Category Archives: Finance

Something to think about for you guys entering the class of 2015

The yields this year for banking, consulting, and other traditional industries have been extremely low and very competitive across all top 16 schools. I don’t have any raw figures to show and as you can imagine, no schools publish raw statistics.

Ironically, the career field that did surprisingly well was Sales and Trading. I’m not sure if that is going to translate into anything for fall recruiting this year but part of the reason for S&T’s success was the low level of people even trying to recruit.

And being a veteran helps so much in S&T because a lot of top traders ARE ex-veterans, a lot of special ops-type guys. Just wanted to throw that out there.

You should all start thinking about a pre-MBA summer internship as I think it is very helpful. “Switching careers” isn’t as easy as it normally is during a great economy so you really need to have as much meat on your resume to be successful to switch into any career.

Bulge Bracket Banks Analysis for MBA Veterans

If you decide to recruit for banking next year, you will have to decide on which type of banks to apply too. By the way, I really advise that you do RECRUIT for banking, do a SUMMER INTERNSHIP with banking, but DON’T ACCEPT AN OFFER from a bank (topic of another post coming soon). I focused on bulge bracket banks (but you may want to add boutique, middle-market- you can find better definitions elsewhere on the internet) and there are many ways to categorize them, but I prefer to do it this way to start it off, ranking within groups is just what I perceive is the MBA/market/my personal sentiment:
American Banks with Retail/Commercial Deposits (Large Balance Sheets):
1. J.P. Morgan
2. Bank of America Merrill Lynch
3. Citigroup

Large balance sheets make investment banking somewhat easier because you can provide multiple services for your clients, i.e. line of credit, in addition to mergers and acquisition advisory services. Problem is that banks don’t make much off of lines of credit and other commercial banking activity so it is a double-edged sword.

Broker-Dealers, Traditional Investment Banks (Small Balance Sheets)
1. Goldman Sachs
2. Morgan Stanley
3. Credit Suisse

Before the financial crisis forced some of them (maybe all?) to be bank holding companies, these guys were mainly focused on proprietary trading. CS has probably the best private bank, GS has probably the best sales and trading, and MS and GS always vie for the top in investment banking and I think historically and even today, GS is still dominating. MS dominates technology without a doubt. CS had a really crappy year for banking, down there with UBS.

Foreign Banks with Deposits in Home Country
1. Deutsche Bank
2. Barclays
3. UBS

I never thought about it this way until a veteran banker told me but he said to never work for a foreign bank unless you don’t have a choice. Do you think the Germans are going to be the first to get cut at DB or the Swiss being the first to be cut at CS, or the Americans? Yeah. And frankly if you are going to give your soul up to banking….might as well help America.

 

Veteran Networks

Another thing that you should really think about being a veteran and all is how strong the veteran networks are. There are actually a decent amount of Managing Directors at most banks who are veterans in banking and sales and trading so there is a certain level of support and mentorship that you can expect. However, being a veteran is far from being a “ticket” into banking – there are a shitload of ex-O3s running all over the place. Especially Navy Sub guys (JP Morgan Co-Heads of Recruiting for Columbia are both Navy Sub guys)…..but I digress.

Overall Rank Bank Veterans Network Rank Comments
1 GS  4 Didn’t get an interview from GS, but let’s face it, it’s still “King of the Street” and everybody knows it, everybody wants to be there. Culture is pretty stiff but you want GS on your resume. Total love/hate/envy relationship here.
2 JPM  3 Very active group, everyone seems more polished than the other banks. Look at JPM as a corporation that happens to be in the banking industry rather than being a bank. Just a great corporation to work for.
3 MS  2 This bank has a very old-school “American” feel to it. They’ve got tons of veterans and they will treat you right.
4 CS  1 Bet you didn’t think a Swiss bank would be #1 but they had the first veterans group and they are a bunch of party animals and fun to be with.
5 BAC  6 There are veterans, but the organization of the veterans group could be better. Being a large organization makes it hard to be cohesive. But then again….JPM does it well and they are larger.
6 DB  8 If you find a US military veteran at DB…..let me know…
7 BCS  5 If you are surprised that a British bank would rank higher than some American banks, I was too at first. Then I realized that they purchased Lehman’s investment bank and it started to make sense to me.
8 C  7 Same thing with BAC, there are veterans, but the organization could be stronger if it had a strong sponsor.
9 UBS  9 Who cares? UBS is imploding.

Finance Events for Military Veterans, All in NYC (October Update)

I’ve been out of the loop. School and recruiting have been crazy busy.

 

Friday, 10/26/2012, 12:00pm – 1:00pm: JP Morgan Veterans Lunch
Friday, 11/2/2012, 9:00am – 4:30pm: Barclays Diversity Forum (Registration over)
Friday, 11/2/2012, 4:30pm – 6:30pm: Barclays Veterans Event (Registration over)
Friday, 11/9/2012, 8:00am – 7:30pm: Goldman Sachs Veterans Event
Thursday, 11/15/2012, 6:00pm – destruction: Credit Suisse Veterans Event (Don’t miss this one…)
Friday, 11/16/2012, 8:30am – 1:30pm: Morgan Stanley Veterans Event
Friday, 11/16/2012, 4:30om – 6:00pm: Citi Veterans Event (Email cordobabrownk@citi.com by October 29)

Bank of America had an event last week but I wasn’t invited so I don’t have much details on that

 

JP Morgan Early Advantage Program Interview & Veterans Networking Events (Update)

Last week, I received a 30 minute interview via phone for the JP Morgan Early Advantage Program and a few days later, I was accepted. It looks like its going to be on July 24 – July 25, with the Credit Suisse event being on July 26 so that will be a full week.

 

Will keep you all posted on what I learn from those events. I haven’t heard of a Bank of America event yet as they have the pre-MBA fellowship pipeline, but Citi has a pre-MBA fellowship event as well as a military networking event in November.

 

Also found an event with Barclays that occurred in November of last year, can’t link directly to the website but here’s the link, click Programs, and then Veterans (Veterans program no longer exists, but I will update this info when it does):

“Event will take place in our New York office on Friday, November 4, 2011

Applicants must RSVP by submitting an updated pdf resume to this address with subject “Veterans Networking Event” by Friday, October 7, 2011

Applicants will be notified of their status by Friday, October 21, 2011.”

Reminder and Update: Citi Pre-MBA Fellowship, deadline is Friday, June 15, 2012

Citi Pre-MBA Fellowship (Veterans): The deadline on the website says May 30, but I have received emails from business schools and other websites saying Friday, June 15, 2012.

Just received word from the Credit Suisse about being invited to their MBA Military Boot Camp, so that’s good news. Took the CFA last Saturday and I’m tempted to just throw all my books away because if I don’t get it this time, I’m not planning on trying again. My goal was to get a basic foundation of finance and I think the participation in the CFA program gives you that. Getting the charter is certainly a personal as well as professional plus, but at this point, I’m not sure if I’ll be able to commit to at least two more years of intense studying – if I even pass the first test.

In other news, I’ve been working on a project in Charlotte and I’ve very surprised how beautiful and fun the city as (at least where my hotel is at). If you ever stop by…check out the mechanical bull at the Whisky River.

 

42 Days of Trading and Potty Training Success

I don’t know why it never occurred to me but a great way to study for the CFA (or learn about finance) is to just start trading. Reading financial statements in the CFA textbook really puts me to sleep, but I start to care about actual financial statements when my money is on the line. My whole spreadsheet is too wide to paste here, but I have another column that converts holding period return into effective annual rate. This is important so you can compare apples to apples, as you could have a 1-day holding period return that is the same as a 10-year holding period return. This is a rather simple topic in the QM section of the CFA which I always forget…but not anymore.

As you can see, most of my gains have been from options and unsurprisingly, I have scored pretty high on the derivatives section as I read through the CFA materials. Two other important columns I have are my thoughts going into the trade and lessons learned getting out of the trade. I was pretty brutally honest with myself and I think it has been helping me maintain discipline through all of this. I never think I’m God’s gift to trading, most of this is probably beginner’s luck. For 42 days of trading, I have made $5,392.58 (off of an initial investment of $10,000) with an annual rate of return of 15,693,016,289,017,900,000,000,000,000%. This number will obviously go down as I take more losses and when I start business school, I won’t have this much time to read news and trade during the day.

If I’m still this successful 3 months in, 6 months in, and beyond, I might consider a career in sales and trading. Good news is that I just got a mentor who works as a Managing Director in Equities Trading at an investment bank through the American Corporate Partners (ACP) program, which I spoke about before. They setup veterans with mid to senior level executives in industries that veterans might be interested in. I’ll be sure to pick his brain about this topic as well.

In other news, my daughter is officially potty trained- I’m pretty damn excited about that.

Trade # Open Price Quantity Original Open Date Security Sell Price Close Date Gain/Loss HPR
1 $1.15 20.00 $2,340.00 4/3/2012 PUT GROUPON INC CL A $10 EXP 10/20/12 $2.20 4/17/2012 2019.9 86.32%
2 $0.50 20.00 $1,040.00 4/10/2012 PUT ZYNGA INC $8 EXP 09/22/12 $0.85 4/18/2012 619.96 59.61%
3 $17.81 150.00 $2,678.50 4/17/2012 VXX $18.25 5/14/2012 $51.93 1.94%
4 $0.95 20.00 $1,940.00 4/18/2012 PUT BEST BUY COMPANY $18 EXP 09/22/12 $1.15 5/7/2012 319.94 16.49%
5 $0.95 20.00 $1,940.00 4/19/2012 PUT RESEARCH IN MOTION $10 EXP 12/22/12LTD $1.25 5/3/2012 519.94 26.80%
6 $0.40 40.00 $1,640.00 4/26/2012 CALL GROUPON INC CL A $17 EXP 07/21/12 $0.40 5/14/2012 -$100.04 -6.10%
7 $1.00 20.00 $2,040.00 4/26/2012 PUT AOL INC $20 EXP 01/19/13 $1.30 5/7/2012 519.94 25.49%
8 $10.75 100.00 $1,082.00 5/2/2012 GRPN $14.89 5/14/2012 $403.50 37.29%
9 $8.90 100.00 $897.00 5/2/2012 ZNGA        
10 $13.50 100.00 $1,357.00 5/3/2012 KKR        
11 $7.92 100.00 $798.79 5/3/2012 BAC        
12 $10.21 100.00 $1,027.86 5/8/2012 GRPN $14.89 5/14/2012 $457.64 44.52%
13 $8.04 100.00 $810.55 5/8/2012 ZNGA        
14 $1.10 20.00 $2,240.00 5/9/2012 PUT AOL INC $22 EXP 01/19/13 $1.35 5/10/2012 $419.93 18.75%
15 $1.13 20.00 $2,300.00 5/11/2012 PUT BEST BUY COMPANY $15 EXP 01/19/13 $1.25 5/14/2012 $159.94 6.95%
16 $0.74 20.00 $1,520.00 5/14/2012 MSFT 130119 C 35.00        
17 $7.45 400.00 $2,987.00 5/14/2012 BAC        
18 $0.46 40.00 $1,895.00 5/14/2012 YHOO 130119 C 20.00        
19 $0.41 5.00 $225.00 5/14/2012 BAC 121117 P 6.00        

BAML Fellowship Reminder, Toigo Fellowship Interview Notes, and BAML Investment Banking Call Notes

1) Just a friendly reminder that the Bank of America Merrill Lynch Global Banking and Markets (GBAM) 2012 MBA Diversity Fellowship Program is due this Sunday, April 15.

 

2) Had my Toigo Fellowship interview this week and it was pretty interesting and different, as compared to my MBA interviews. There were three interviewers, two Toigo alums and current industry practitioners. I expected the “Why Toigo?” questions and I expected the industry practitioner to get into some detailed questions, for example, “What specific steps are you taking to address your lack of a quantitative background?” and “Why finance, investment banking, etc.”? I had a great interview experience, the interviewers were very professional, and in no way was the interview a give-a-way. You had to fight for it.

 

3) As I was an early applicant for the BAML Fellowship, I got to dial into four distinctly awesome calls: the first call was someone from the recruiting team, the second was with a first year Columbia student who is about to enter his summer internship, the third was with a current associate, and the final call today was with a vice president. Forgive me for noting the obvious, but it is interesting to see the evolution of how recruiting views you, how a first year MBA student is preparing for a summer internship, how a first year associate view his summer internship as well as prepare for this first year full-time, and how a VP views her experience from start to finish. It was interesting to note that the summer and first year associate focused on the technical aspects required of investment banking while the VP focused on the soft skills. You can see the evolution of skills required.

 

Top 3 “Hard” Skills Required/Useful for Investment Banking:

  • Accounting / Financial Statement Analysis: Basically how to interpret financial statements from an investor’s / investment banker’s point of view. “Mechanics” of accounting.
  • Excel and Modeling: Seems relatively straightforward – take the investment banking “boot camp” classes
  • General knowledge about the markets, i.e. current yields, big IPOs coming up, which banks are considered good in which markets (Read deal blog/wsj/ft/etc)

 

Top 3 “Soft” Skills Required/Useful for Investment Banking:

  • Energy (don’t know how to really categorize this one). Sleep a lot. Learn how to sleep. Travel or relax before business school.
  • Relationship building (internally and externally), become go-to-person
  • Dealing with the unknown

Top 3 Things to Do to Get Into Investment Banking:

  • Attend all informational interviews, networking events. There are too many qualified candidates for each position, it usually comes down to how many people know you and more importantly, like you. Set up informational interviews as early as you can. Utilize your business school alumni database.
  • While networking, at first, don’t focus on why you are qualified for investment banking, focus on building rapport, there will be plenty of time to demonstrate your competence later on. Be memorable.
  • Demonstrate interest for investment banking, feign interest if you have really good acting skills. Here are some good phrases to modify/repeat: “client interaction,” “diverse projects,” “fast-paced,” “like excel, modelling”
Unofficial BaML Fellowship Interview Structure:
  • Phone screen with “senior” person – talk about markets, test passion for markets, treasury yields, bond prices
  • 1st in person day: Meeting with VP/MD-level bankers
  • 2nd in person day: Reception to meet with others
  • Final day: meet others in bank – fit related questions, brain teasers, minor league technical questions
  • Confirm fellowship by June
Unofficial BaML Associate Daily Routine:
  • Analysts/Associates come in 8:15-9:00 AM. VPs get in by 9-930 AM. MDs come in when they want to.
  • Tasks are coming in by 10:00 AM
  • There is one major project and multiple smaller tasks per day
  • Work on smaller tasks (decks/mark ups) until 5-6 PM.
  • Work on major project after 5-6PM
  • Leave no earlier than 10:30 – 11:00 PM as an analyst/associate
  • Major projects include reading 150 page bond indentures, task is to critique the terms inside
Unorganized Comments:
  • BAML’s leveraged finance group is #1 on the street
  • You can prepare as much as you can, but it gets to a point where the only place you are really going to learn investment banking is by working in investment banking
  • Investment banking is an apprenticeship model, much like consulting; therefore, two ways to convince people who know how to do it to teach you is to either a) be really willing to learn to the point of exuding that feeling or b) being a cool person to hang out with
  • Top 5 banks are like top 10 MBA, the only difference is what they are #1 in and fit
  • Be prepared for unglamorous part of investment banking
  • Really try to figure out group dynamics, if you will be spending the prime of your life working long hours, might as well do it with people you like, rather than just tolerate
  • Depending on your knowledge of finance and accounting, it MAY be helpful to exempt from the 101 classes (and pass up on some free high grades) so you can get access to more advanced finance courses
  • On big teams, there isn’t time for group intros, you just work your way around and meet people as you hit the ground running
  • It’s easier to transition to a group that you “summered” in – it’s a benefit to know people

The Evolution of the Relationship between Military Veterans and the Finance Industry from 2011-2012

Since time immemorial, military veterans, especially junior military officers, have been attending top MBA programs and then entering careers in finance- be it the less glamorous more stable careers in retail banking or the high-pressure, high-paying careers in investment banking or sales and trading. However, it was in June of 2011 that five of the top banks:

came together and organized themselves as an organization called “Veterans on Wall Street” (VOWS), which is dedicated to “honoring former military personnel and employees currently in the National Guard and Reserve by facilitating career and business opportunities in the financial services industry.” This effort was mainly focused on hiring veterans for the retail banking business for BoA, Citi, and back-office and middle-office functions for GS, CS, and DB. Note that no front-office job was being offered as a top-tier MBA was still a requirement to break into those fields. Conspicuously absent was JP Morgan and Morgan Stanley.

 

Five months later in November of 2011, JP Morgan Chase (JPMC) led an effort called the “100,000 Jobs Mission” to hire 100,000 veterans by 2020. Founding members of the 100,000 Jobs Mission appear to be mostly non-financial services related:

  • AT&T
  • Broadridge Financial Solutions, Inc.
  • Cisco Systems Inc.
  • Cushman & Wakefield Inc.
  • EMC Corporation
  • Iron Mountain Incorporated
  • JPMorgan Chase & Co.
  • Modis
  • NCR Corporation
  • Universal Health Services
  • Verizon Communications Inc.

It is unclear to me why JPMC did not just lump itself together in the VOWS campaign, however, I suspect that it had something related to do with the recently settled military mortgage scandal. Before we go into some of the motives of the campaigns to hire veterans, I want to highlight all the positive things that are happening.

 

In 2012, GS had its inaugural “Goldman Sachs Veterans Internship Program” which started this April. This is the first internship of its kind as its timeline is not connected to the traditional summer internship. It appears to be the first internship at a financial services company focused on training and eventually hiring veterans. Also, military veterans are now considered part of their “diversity” hiring which traditionally included women, minorities (minus Asians), and LGBT.

 

Also in 2012, CS initiated its inaugural “Credit Suisse MBA Military Boot Camp,” geared towards prior-military MBA candidates entering a full-time MBA program in Fall 2012.

 

JP Morgan, not to be confused with JPMC, has had a MBA Early Advantage program in place which has been open to “ is open to Black, Hispanic, Native American, female, LGBT” and recently, if not this year, “military and veteran students.”

 

Citi and BoA are the only two banks that I know of that offer pre-MBA fellowships, i.e. they guarantee accepted fellows a summer internship as well as payment for tuition or a stipend, before MBA students even start their first MBA class. Both have recently, if not this year, included veterans in their respective programs: Citi Pre-MBA FellowshipBank of America Merrill Lynch 2012 MBA Diversity Fellowship Program.

 

The obvious trend is including veterans in “diversity” recruiting and I have no major qualms about that. Although secretly, I must admit that most veterans would find it slightly distasteful as if veterans couldn’t get the job otherwise. After all, combat experience is earned, and all the other diversity categories one is born into. But hey, I’ll get off my pedestal – this obviously benefits veterans so I’m all for it.

 

I also want to touch briefly into why these banks are starting these veteran hiring initiatives, is it out of the kindness out of their hearts or is it more for PR reasons? Probably a touch of both, with a heavier weight on the latter.

 

Beyond the earlier link of JPMC’s recent settlement, JPMC was also involved in violating the Servicemembers Civil Relief Act (SCRA). The SCRA provides numerous protections, but the JPMC incident focused on the 6% clause, “Servicemembers may be able to reduce the interest rate on their pre-service credit cards, car loans, mortgages, installment contracts, interest charged by the IRS, secured debts under a confirmed bankruptcy plan, and other debts or obligations to 6% per year under the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. App. Section 527. However, federally insured guaranteed student loans are not eligible for this rate reduction under the Higher Education Act of 1965, 20 U.S.C.S. Section 1078(d). The SCRA specifically includes debt owed by the Servicemember individually or jointly with a spouse. Debt jointly owed by a Servicemember and individuals other than a spouse has also been eligible for the interest rate reduction. It does not matter which one of you initially incurred the debt.” Read more here. This is probably a good segway into student loans and how they seem to be impenetrable to anything…but we’ll deal with that in a later post.

 

In March 2011, units of Bank of America and Morgan Stanley have agreed to pay more than $22 million to settle charges that they improperly foreclosed on active-duty members of the U.S. military. The list goes on. Wells Fargo – here. Citi – here.

 

Obviously bad things have been done, I think you get the point by now. However, to balance out this picture, I do believe that in general, the mortgage departments were just incompetent and understaffed, so it wasn’t veterans who were specifically targeted but rather a lot of mortgages were just handled in an erroneous manner.

 

So from a historical point of view, one could definitely argue that the mortgage scandals could have been one of the motivators of the banks starting veteran hiring initiatives.

 

From a employment point of view, this is fantastic. It appears that the retail banking units are targeting enlisted soldiers and the more glamorous positions are still mainly being offered to officers who graduate from a top MBA.

2012 Credit Suisse MBA Military Boot Camp

Have you considered life on Wall Street after life in the Military? Do you have questions about the transition to corporate life? Are you concerned about how to transfer your military skills to investment banking?

Apply now for the Credit Suisse MBA Military Boot Camp, an educational outreach initiative for prior-military MBA candidates who are entering business school this fall and who are interested in a career in financial services. During this full day program you will learn about careers in Investment Banking, Sales and Trading and Private Banking. You will receive advice from previous Vets who have made the successful transition to Wall Street and will have time to network with members of the Credit Suisse Americas Veterans’ Network, the first such network on Wall Street.

Credit Suisse greatly values the military experience and is hoping to help prior-military MBA candidates develop an understanding of the different ways that the military experience can translate into a successful career in finance. We hope the boot camp is educational and helpful as you prepare for the fall semester recruiting effort.

Credit Suisse
11 Madison Avenue
New York NY 10010
Program is geared towards prior-military MBA candidates entering a full-time 2 year MBA program in Fall 2012.

Applications must be received by May 15th, 2012.

Application to this program is selective. Credit Suisse will contact you by June 1st with the outcome of your program application. Travel expenses will be covered up to $150 by Credit Suisse.

For additional information, please contact campus.diversity@credit-suisse.com.

15 May 2012

 

 

Check it out here