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itpro
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   Posted: 17/Mar/2011 at 12:08pm |
Originally posted by anthro
Originally posted by basant
it is interesting but most of the IT guys that I have met or talked to seem very frustated that is inpite of the decent money these guys make! |
Few or no IT services company has bargaining power with client today -Contracts are heavily one sided in favour of client adding to huge stress to the IT employee - a tiny example - 5 or 10 % productivity gain to be given to client per year come what may which many of these firms meet by moving out employees from that project. |
Well said Anthro. To add to this there is a cost side pressure and push to use the junior members. That's the reason in one another post, I said that companies probably are reaching a stage where they don't know how to manage the mass.
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prabhakarkudva
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Posted: 17/Mar/2011 at 1:20pm |
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Brilliant report that CrazyHorse,thanks!
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Take your chances and keep them in a box until a quieter time.
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deepinsight
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Posted: 17/Mar/2011 at 2:14pm |
Crazy Horse:
Thats an excellent write-up. Thanks.
Captures very well the demands, aspirations, conflicts inherent in the field.
Originally posted by Crazy Horse
My 2 cents having been in ER for abt 8 years including sell side & buy side + PE. But mostly the descriptions are true of any other role in an investment bank as well.
Caution: V long post with no original conclusion!!
.....
If you are just looking for fast money, it will depend on how much you are currently earning and how good you do in your MBA (and how good your school is) and how good the economy is etc etc...i would advise against fast money!
This is a field which attracts great minds but then burdens them with the most mundane tasks (sort of like a boot camp for armed forces). Not for everyone and certainly not purely for money or glamour (but then everyone including me goes there for the money n glamour)
Hope this helps!!!
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"Investing is simple, but not easy." - Warren Buffet
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anthro
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Posted: 17/Mar/2011 at 7:40pm |
Crazy Horse : Thank you for this write up - for the great insights and for the mind to share this.
Anthro.
Originally posted by Crazy Horse
My 2 cents having been in ER for abt 8 years including sell side & buy side + PE. But mostly the descriptions are true of any other role in an investment bank as well.
Caution: V long post with no original conclusion!!
Sell side
You will be starting as an associate where you will be expected to bury yourself in excel models for about 2 years as someone's assistant. Serious grunt work...but thats same if you were in any other divisions in an investment bank.
In 2- 5 years you will get some stocks to cover. The stocks (and sometimes even the industry) will however not be in your control.
Then you will slowly start to realize that your job is 90% useless. Rarely, do your customers read your reports in full, and you will be covering the same stocks that are covered by atleast 10-15 other investment banks (basically banks are interested to cover only the largest and most liquid stocks unless there is investment banking fees involved).
You will thus come to the conclusion that you are effectively a glorified salesman taking pressure from ur customers, companies you track and the i banking dept of your firm
I worked for an MNC where some sort of chinese wall exists, but if you work for a tier 2 indian brokerage (tier 1 would be Kotak, IDFC, Enam etc) you are effectively selling investment banking. And if your research is for retail audience it is a fraud job!
Buy side & PE
If your passion is to really analyze stocks (esp with a long term, value oriented strategy) you may do better on the buy side.
But here again you will be driven by the need of mutual funds to perform on a quarterly basis (an anti-thesis to the value oriented strategy). Most mutual funds and hedgies are extremely short term oriented (Franklin and HDFC are exceptions to an extent though)
In PE, you will be able to do a bit more long term work, but 90% of your time will be spent making huge reports on companies just to reject those (the due process of making investment memo's), reading legal due diligence & other documentation etc etc all of which are mind-numbing experience!
Money
Generally sell side pays more than buy side. but even in sell side money made depends on whether you are in an MNC or a local firm (local firm pays much much less) and the hotness of your sector. I have known colleagues with abt 10 years of experience making more than 1 cr an year in the last bull run (some of the same guys made abt 20-30 lakhs 1-2 years later in the bear market) but also associates making less than 10 lakh (and this in Mumbai).
Buy side gives you less money but then pressure in sell side is so much more.
PE money is good...similar to sell side
Other items
Being in the industry, you (if you network hard enough) will become aware of hidden opportunities (legal ones i mean) before the rest of the world so you may be able to benefit from those
You may also come to know illegal (insider/front trading) info but you take them at your own risk; if you are inclined in those.
It is very rarely that you will be allowed to trade on the stocks that you are officially analyzing (policies vary from co to co but in general the classy firms have a very strict policies regarding this)
Conclusion:
ER is just like any other division in an investment bank involving mindless monotony in the first few years, attracting the most ambitious and smart minds for the payday that MAY come once you become a senior guy. It has nothing, REPEAT NOTHING, to do with serious long term value oriented investing approach.
My personal experience:
The work was mind-numbing in the initial few years but then became much better later on. You also get to be in close contact with some seriously brilliant minds (all frustrated but still v brilliant and ambitious) as well as the top management of companies. an un-paralleled experience i would say
You actually learn to analyze a company (which you dont learn in the b schools), learn to understand that most of the so called experts and management are bullshitting through their nose. A dose of cynicism that can do wonders to your own personal investment. You also get a lot of information sources and contacts.
I was also lucky to be in the right place at the right time (started out of college just as the bull market began) and received most of my compensation just as the bear market began.
I also had a v frugal lifestyle which is extremely imp. i knew 30 year old colleagues of mine who bought BMW's thinking the good times will roll on. I was saving like 70% of my post tax income because i knew i would soon be leaving this place. I was also lucky because i made a job change in 2008 with a multi year guaranteed bonus (it happened before the shit hit the fan and my new company was still expanding!!!) that contract proved v handy when things did melt down in the second half of 2008!!
The money in this field is extremely volatile so dont expand your lifestyle because you made so much last year. Next year you may make half or be jobless!
Advice
If you are just a B Tech with CFA level 1, and if you still want to enter this field, i would recommend an MBA (top 10) to get into the industry (at the MNC co's) meanwhile you can finish the CFA as well.
If your intent is to learn how to seriously invest, you can do that by completing the CFA, reading some good books recommended elsewhere in the forum. You dont need to waste 2 years for an mba and then another 3-4 years of mind numbing work and pray for good times!
If you hate your tech job and is looking for an industry change, then you may as well go for an MBA...mebbe you will get interested in finance or in marketing! But please do think twice..the grass always seems to be greener on the other side!
If you are just looking for fast money, it will depend on how much you are currently earning and how good you do in your MBA (and how good your school is) and how good the economy is etc etc...i would advise against fast money!
This is a field which attracts great minds but then burdens them with the most mundane tasks (sort of like a boot camp for armed forces). Not for everyone and certainly not purely for money or glamour (but then everyone including me goes there for the money n glamour)
Hope this helps!!!
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new2investing
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Posted: 17/Mar/2011 at 9:18pm |
@crazyhorse - thanks a lot for taking the pain and patience of writing your experiences in detail. "If your intent is to learn how to seriously invest, you can do that by completing the CFA, reading some good books recommended elsewhere in the forum." These words of yours most accurately describe my state of mind.The reason behind my intent of moving into ER is to have some hands on experience of Equity analyses and hone up my skills as analyst.And I am pretty much confused as to what should i choose among the two :a settled life with decent pay in IT itself or take the pains of starting again as a fresher in the field of equity investing.
This post of your has surely helped eradicate some of my confusion but I am still not able to make up my mind.Will need to think a bit more.
Thanks again to all the teddies for starting and keeping alive this wonderful and helpful forum. 
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Learner...
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TCSer
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Posted: 17/Mar/2011 at 9:52pm |
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Crazyhorse
Many thanks for the informed writeup.
Things appear to be the same in both IT & non IT company specially in initial years.But compensation wise IT services co cant afford to pay more as theirs is a linear model.Product cos are much better paymaster but opportunities in them are limited.
Best course is as Basant ji says stick to a job where work hours n pressure is bearable,go through TED n books carefully ,enhance your knowledge ,control your emotions & make your self financially independent.
Let your money work for you n you enjoy life.
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Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays
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barla
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Posted: 17/Mar/2011 at 1:44am |
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never realised that equity research was such a dull and difficult job.
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basant
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Posted: 17/Mar/2011 at 7:07am |
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I also had a v frugal lifestyle which is extremely imp. i knew 30 year old colleagues of mine who bought BMW's thinking the good times will roll on. I was saving like 70% of my post tax income because i knew i would soon be leaving this place. I was also lucky because i made a job change in 2008 with a multi year guaranteed bonus (it happened before the shit hit the fan and my new company was still expanding!!!) that contract proved v handy when things did melt down in the second half of 2008!!
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Brilliant. Most of the 25 year olds lock themselves in buying a new car and a new home and spend the next several years paying back the cost of pre-poned luxory.
The investment nest should come first, a second hand car might do the trick and doesn't Buffett say that he would have been a bit more richer had he stayed on rent for his life time. I am not saying that one should not buy a home but maybe postpone it abit till you have made adecent amount of money locked away in good businesses.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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