Careers

So You Want to Be An Investment Banker?

By The Prince ⋅ January 15, 2008 ⋅  Email This Post ⋅  Print This Post ⋅ Post a comment

The Prince is going to begin sharing some tips on how to get investment banking analysts jobs.  This will be series of posts so not all the information will be here.  This post will mostly focus on strategies for getting an initial interview not on interviewing tips.  The entire series will focus mainly on getting investment banking jobs not capital markets jobs but much of the advice applies for both types of positions.  The Prince has been successful in the process and has many friends who have also gotten the jobs they want.  His school’s investment fund ran a program where seniors with jobs setup did tons of practice interviews and resume reviews with junior members of the club.  The club also maintained an alumni database of well-positioned alumni who were willing to advise and advocate for summer and full-time job applicants.  If your school has these resources please use them.

First, some basics.  The main investment banking full-time analyst recruiting season in the fall each year with summer analyst recruiting beginning in mid-January.  The offer rate to summer analysts varies by bank with Goldman Sachs being the lowest since they have two different start dates in the summer.  Usually, the offer rate is over 50% to summer analysts at most banks.  Goldman also goes out of its way to host receptions for summer analysts at other banks in hopes of getting them to interview on an accelerated track for Goldman.  This year the offer rate was much lower since most banks cut the number of full-time slots they had on offer since the forward calendar looked ominous for investment bank performance (i.e. credit meltdown, LBOs slowing, and M&A slowdown).  Typical rule of thumb is that for each 20-30 interview slots roughly 1,000 resumes are reviewed at GS, MS, and JPM.  All initial screening is done by summer analysts.  Sometimes summer analysts from the target schools will review resumes from their school but more often than not the analyst looking at your resume will not be from your school.  Since analysts have tons of work don’t expect anything more than a 30 second glance from the analysts or the HR recruiter.  So resume perfection is essential.

Typical summer analyst pay last year was a pro-rated sum based on a salary of $55,000-65,000 per year plus a $2,000 taxable relocation bonus.  Total all in amount would look something like $16,000 for a summer before taxes.  Don’t expect to bank much of this money since rent will be a killer and working all the times means you have to pay more for services since you can’t get them done during the day (i.e. cleaning, dry-cleaning, shopping, meals, etc.).  You really should not do the summer analyst job or the full-time analyst job for the short-term money.  The real money comes 6 to 10 years down the line, right now you are paying your dues.  Do as Goldman does, “Be Long-Term Greedy,” and do the analyst job with hopes of more money in the future.  Just taking your hazing now because everyone goes through it.  After taxes you are not going to be making enough money as an analyst in the metropolitan cities where banks operate to really live large.  Especially, considering that bonuses are taxed at about 50% unless you put them into deferred plans, 401-ks, ESOPs, or IRAs which I strongly recommend.

Now the odds are not good for anyone applying for a full-time analyst job on the normal schedule in the fall.  The odds are even worse for those who do not have previous summer jobs that have a financial bent.  Most full-time positions at a given bank are going to go summer analysts from that bank or from other banks.  The ability to find senior alumni at your desired target to advocate for you will make a difference if you play your cards right.  The top groups at a given bank will probably not have many jobs on offer for the regular process once summer analysts have accepted their offers.  Don’t expect to apply in the regular pool and get an offer to GS M&A or CS Sponsors.  It isn’t going to happen.  If you have no previous experience and you are going to investment banking it is truly a contact sport and don’t expect to get your first choice.  Be very careful about picking a group where you like the people because that will make your life so much better.

There are some alternatives to the regular pool during your senior year and the Prince would highly recommend them.  The best route to getting an interview or an offer is to get summer internships as early as possible in your sophomore and freshman summers.  They don’t have to be in the investment banking division they should be in a division which has contact with the IBD or the capital markets groups.  Think operations or primebrokerage.  You can then use your contacts from these positions to get interviews at the end of the summer and secure more prestigious summer jobs each year.  Furthermore, you should focus on building strong connections to the decision makers in the businesses you want to work in later down the line.  For example, The Prince spent mornings shadowing credit derivative sales when he worked in primebrokerage.  This led to some long 5AM to midnight days but at the end the head of the desk offered him a job for next summer as an analyst.  My job last summer came about because my boss talked to an old friend of his in Investment Banking that was an alumni of my school and highly recommended me.  The alumni interviewed me and then had me interview with everyone in the group before making me an offer before the end of my primebrokerage summer job.  So I had an offer in hand before summer analyst recruiting even started 4 months later.  I was so thankful that I didn’t have to go through the summer analyst interview process since many of my friends were getting killed by interview for 3 weeks in January and February.  Some of them didn’t even get offers after all that hard work trying to secure a summer job.

Here are some great resources for more information on what to do to get interviews.  The Prince doesn’t agree with everything on these sites but by and large they offer good advice.

• Mergers and Inquisitions - Good general advice on resumes and what to expect once you are hired from a current analyst.
• Investment Banking Resumes - Mainly focused on crafting successful I-Bank resumes
• IBankingFAQ - Pretty comprehensive site about winning jobs in banking and what it is like working as an analyst.
• Wall Street Oasis - I really like this site and typically the forum posts give lots of useful information.  This is a good place to get answers to most of your questions but many times the forums devolve into debates about which banks are the best.
• Vault - Some of the guides can be helpful and the company specific guides are usually pretty good.  Often I have found the guides to not be accurate or outdated.  The message boards on vault are okay but don’t spend too much time using them because their is a lot of false information posted.
• WetFeet - Basically the same as Vault, however, I like their investment banking interview book better than Vault’s guide. 

For Vault and WetFeet your career center should have a portal which allows students to download guides from these companies for free.

Here are some links to the career sites of major banks.

• Bank of America
• Citi
• Credit Suisse
• Deutsche Bank
• Goldman Sachs
• JP Morgan
• Lehman Brothers
• Merrill Lynch
• Morgan Stanley
• UBS

Here is a great reading list from GS that I read selectively before interviews.  If you are a freshman or sophomore reading this stuff will make you look good in interviews and help your general banking knowledge.  If you really want to “get it” you have to read these.  The Prince’s favorites are in red.

Written by Current or Former Goldman Sachs Employees

• The Five Great Myths about China and the World by Jonathan Anderson and Fred Hu; PPP Company Limited; 2003
• Exploring General Equilibrium by Fischer Black; MIT Press; 1995
• Business Cycles and Equilibrium by Fischer Black; Blackwell Publishers; 1991
• Managing Currency Risk by Fischer Black; Association for Investment Management & Research; 1989
• Old Girls’ Network: Inside Advice for Women Building Businesses in a Man’s World by Connie Duckworth; Coming in July, 2003
• Goldman Sachs: The Culture of Success by Lisa Endlich; Knopf; 1999
• Beginning the Journey: China, the United States, and the WTO by Robert Hormats; Council on Foreign Relations Press; 2001
• Global Aging and Financial Markets: Hard Landings Ahead? by Robert Hormats; Center for Strategic and International Studies; 2002
• The Boundaryless Organization: Breaking the Chains of Organization Structure by Steve Kerr; Jossey-Bass; 1998
• The GE Work-Out : How to Implement GE’s Revolutionary Method for Busting Bureaucracy & Attacking Organizational Problems – Fast by Steve Kerr; McGraw-Hill Trade; 2002
• The Practice of Risk Management by Bob Litterman; Euromoney Publications PLC, 1998
• Foundations for Financial Economics by Bob Litzenberger and Chi-fu Hwang
  Prentice Hall; 1998
• Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds by Robert Menschel John Wiley & Sons; 2002
• Adam Smith and the Origins of American Enterprise by Roy C. Smith
  St. Martin’s Press; 2002
• The Wealth Creators: The Rise of Today’s New Rich and Super-Rich by Roy C. Smith; St. Martin’s Press; 2001
• The Global Bankers by Roy C. Smith; BeardBooks, Incorporated; 2000
• High Finance in the Euro-Zone : Competing in the New European Capital Market by Roy C. Smith; Pearson Education; 2000
• The Money Wars: The Rise and Fall of the Great Buyout Boom of the 1980s by Roy C. Smith; BeardBooks, Incorporated; 2000
• Cases and Readings in Markets, Ethics, and Law by Roy C. Smith; Simon & Schuster Custom Publishing; 1996
• Street Smarts: Linking Professional Conduct with Shareholder Value in the Securities Industry by Roy C. Smith; Harvard Business School Publishing, 1997
• Global Banking by Roy C. Smith, Oxford University Press; 1995
• Comeback: The Restoration of American Banking Power in the New World Economy by Roy C. Smith; Harvard Business School Publishing; 1993
• Securities Markets in the 1980s: The New Regime, 1979-1984 by Barrie A. Wigmore; Oxford University Press; 1997
• Crash and Its Aftermath: A History of Securities Markets in the United States, 1929-1933 (Contributions in Economics and Economic History, No 58) by Barrie A. Wigmore; Greenwood Publishing Group; 1986

Industry Background and Flavor

General

• Understanding Wall Street by Jeffrey Little & Lucien Rhodes
• The Money Masters by John Train (for later.. methods of master investors, W buffet, Templeton, Price etc)
• The New Money Masters by John Train
• Money Masters of Our Time by John Train
• The Visual Investor: How to Spot Market Trends by John J. Murphy
• The Essays of Warren Buffett: Lessons for Corporate America by Warren Buffett
• Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffet the World’s Most Famous Investor by Mary Buffett and David Clark
• The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor by Robert G. Hagstrom Jr.
• The Alchemy of Finance: Reading the Mind of the Market by George Soros
• Bill Gross on Investing by William H. Gross
• Capital Ideas: The Improbable Origins of Modern Wall Street by Peter L. Bernstein
• Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay
• Greed and Glory on Wall Street: The Fall of the House of Lehman by Ken Auletta
• The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow
• The House of Nomura: The Inside Story of the Legendary Japanese Financial Dynasty by Albert Alletzhauser
• The New Crowd: The Changing of the Jewish Guard on Wall Street by Judith Ramsey Ehrlick & Barry J. Rehfeld
• One Up On Wall Street: How to Use What You Already Know to Make Money in the Market by Peter Lynch
• Beating the Street by Peter Lynch
• Our Crowd: The Great Jewish Families of New York by Stephen Birmingham
• Reminiscences of a Stock Operator by Edwin Lefevre
• Secrets of the Temple: How the Federal Reserve Runs the Country by William Greider
• Soros on Soros: Staying Ahead of the Curve by George Soros, Bryon Wien & Krisztina Koenen
• Guerrilla Investing: Winning Strategies for Beating the Wall Street Professional by Peter Siris
• The Battle for Investment Survival by Gerald Loeb
• Money & Power: The History of Business by Howard B. Means
• The Great Game: The Emergence of Wall Street as a World Power 1653 – 2000 by John Steele Gordon
• Toward Rational Exuberance: The Evolution of the Modern Stock Market by B. Mark Smith
• 100 Years of Wall Street by Charles R. Geisst, Richard A. Grasso
• A Random Walk Down Wall Street, Seventh Edition by Burton Gordon Malkiel
• Common Stocks and Uncommon Profits and Other Writings by Philip A. Fisher
• The Go-Go Years: The Drama and Crashing Finales of Wall Street’s Bullish 60’s by John Brooks
• Against the Gods: The Remarkable Story of Risk by Peter Bernstein
• Extraordinary Popular Delusions and the Madness of Crowds and Confusion by Charles MacKay, Martin Fridson, Joseph de la Vega
• Manias, Panics and Crashes: A History of Financial Crises by Charles Kindleberger
• Capital Ideas by Peter Bernstein
• The Big Board by Robert Sobel
• The Chastening by Paul Blustein
• From Here to Economy: A Short Cut to Economic Literacy by Todd G. Buchholz
• After the Trade is Made by David Weiss
• The Crisis of Global Capitalism: Open Society Endangered by George Soros
• Martin Zweig’s Winning on Wall Street by Martin Zweig
• The Money Game by Adam Smith
• The Fed: The Inside Story of How the World’s Most Powerful Financial Institution Drives the Markets by Martin Mayer
• Maestro: Greenspan’s Fed and the American Boom by Bob Woodward
• The Quotations of Chairman Greenspan: Words from the Man Who Can Shake the World by Larry Kahaner\
• Barbarians at the Gate by Bryan Burroughs and John Helyar
• Liar’s Poker by Michael Lewis
• The Predator’s Ball by Connie Bruck
• When Genius Failed by Roger Lowenthal
• F.I.A.S.C.O. - The Inside Story of a Wall Street Trader by Frank Portnoy
• Den Of Thieves by James B. Stuart
• Monkey Business: Swinging Through the Wall Street Jungle by John Rolfe and Peter Troob
• Next by Michael Lewis
• The New New Thing by Michael Lewis

Broad Industry History

• Investment Banking: A Tale of Three Cities by Samuel L. Hayes III and Philip M. Hubbard
• A History of Corporate Finance by Jonathan Barron Baskin and Paul J. Miranti, Jr.
• Global Banking by Roy C. Smith and Ingo Walter
• Wall Street Women by Anne B. Fisher
• In the Black: A History of African Americans on Wall Street by Gregory S. Ball
• The Last Partnerships: Inside the Great Wall Street Money Dynasties by Charles R. Giesst
• The City of London, vols 1-4 by David Kynaston
• The Rise and Fall of the Merchant Banks by Erik Banks
• The London Stock Exchange: A History by Ranald Michie
• The Death of Gentlemanly Capitalism: The Rise and Fall of London’s Investment Banks by Philip Augar

Analytical and Reference

General

• Barron’s Dictionary of Finance and Investment Terms by John Downes & Jordan Elliot Goodman
• The Intelligent Investor by Benjamin Graham
• International Economics: Theory and Policy by Paul R. Krugman
• Wall Street Journal Guide to Understanding Money and Investing by Kenneth M. Morris
• The Irwin Guide to Using the Wall Street Journal by Michael B. Lehman
• The Financial Times Guide to Using the Financial Pages by Romesh Vaitilingam
• The Atlas of Economic Indicators: A Visual Guide to Market Forces and the Federal Reserve by W. Stansbury Carnes, Stephen D. Slifer
• Wall Street Words: An Essential A to Z Guide for Today’s Investor by David Logan Scott

Fixed Income, Credit, Commodities & Equities

• Bond Book: Everything Investors Need to Know About Treasuries, Municipals, GNMAs, Corporates, Zeros, Bond Funds, Money Market Funds, and More by Annette Thau
• The Bundesbank by David Marsh
• Controlling and Managing Interest Rate Risk by Anthony G. Cornyn and Robert A. Klein
• The Handbook of Fixed Income Securities by Edited by Frank J. Fabozzi
• The Money Market by Marcia Stigum
• Money Market Bond Calculations by Marcia Stigum
• Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment by David F. Swensen

Options/Derivatives

• How to Trade Options by Jon Najarian
• Options as a Strategic Investment by Lawrence McMillan
• Options: Essential Concepts and Trading Strategies by The Options Institute
• Options for the Stock Investor: How Any Investor Can Use Options to Enhance & Protect
• Their Return by James B. Bittman
• Trading Index Options by James B. Bittman
• All About Options: The Easy Way to Get Started by Thomas A. McCafferty
• How the Options Market Works by Joseph A. Walker
• Mastering Derivative Markets: A Step-by-Step Guide to the Products, Application & Risks by Francesca Taylor
• McMillan on Options by Lawrence G. McMillan
• The New Financial Instruments by Julian Walmsley
• Options, Futures and Other Derivatives by John C. Hull

Written About, By or For Money Managers and Traders

• Investment Analysis and Portfolio Management by Reilly Brown
• Market Wizards: Interviews with Top Traders by Jack D. Schwager
• The New Market Wizards: Conversations with America’s Top Traders by Jack D. Schwager
• Stock Market Wizards: Interviews with America’s Top Stock Traders by Jack D. Schwager
• Trader Vic: Methods of a Wall Street Master by Victor Sperandeo
• Trader Vic II: Principles of Professional Speculation by Victor Sperandeo
• Exceptional Trading: The Mind Game by Ruth Barrons Roosevelt
• Trading to Win: The Psychology of Mastering the Markets by Avi Kier
• The Disciplined Trader: Developing Winning Attitudes by Mark Douglas
• Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets by Stan Weinstein
• Trading in the Zone: Master the Market with Confidence, Discipline & A Winning Attitude by Mark Douglas and Thom Hartle
• Trading in the Zone: Maximizing Performance with Focus and Discipline by Ari Kiev
• Trading with Crowd Psychology by Carl Gyllenram
• Pit Bull: Lessons from Wall Street’s Champion Traders by Martin S. Schwartz et al
• The Master Swing Trader: Tools and Techniques to Profit from Outstanding Short-Term Trading Opportunities by Alan S. Farley
• How to Trade in Stocks by Jesse Livermore
• The Market Maker’s Edge: Day Trading Tactics a Wall Street Insider by Josh Lukeman
• The Super Traders: Secrets & Successes of Wall Street’s Best & Brightest by Alan Rubenfeld
• A Zebra in Lion Country by Ralph Wanger with Everett Mattlin
• Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy
• Hit and Run Trading: The Short-Term Stock Traders’ Bible by Jeff Cooper
• Hit and Run Trading II: Capturing Explosive Short-Term Moves in Stocks by Jeff Cooper
• Street Smarts: High Probability Short Term Trading Strategies by Laurence A. Connors and Linda Bradford Raschke
• The 5 Day Momentum Method by Jeff Cooper
• The Real Holy Grail: Money Management by Eddie Kwong
• Trading Connors VIX Reversals by Laurence A. Connors and Gregory Che

The only book missing from the list is Jonathan Knee’s Accidental Investment Banker which the Prince highly recommends.  For those applying to Morgan Stanley, the excellent new book from Patricia Beard entitled Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley which is a must read.

There will be more articles coming in this series.

• So You Have an Investment Banking Interview
• Which Group Should I Choose and Why?
• How Do I Get the Offer as a Summer Analyst?