Future and Opportunity of Investment Banking

Discussion in 'Professional Trading' started by rmurphy00, Nov 17, 2008.

  1. rmurphy00


    My name is Ray Murphy. I'm a sophomore student at Emory University in Atlanta, working towards a major in Finance and International Business (typically a secondary major) and a minor in Statistics (if I can finish - I'm not so sure).

    I was hoping to go into the Investment Banking. Many of my ex-Senior friends from last year and 2- years ago were swallowed up by various eager banks upon graduation. Their employers were mostly Bear, Wachovia, Suntrust, JP Morgan, Goldman, etc - with a few more other regional employers such as Coca-Cola, record companies, etc. Those who went to Wall Street, and even those who went to Suntrust, Wachovia, etc. all got sweet jobs - mostly as analysts. Some of 2nd years claimed to be well north of $150K - with no end in sight. Needless to say, many of them got laid off. To tell you the truth, I have lost contact with most of them (abandoned FaceBooks, emails unreturned, phone numbers have become "this phone number does not exist..."). Those who kept their jobs complain of being totally ragged out, of a horrible CYA work environment, and are not so assured of their "no-end-in-sight" salaries anymore. In fact they seem to have adopted more of an "I hope I keep this salary" type of attitude.

    I have to say, Investment Banking looked quite glorious - until the financial sector collapse. Anyone from a top-tier school could be assured of making $1M+ after 10 or so years. Sure the hours were long, but that was glorified. Tough, rich, affluent, intelligent, and indefatigable - who would not want to be like that? But now we are entering an era of regulation and restrictions. Everything is being socialized. President George Bush claimed these measures will be "temporary" to "restore" the previous harmony - but with the failing bailout and increasingly drastic measures - it looks like these changes are here to stay.

    What is going to happen to those salaries and positions now? Will someone entering as an analyst, trader, etc. still be able to make $1M+ after 10 or so years? Will there be good opportunity to get these jobs? BusinessWeek, NYT, etc. are all full of stories of students who wanted to be investment bankers - now switching to engineering, science, mathematics, consulting, etc. In other words, they seem to have dropped their desire to become investment bankers.
    Perhaps more favorable conditions will be restored upon an economic expansion? That shouldn't be more than 4-6 years from now - possibly 8 depending how bad this recession is.

    I would greatly appreciate any direction in this.

    Thanks is advance,
    -Ray Murphy
  2. Daal


    Your fighting the last war. you dont want to be in financial services, the bubble has burst. you need to be in commodity related sectors
  3. More of those "jobs" will be outsourced overseas and/or algorithmized. :mad:
  4. Most of the investment banks business simply disappeared, at least for the time being: IPOs, securitization, running hedge funds/managed accounts for institutional clients, proprietary trading. Who's going to pay you a million dollar salary there when they no longer can sell worthless synthetic debt to dumbass pension funds and insurances?

    When the economy is in the shitter, go interview with consulting firms. They always get business as their clients restructure, lay off people etc.

    Try McKinsey, BCG, Bain etc.

    From a top tier consulting firm you can always try to get back into investment banking once the smoke clears and you're unhappy with consulting (which most likely you will be :cool: ).
  5. ctheo1


    ray -

    i spent approx. 10 years in that business working for bulge brackets.....most of the time.

    without being overly dramatic, the financial industry and in particular wall str as we know it has disappeared. a new structure will emerge. don't ask me what, as i don't know.

    that said, you need to sit and think what you want out of your life and out of your career. some of the things you mention in your post give me the feeling that you're looking at that sector for the "wrong" reasons. these are usually the people who on the one hand are lucky enough to get in line, but on the other, never get to the front of the line to drink from the well. i will give you a very brief example: i started my career at a top firm after going through their "mba training class". [basically a bunch of mbas indoctrinated to the ways of the bank....] there was 57 of us at the beginning.....

    ...... guess how many of us were in the industry (let alone the bank) after 2 years....15!!! what was interesting was that most of the people who had left, were people with really super grades and the like. anyway.....

    time is on your side. find out what you have a passion for and what you're interested in. then go for it. do not care if it is "fashionable" or not. do not care what other people say. the world of high finance, or money shuffling as i'd like to call it, will always be there one way or another. money will always be made. but the people who have the passion are the ones who will also be fulfilled in the end.

    good luck
  6. The investment banking model of the 80s may no longer be around. However, there are plenty of opportunities in Private Equity, raising funds for Private Placements, PIPES, Joint Ventures, Start Ups, etc.

    I am in the Private Equity Energy World. We do the same as GS, raising capital for projects. There is less "Paper" pushing and far more relationship building.

    There will be plenty of opportunities in these area's. Plenty of money looking to go somewhere other than Public Traded Companies.

    I'm unsure about International Private Equity. I do have friends who are working in Dubai, for a English Private Equity group involved in REITS. They are doing pretty good.

    However, MBA's are a dime a dozen and many or jobless righ now. So, it may be harder to find something now, but by the time you graduate, it should be a little easyer unless OBAMA creates the NEW WORLD ORDER, then we are all fucked.
  7. Daal


    perhaps we will see the emergence of Private Credit like mauldin thinks. investment funds that will take advantage of the shortage of credit and earn equity like returns providing loans
  8. Wouldn't see the advantage of such a model unless, the fund stayed away from the consumer. So, if a fund got into the "lending" business, to lend to "private companies" with solid balance sheets and hard assets, recourse style loan, then I would say the are becoming Venture Capitalist.

    I just do not see this happening IMHO.
  9. My suggestion would be to drop the International Finance minor/major, and do a double major in finance and statistics. I did a major in finance and a minor in stats and the only regret I have is that I didn't do a double major. Stats is freaking hard but it is oooohhh sooooo useful when it comes to the markets. You may not be able to land a job at Wall Street anymore but with the internet at your disposal you can write your own ticket. Just how badly do you want to succeed? And....depending on how good you get you could be up to that 1M in as little as 5 years. Bust your ass in Stats, and apply what you learn to the markets. After all, the market is nothing more than a random number generator.
  10. Daal


    interest spreads are widening beyond fundamental values. with the collapse of hedge funds and with banks with impaired balance sheets and not willing to lend the 'free money' opportunities are there waiting to be grabbed.
    history shows this wont last long. I believe john paulson opened a fund to buy select fixed income assets, thats the kind of thing should happen more and more in the years to come
    #10     Nov 18, 2008