Monday, July 07, 2008

Last party of the MBA and the end of my blog

My friends, the MBA is over. The summer ball on Saturday was the final party at London Business School that I will attend in a long time. Of course, I may come back to Tattoo or Diwali next year, but it will not be the same anymore. I will miss those friends of mine who have left London for the Philippines, Italy, Russia, India and other places. Luckily, most of my friends remain in London, but we will hang out less than before.

This is not only the end of my MBA, but also the end of this blog. I want to keep writing, but since I now start my job I will want to have an anonymous blog so I can express my ideas freely without being associated with a specific bank - I would not be able to write what I really think. For the same reason, I have always maintained this blog rather than blogging on the official London business school blog - simply to write whatever I felt without feeling I need to censor my thoughts. I am starting my new job on Wednesday, starting with a training in New York, and then joining the trading floor in London in October, and therefore this is my last post.

Thank you all to those who have followed this blog and sent messages of support over the years. I wish you all the best in achieving your dreams. I close with my favourite quote by the Nigerian writer Ben Okri:

- Ben Okri -

All the best,

Saturday, July 05, 2008

Graduation from London Business School

Can you believe it? Angel Angie, who two years ago was blogging about her miseries in the consulting world, then came to London Business School to move to London and find a new career has graduated today! I had a beautiful day celebrating with my friends! You can see all you need to see from these pictures.

Monday, June 02, 2008

MBA finances

I am graduating in 4 weeks, and am quite impressed by the cash flows I projected before starting the MBA. Though there were lots of deviations along the way, I had estimated that I should end the MBA with a balance of approximately 0, and this is what happened. I am disclosing my "profit and loss statement" for the 21 months of my MBA at London Business School. It is obviously rounded and approximated to the nearest 1000, and I have omitted holidays, clothes shopping etc.

Overall, you can see that I have managed to end the MBA without any debt. Actually the balance is higher than what I show because in reality my husband found a good job here after a while and we split the rent and other living expenses. So if you are coming to London Business School and want to make estimates, here's my recommendation for adapting the numbers to your situation:

- obviously, most of you won't be lucky enough to be paid by McKinsey without obligation to return ;-)
- if you have a partner, expect him/her to find a job after 3-6 months and enjoy :-)
- most banks and consultancies pay the sign on bonus tax free, somehow my bank refused to, so it was taxed which makes a big difference unfortunately
- Rent is one very big factor which will change the outcome. Even though I came here with my husband, we started off sharing, since he didn't have a job yet and we also didn't find studios that were cheap enough (we were willing to pay up to 230 pounds per week). I only knew one other couple that did that for the first year, and I think we were the only ones who did that for the two years. It's not easy of course, but that way we paid a rent of 837 pounds per month instead of 1200-1500 that we would have had to pay for a studio/1bedroom in this area. There were a lot of couples who had no income (and no McKinsey sponsorship and no scholarship) but opted for a 350 per week 1 bedroom. Of course it is more comfortable, but then I would have had about 15,000 pounds debt upon graduation, and now I am debt free, which feels great

So you see what to focus on: on the income side, internship salary, scholarships and bonuses are very important (I did two internships and obviously earned more than others), on the cost side, rent in London is the major factor (given that tuition fees are beyond your control).

I hope this helps. All numbers are given in GBP.

Net Income
McKinsey living expenses 15,000
Scholarship for tuition 20,000
Internship salary (20 weeks) 22,000
Internship bonus (so far) 15,000
Second year project 2,500
Total income 74,500
(excludes around 7,000 GBP in outstanding summer bonus and relocation allowance)

Tuition fees 41,000
Rent 17,640
Living expenses 18,900
Bills, phone etc. 1,050
Transport 1,050
Sum 79,640

Tuesday, May 27, 2008

Israel trip

The MBA is drawing to a close - we will graduate in little more than 5 weeks - and I have saved the best for the end. I have just come back from one of the most amazing experiences of my MBA - a trip to Israel organised by some of my fellow students. There have been many trips organised from students for their classmates - to South Africa, Japan, India etc.. Though I had plans to go on most of them before the MBA, once here I realised there was very little time and also the trips were expensive. So finally I made it to one trip to a country that I had wanted to visit for many years but always felt afraid to visit due to the security situation and the tensions there. I am so glad I was able to go with the school trip because it is just a beautiful and very inspiring place. See for yourselves, here are some of my pictures from the trip:

Amazing Jerusalem

Walking on the Sea of Galilea

Hiking in the Negev desert


The Dead Sea

Tel Aviv

Sunday, May 11, 2008

London Business School wins hattrick in Paris

We won in 2006, we won in 2007, and we won again this weekend! London Business School rules European sports! We won the MBAT tournament of the top 15 European business schools for a third time this weekend!

I couldn't go this time, so thanks to Rusgirl for texting me from Paris. She won Rugby and Swimming, so congratulations to all the MBAs and Masters in Finance student who fought for the trophy once again! We are proud of you!!

Friday, May 09, 2008

McKinsey nightmare

I had a bad nightmare last night. I had just finished my MBA, and for some reason, I was starting back with McKinsey! I was at a welcome dinner in London, ready to start my associate training, and they told us there were different training locations where we would have to go the next day. The locations were London, New Jersey, and Frankfurt. We each had to draw a card that would tell us where we were bound. The director (who happened to be a serious German guy wearing a grey suit) handed out the cards. I told him I wanted to stay in London, that since I lived in London I saw no reason to fly of to some other place just to do a training. He said these were the rules and I would have to show flexibility as a consultant. I refused and finally managed to force him into giving me a card that gave me the right to stay in London. But he told me that I would regret this, that I had the wrong attitude to be a consultant, that I would have to show flexibility and be delighted being told to fly around. He would take my attitude into account at the next "people's performance committee".

After that, the dinner continued. I was sitting opposite an associate principal who I had actually known during my time there. She told me that she was pregnant and would probably going to stop working for a year when the baby came, because, after all, APs didn't earn that much and it wasn't worth it. Then suddenly I was just myself and told her that that was true, that I was very happy with my decision to become an investment banker, and that taking into account my bonus I would probably earn more than her as an Associate, hehehe.

Then I woke up, the sun was shining, and I was in London. I didn't have to fly away. I just took a long walk through Hyde Park, bought fresh juices at Wholefoods, came back home, read a book about 19th century explorers to Tibet, and then took a nap on my sofa. Life is good.

Wednesday, April 23, 2008

London Business School partnership with Hong Kong University

For those who want to gain a strong network and experience and Asia but are also looking for a back door entry into London Business School, you may be interested in the MBA program of the University of Hong Kong, HKU. Since last year, the is a partnership between HKU, London Business School and Columbia Business School. All MBA students at HKU do their first year core in Hong Kong, and then all transfer to either London Business School or Columbia Business School in New York for their final term, where they can take four to five electives.

Right now, we have 40 HKU students in our second year at London Business School. Together with Masters in Finance and MBA students, this brings our class size to about 450. I would imagine that for the purpose of finding a job in London, the programme is not ideal, since the last term of the MBA is quite a late moment to apply for jobs. However, that for those who plan on staying in East or South East Asia, this is a great opportunity to build up a network in Hong Kong and also get to study a term in London or New York.

Since I have many readers from Asia, I thought you may be interested.

Monday, April 21, 2008

Back on campus for the final showdown

It had to happen, the final term of my MBA has arrived! Only 10 more weeks of school, then we're officially done with the MBA! I have just come back home from my first day at school, and this term will be hard work and very exciting and enjoyable!

I started the day running in Regent's Park, and then doing readings for my International Finance class with professor Raman Uppal tomorrow. The first sessions will focus on the behaviour of exchange rates and hedging decisions of multinational firms. I have already taken a class on currency markets and on derivatives, as well as having worked in sales & trading last summer, so I am taking this class mainly because I heard the professor is brilliant and inspiring, and also to get a more qualitative high-level view of hedging and financial markets.

During spring break, I had the chance to read two of the books the professor had recommended to contemplate what is important to us in life (see previous post). I chose "Tuesdays with Morrie", a book on a wise college professor who chose to share advice and experience and spend time with all those who were close to him before his death, rather than hiding away in shame. The book deals with how much pain is caused by the taboo around death, and by the hypocrisy of people who live life pretending they will not die. The book shows how relieved relatives and friends are when someone puts the cards on the table and actively says goodbye before dying. It's a simple book, but a beautiful story nonetheless. The second book I chose was "Three Cups of Tea", about an American hiker in North Pakistan who was so touched by the hospitality of Balti villagers after an accident he suffered while climbing K2, that he dedicated his life to building free schools in remote mountain regions of Pakistan and Afghanistan, villages neglected by the central governments. The guy's dedication and his achievements in inspiring illiterate children are admirable, and I particularly enjoyed this book.

In the afternoon, I went to the library to do readings for my Credit Risk class, but bumped into too many people I hadn't talked to in a long time - people from my stream that I haven't seen since the first year, some friends who have just returned from exchange, some MBA 2010s that I know from my previous life as a McKinsey consultant and so on and so forth. No time to read in the end, but it was great to catch up with people, and it was a sunny day, so everybody was cheerful and happy. I also arranged for a Chinese lunch tomorrow with one of my great friends here who just returned from exchange in the US, I am happy she is back. I will be working with her and two other girls in a team for the International Finance class, it will be fun to have a group of four girls who are also close friends to work on the cases. We will disguise lunches and dinners as important working meetings and thus enjoy ourselves :-)).

Then I had the Credit Risk evening class. I chose the evening over the morning class so I can always go away on weekend trips without having to be back on Monday mornings :-). It's tough sitting in class till 9pm but what can you do... So far the class is very good and I am learning a lot. Credit Risk modeling is not easy, so you really need a teacher who explains well. I took the class because I heard Viral Acharya is one of the best finance professors, and was at first upset when I heard that the first three lectures would be taught by Professor Stephen Schaefer instead. After attending the first lecture, however, I am very happy, Professor Schaefer explains very well and goes step by step, we covered a lot of material but it seemed much more manageable than what I had feared after looking at the course materials, so I'm relieved.

On Wednesday, I will have my first Financial Engineering and Risk Management class with Professor Suleyman Basak, which I am also looking forward to, although the course material suggests it will be hard core. I learned a lot in his Fixed Income class though, so I expect that I will understand the material much better after attending the lectures. Lots of work ahead! It doesn't help that I am going on a 10-day trip again during term next month (I did the same last term and catching up was brutal!), it will be very tough to catch up with all the assignments afterwards, but I just had to take advantage of going abroad with friends once more, since I will start work straight after graduation.

With all this excitement, unfortunately it looks like time will race ahead even faster than before, and in no time the MBA will be over. At least I will know that I have thorougly enjoyed the experience, and that coming to London was the best decision I ever made. But it is still too early to talk like this, I am still a student :-).

Saturday, April 12, 2008

The Mood in the City

The mood in London financial markets is not good. House prices are going downtown, and with them the British pound (great for me and all the poor foreign tenants, but apparently bad for the majority). Investment bankers within UBS are looking around for jobs, and the Royal Bank of Scotland is sweeping ABN Amro's trading floor clean with incredible lack of style:

ABN’s structured credit traders were apparently told on Thursday that they should report to RBS’ London office in preparation for a move there on Monday. Terminals needed to be checked and such like. And when they got there… they were all fired (full story).

Luckily, the British have a great sense of humour, and I couldn't stop laughing at this economic assessment of London 2010 from the price of everything blog:

London, April 2010 – Wall Street firms have just announced their latest results for FY 2009;

300 million staff have been “written down”, leaving just two (Sid and Doris Bonkers) to manage the investment banks’ remaining worldwide debt, equity, merger and advisory, securitisation, syndication and prime brokerage businesses.

Marti Peeps, sole analyst at the last remaining research house, Teletext, welcomed the results as “a bold step in the face of ongoing bad debt provisioning,” though conceded that the City’s newly “rightsized” payroll might struggle to take on board the burgeoning supply of new issuance, namely the packet of Walkers Crisps rumoured to be hitting the primary market in late summer 2012.Hopes for a recovery in Wall Street earnings have for several quarters hinged on the prospects for the successful completion of a 40p private placement of a bag of Salt and Vinegar flavour crisps on behalf of the Walkers Crisps Company. Lead underwriters JPCitigroupMerrill, a subsidiary of the US government, and Northern Rock SocGen KFW Nomura, a wholly owned subsidiary of Tesco plc (Neasden branch), are rumoured to have “solid” interest for the underwriting, most notably from Asia, itself a subsidiary of Texas Pacific Group, but declined to go into further detail.


(click here for pdf version). Enjoy!

Wednesday, April 02, 2008

People are starting to leave

Tonight I attended the second good bye party of classmates in a matter of 3 days. Due to the flexibility of our programme, the MBA at London Business School ends in a gradual fashion; there are people I haven't seen since mid-December, who have been working now in Dubai, Hong Kong, New York, or London since January. There are people who finished up last week and are moving back to Bombay or Hong Kong tomorrow. And there are people who are luckily staying to work in London, but will travel around the world for the next three months, while some of us continue their studies.

The good bye evenings are a great way of catching up with people - to be honest I have not been very sociable through the last term. On one hand, I simply read and thought a lot over Christmas and enjoyed staying at home reading rather than going out - probably I needed to relax. Then I traveled through Southeast Asia and Scotland for 3 weeks during term and struggled to catch up. And then I prepared for the Fixed Income Exam, which was quite something. It is only since a week that I have come out of this haze and am "reintegrating into society", and I must say, I like it :-). As I just said, the goodbye evenings are great, especially since I am not leaving. All my best friends are staying in London at least for the next 2 or 3 years anyway, so there is nothing to be sad about.

It will be worse in 3 years when people start leaving to their home countries to found families, because I do not have a home to go to in the sense that others do, who go abroad only to boost their credentials for a few years and then happily return home. It is wonderful how people from India or Italy are sure that in the end they will surely go back to their home countries. Although Hamburg is a great place with a high living standard, I feel too far removed now in terms of mentality to consider going back to Germany. Working at McKinsey already alienated me from the general discourse of the country, and since living in London I feel more and more estranged at the media and the opinions I encounter. I am so upset they do not fix the education system, among many other things that need to be fixed, and that the way the system was designed after the war makes any changes impossible. Anyway, I digress. The point is that for now, I am happy that all my friends are staying in London for the next years, and by the time some leave, I assume for all who leave there are more to come to London. That's the beauty of living in the greatest city in the world :-).

I have also realized over the last week how many great people I have come to know over the last 18 months. These days, people are especially nice because many are sentimental, and because some know they won't see each other anymore, so the conversations get less automized and more personal. Things are good. I am happy I am staying in school for another term!

Sunday, March 30, 2008

Buy side/sell side joke

Passed on to me by a friend on the buy-side (if an investment banker ever asks you to tell him a joke in the job interview, this may a a great one for him ;-))) ):

"What is the difference between a buy-side and a sell-side trader?"
"One says "f*** you" and hangs up the phone - the other hangs up the phone and then says "f*** u"

hehehe :-).

Tuesday, March 18, 2008

Welcome message from the finance professor

What a great school where you get greeted to an upcoming course like this!! I am copying a shortened version of a message from our International Finance professor, which he sent about 6 weeks before the start of the class. What I really like about our finance and economics professors is that they really love their subjects, some to a somewhat crazy extent, but that's how you spread enthusiasm and advance knowledge. Here it goes:

Dear Friends,

I am the professor for the elective course on International Finance, which is scheduled for Summer 2008.

Why am I writing this email to you? I am writing this email to welcome you to the course and to tell you a bit about my objectives for the course so that you understand what I wish to accomplish in the time that we spend together.

I have been teaching in business schools for about 20 years now, and about 10 years ago I decided that I wanted to do more than just teach "Course X" -- given how short life is, this was simply not sufficiently rewarding for me. And, after some contemplation, I realized that given the opportunity cost to you of being in school, you should also expect much more than just learning about finance, or accounting or some other subject while you are in school.

What are my objectives for the course?
So, I now have two objectives in teaching the course on International Finance. First, I wish to imbed in your head a systematic structure for thinking about all issues related to international financial markets and international corporate finance. With a little bit of cooperation from you, I am confident that we will achieve this objective. My second objective is to help you to think about your life and to help you change it in a direction that you want. To accomplish this, we will spend the last 10 minutes of each class talking about issues not related to finance. The topics covered during this time will range from philosophy, physics, anthropology, biology, psychology, mountain-climbing, baseball, genetics, bike-racing ... and whatever else I need to talk about in order to rekindle the fire in you so that your dreams are about achieving extraordinary goals rather than just finding the best job in consulting or investment banking.

What else you may wish to do before the start of the course?
The best way to get value from the course (and your time in school) is through introspection and contemplation about the issues that are important for you in life (not just in finance). To help you do this, I have enclosed below a list of books (all of which are unrelated to finance) that will help you think about the important issues in life. I strongly encourage you to read at least one of these books. Other than reading these books, I suggest that you spend some time walking (and thinking) in Regents Park.

Best wishes, and looking forward to seeing you in class.
Due to popular request, I am adding the list of recommended books. I have bought "Three Cups of Tea" and "Tuesdays with Morrie" and will read them over spring break:

1. How each individual can have a tremendous impact on life on Earth
- Mortenson, Greg. Three Cups of Tea.

2. Thinking about what you wish to accomplish in life
- Hess, Hermann. Siddhartha.
- Albom, Mitch. Tuesdays With Morrie.

3. An example of accomplishing a lot despite a very modest starting point
- Mandela, Nelson. Long Walk to Freedom.

4. Examples of accomplishing what seems impossible
- Weihenmayer, Erik. Touch the Top of the World.
- Armstrong, Lance. It Is Not About The Bike: My Journey Back To Life.

5. How to walk the path in order to get to where you want to go
- Zander, Benjamin and Zander. The Art of Possibility.
- Herrigel, Eugen. 1999. Zen and the Art of Archery, Random House.
- Suzuki, Shunryu. 1970. Zen Mind, Beginners Mind, J. Weatherhill Inc., New York.

Wednesday, March 12, 2008

Tick tock tick tock - the second year

Yes, I am still here, even though I don't write much anymore. There is just too much going on. As always I was hoping for a relaxing term but I have the ability to always end up doing lots of exciting things that keep me busy. The downside of this exciting life is that time is passing much too fast, the term is as good as over and there are now less than 4 months till the end of the MBA. It feels even less because lots of my friends are taking the summer term off to go traveling, so there are a lot of people now in the classroom who are finishing up.

I have been traveling a lot this term, working on a consulting project in the Scottish highlands, and going to Southeast Asia with three friends, I absolutely love Thailand!! I have been reading a lot this term, something I used to do a lot when I was younger and almost gave up while I was working at McKinsey, and now I am getting into the habit again, which is great. I have also just spend a few lovely days with my family in Hamburg, enjoying the great food and spending time with my grandmother and parents. Hamburg is such a great place to live and so cheap compared to London. No wonder it has won 3rd place as one of the best places to invest in for 2008 (along with Moscow and Istanbul) :-).

Now there is one week left of the spring term. I am working hard to finish up the consulting project for the Scottish tourism venture that I have mentioned before, and other than that really need to get started with my take home exam for time series analysis due on Monday. It was handed out 1 or 2 weeks ago but I just haven't had any time to even look at it so far. I also need to prepare for the Fixed Income exam next week, and since this is a course I have enjoyed a lot, the outcome is much more important to me, so I will need to prioritise my fixed income preparation over the rest for the next week.

On the side, I have also joined a team of classmates for our inter-school Tennis league, and we have won the first round, yay!! Playing Tennis in Regent's Park on a Friday morning is just something I need to enjoy as much as possible while I'm not working.

That's it for today, I will keep writing once I get all the exams and papers out of the way!

Monday, February 25, 2008

the job market in finance (and equity markets): should have listened to the Harvard MBA indicator!!

In the mid of frantic interviewing for summer positions in investment banking a year ago, the president of our finance club posted this interesting article on our discussion board:

If 10 percent or less of a given year’s graduating class take jobs in investment banking, investment management, trading, venture capital, private equity or leveraged buyouts, that is a long-term “buy” signal. If 30 percent or more take such jobs, it’s a “sell.” This year, the indicator doesn’t look good, with 37 percent of H.B.S. grads taking jobs in the securities business.
(full version here)

The article had actually been published in November 2006, but we were discussing it in January 2007. The first sell-off in equity markets and then in credit markets started few weeks later, and really gained speed in August. So the indicator was a few months early, but it is very impressive.

I remember my thoughts when I read it: that probably it was true, but that hopefully the bubble would continue for another year or two and burst only then. Greed is what keep bubbles growing: you know it can't last, but if others had benefitted from the bubble, perhaps I could also have a little bit more before the party was over? Greed makes people grab for overpriced assets hoping they will appreciate further. But in the end it all ends the way it has to end. Probably this year the numbers will be down to below 30% (although for the class of MBA2008 at least at London Business School we will certainly be more than 30% going into finance I believe).

Talking of bubbles, the UK housing bubble is also bursting these weeks (finally!!). Today's FT has a very insightful commentary on the UK economy. I am quite happy about the bursting housing bubble (all else equal, obviously), as I am planning to move closer to the financial district, the City, in a few months, and the rental prices are just plummeting. Housing near the City is a big bubble, in recent years they are building housing like crazy for all the investment bankers supposed to move there, but this year most likely people will be moving out rather than in, and hundreds of new units will come onto the market.

I have watched the rental price of a 2 bedroom flat that I have my eye on in walking distance to my future job drop from $3,000 per month to $2,700 in the last 3 weeks, but I will wait another couple of months and am fairly sure things will go down - or DOWNTOWN!!!, as our fixed income professor likes to shout :-). The fixed income class is very heavy stuff by the way, first time I am doubting if interest rates are a good area to go in, it's complicated!! I'm a bit of a macro person I guess, I always think - what difference does it make if the interest rates are 4.17% or 4.21%? Really, it is so removed from reality. But the class is great, I am learning a lot, especially I am learning to be more humble about my intellectual abilities :-))). That's certainly a good thing.

Saturday, January 26, 2008

london, the markets, and the second year MBA

Well, life in London is as exciting as ever. The big story in the markets is obviously the alleged $7 bn fraud at Societe Generale, though I am very sceptical about their version of the events. At least, the story solves one mystery I heard about at the end of my hedge fund internship. We, the analysts, would look at investment ideas, while the traders would manage the open positions and talk to sell-side traders to see what's going on in the market. I remember we had running gag for a while, as some traders in the market were telling our head trader that there was a mysterious "DAX man" in the market, that somone was buying up billions of dollars worth of DAX futures, and everybody was wondering who this crazy guy could be, buying billions of DAX futures while the market was so volatile and headed for a strong correction. We would speculate if it could be one of the Middle Eastern investment funds, or if it was someone who knew something. Or we would dismiss the story and think the story about the mysterious DAX man was a big joke. Well, it seems it wasn't a joke. It might be a mere coincidence and it might be that this was an unrelated event, but I somehow feel this new "rogue trader" might just be him.

And if that wasn't exciting enough, summer recruiting is starting off next week and the first years are freaking out. It is very stressful, especially with markets as they are, banks seem to have less slots for the summer and some people are disappointed not to have many interviews lined up. I have done some mock interviews over the last week and am happy that some people are really well prepared, but I still feel that some people are overconfident and should prepare harder, this year it won't be easy to land a, investment banking internship. So please prepare as hard as you can!! You have been warned :-).

In the world of academic finance, I am enjoying my course in Fixed Income Securities immensely. The professor, Suleyman Basak, has set himself a very high standard of making sure we know more "than the average smart guy on Wall Street who has read Fabozzi". In fact, two alumni from my school who work as prop traders now both told me his course was the best course ever preparing them for landing jobs at the most desired trading desks, so I am hoping to get a lot out of the course. I enjoyed the first two lectures so much that I dropped an advanced financial analysis course that I had signed up for for next term, and have signed up for a Financial Engineering course with professor Basak instead.

As a distraction from the world of finance and investment, I am working on a great paid second year consulting project for a tourism venture in the Scottish highlands, which we are very excited about. In a few weeks we will go up to the highlands for a week to check out everything on-site. From hedge fund internships to consulting projects in the Scottish highlands, Diwali parties and making friends from all over the world, I cannot believe how varied my MBA experience has been so far. Luckily it is still not over :-). Next week I'm setting off for a short holiday in South East Asia with three friends, followed by a trip to the Scottish highlands and then spring break! Life is good.

Tuesday, January 08, 2008

Interview questions to prepare for Sales&Trading

I have written up this list for the MBA2009s from my school but thought I might as well share it with others applying for summer internships in Markets. Writing it up, I realized there is a lot to prepare actually. Lots of questions are easy if you follow the markets and have been in the field before, but for career changers there is actually a lot to prepare! Here it goes:

Technical questions

  • How are bond prices and yields related?

  • How do you price a bond?

  • How do you calculate implied forward rates?

  • How do you price an option?

  • What is a Credit Default Swap? How does it work?

  • What is a CDO? How does it work?

  • What happens to bond prices when interest rates rise? What happens to equity markets? What happens to currencies?

  • What is an inverted yield curve and how do you interpret it?

  • What is a carry trade? How does it work?

Market awareness

  • Know the price of oil, gold, the level of the FTSE, S&P500, Nikkei, Dax, know FX rates USD/EUR, USD/Yen, EUR/GBP, what have these been doing over the last months?

  • Know central bank rates of US, Euro area, UK and Japan, what have they been doing over the last months, what does the term structure look like, why?

  • How would you invest $1million?

  • Have you ever invested money?

  • Tell me a trade idea?

  • What stocks do you like and why?

  • What do you think the Fed/Japanese Central bank etc. will do at their next meeting?
    (A really good source of commentary on rates and currency markets is Daily FX)

  • Where do you think interest rates are going?

  • What happened in the markets yesterday?

  • Draw me the US yield curve. Draw me the UK yield curve. Why is it inverted?
    (check Bloomberg rates for the graphs, much easier than looking up the yields in the Financial Times and drawing it yourself. Wow, the UK yield curve looks funky right now!)

  • What do you think about the current credit markets?

  • What's your view on the US economy?

  • What do you think is the next big investment opportunity in the markets that can offer spectacular returns?

  • etc. (all questions like that to check if you have an opinion and read the newspaper, answer can be short and concise, there is no right answer as long as it is logical and moderately well informed)

  • + questions that you provoke -i.e.
    If you say you are interested in emerging markets, they will ask you about which EM stock you like or what happened in Thailand last year,
    if you say you are interested in oil they might ask what's going on in Venezuela or Kazakhstan,
    if you say you come from financial engineering they might ask something more technical,
    if you say you want to do sales they might say “sell me something now” and so on


  • Why do you want to do this?

  • Why do you want to leave your previous job?

  • We have invited 15 of your classmates for the final round. Why should we take you and not your classmates?

  • How will you decide between different offers?

  • What do you like about Deutsche Bank/Lehman Brothers etc.?

  • Why Sales & Trading and not Investment Banking?

  • Tell me about a time in your work when you really felt the power of a team and what a team can achieve

Wednesday, January 02, 2008

Teaching yourself programming for financial modeling

In preparation for my trading (or structuring) job, I have decided to finally learn programming. In case there are people out there also considering to learn programming for financial modeling, I have started a separate blog

C++ for financial modeling

I intend to keep it as a sort of diary to document how to teach oneself programming, and to discuss the roadblocks on the way. I have wanted to learn programming for a long time and have realized that the main reason I never did it was lack of self confidence and doubts about lots of things. I think I have finally overcome these doubts and hope I can encourage others who have been shy or hesitant about learning programming. My main learning from today is that it is really nothing mysterious once you get started, so I cannot believe it has taken me so many years to get started. But I will keep all this in a separate blog, since it is of no interest to most of my readers.

Tuesday, January 01, 2008

Read the Gloom Boom Doom blog for sales & trading interviews

Interviews for summer jobs are coming up, and I have talked to some MBA2009s concerned that they still don't have an opinion on the market or much overview of how to understand the markets despite reading the FT for the last months. I strongly recommend Marc Faber's blog "The Gloom, Boom, and Doom Report", which gives a very independent and insightful view on the direction of the markets. Journalists can be short sighted and like to regurgitate consensus opinion rather than give insights, so it is good to have an investor with excellent writing skills covering the markets with a monthly column. I like this part of Marc Faber's current column:
But how can a responsible central bank cut interest rates and pursue an expansionary monetary policy when the stock market is close to an all time high and when it is faced with a weak currency and soaring food and commodity prices?

'Only in America' one should say because the US-infected IMF and World Bank would advise any country under these conditions to 'tighten' monetary policies and to raise interest rates. But since the Fed's only objective today is to 'inflate' asset markets further at the expense of totally debasing the currency we need to look at a new currency as a 'unit of account' and as a 'store of value'. (continue reading)