Wednesday, November 21, 2007

Surprising career choices

Many people have been asking me which job I ended up signing, so it is time to talk about it. I made a perhaps unusual choice. I signed with an investment bank instead of taking the offer from an established multi-billion dollar hedge fund. And I did this even though in terms of the internship, I enjoyed the work at the hedge fund more. Where shall I start to explain and justify myself? I myself was wondering once in a while if I am crazy. But I believe I did the right thing. Here's why.

Content and style of work: in terms of the style of working, the hedge fund was fantastic. It is quite creative and independent, and you never have to worry about selling anything or pleasing anyone. You just try to find out what is the right position to take, if there is a trade or not, and if yes, how to structure the trade in an intelligent way, and you are very free in terms of the opportunities you explore. Banking is very client driven, so obviously it will be more rigid and focused on selling products. The advantage of a bank is that one can move around quite easily and explore different areas, as well as switch desks or divisions. In a hedge fund, once you do merger arbitrage with European equities, it is unlikely that you will ever do anything else. The freedom of moving around and seeing different asset classes and regions was one of the reasons the investment bank seemed more attractive to me

Macro versus micro: the specific job I would have been hired for at the hedge fund required going into deep details of the financial reports of companies, finding inefficiencies and mispricings in their assets and liabilities. The trades were then structured in a market neutral way, so as to take a position only on the mispricing, while hedging out all market risk. Unfortunately, market risk is exactly the part I find most interesting, while accounting is what I like the least. Again, I prefer to work in commodities, interest rates, FX or emerging markets, rather than reading annual reports. This was the strongest reason of all.

Continuation of business school: another attractive element of the Associate programme in a bank is the fact that you are part of a group of 40 associates and about 80 analysts, and have the first 2 months together in New York of training, living in Manhattan, enjoying New York, making lots of friends. If you want to make money in the future, it helps to know a lot of people in different areas, and especially as a career changer I felt that so far I have very few contacts and know very little. Judging from last summer, I know I will enjoy having a large peer group of people in the same situation as I am, as it will make the transition from lovely student life to hard work easier.

Let's see how it all works out. I am meeting with lots of first years these days to explain them what Sales & Trading is all about, so I will probably make a post about it soon. At least I will post my reading list on how to prepare. This is a very busy week with lots of assignments, plus the final exams are coming up, so I have no time to get bored!


-tvu said...

Congrats...I'm certain you're going to be happy and successful. But it doesn't hurt to have a "good luck" wish for you. hehe..

Alex said...

interesting career choice. good luck with IB!