this holds true.

    4) Network some more.

    5) Network.

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