Thanks for all the upvotes and comments on the previous pieces:submitted by getmrmarket to Forex [link] [comments]
Before you understand the core concepts of pricing in and second order thinking, price reactions to events can seem mystifying at times
We'll add one thought-provoking quote. Keynes (that rare economist who also managed institutional money) offered this analogy. He compared selecting investments to a beauty contest in which newspaper readers would write in with their votes and win a prize if their votes most closely matched the six most popularly selected women across all readers:
It is not a case of choosing those (faces) which, to the best of one’s judgment, are really the prettiest, nor even those which average opinions genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be.
Trading is no different. You are trying to anticipate how other traders will react to news and how that will move prices. Perhaps you disagree with their reaction. Still, if you can anticipate what it will be you would be sensible to act upon it. Don't forget: meanwhile they are also trying to anticipate what you and everyone else will do.
Preparing for quantitative and qualitative releasesThe majority of releases are quantitative. All that means is there’s some number. Like unemployment figures or GDP.
Historic results provide interesting context. We are looking below the Australian unemployment rate which is released monthly. If you plot it out a few years back you can spot a clear trend, which got massively reversed. Knowing this trend gives you additional information when the figure is released. In the same way prices can trend so do economic data.
A great resource that's totally free to use
This makes sense: if for example things are getting steadily better in the economy you’d expect to see unemployment steadily going down.
Knowing the trend and how much noise there is in the data gives you an informational edge over lazy traders.
For example, when we see the spike above 6% on the above you’d instantly know it was crazy and a huge trading opportunity since a) the fluctuations month on month are normally tiny and b) it is a huge reversal of the long-term trend.
Would all the other AUDUSD traders know and react proportionately? If not and yet they still trade, their laziness may be an opportunity for more informed traders to make some money.
Tradingeconomics.com offers really high quality analysis. You can see all the major indicators for each country. Clicking them brings up their history as well as an explanation of what they show.
For example, here’s German Consumer Confidence.
There are also qualitative events. Normally these are speeches by Central Bankers.
There are whole blogs dedicated to closely reading such texts and looking for subtle changes in direction or opinion on the economy. Stuff like how often does the phrase "in a good place" come up when the Chair of the Fed speaks. It is pretty dry stuff. Yet these are leading indicators of how each member may vote to set interest rates. Ed Yardeni is the go-to guy on central banks.
Data surprise indexThe other thing you might look at is something investment banks produce for their customers. A data surprise index. I am not sure if these are available in retail land - there's no reason they shouldn't be but the economic calendars online are very basic.
You’ll remember we talked about data not being good or bad of itself but good or bad relative to what was expected. These indices measure this difference.
If results are consistently better than analysts expect then you’ll see a positive number. If they are consistently worse than analysts expect a negative number. You can see they tend to swing from positive to negative.
Mean reversion at its best! Data surprise indices measure how much better or worse data came in vs forecast
There are many theories for this but in general people consider that analysts herd around the consensus. They are scared to be outliers and look ‘wrong’ or ‘stupid’ so they instead place estimates close to the pack of their peers.
When economic conditions change they may therefore be slow to update. When they are wrong consistently - say too bearish - they eventually flip the other way and become too bullish.
These charts can be interesting to give you an idea of how the recent data releases have been versus market expectations. You may try to spot the turning points in macroeconomic data that drive long term currency prices and trends.
Using recent events to predict future reactionsThe market reaction function is the most important thing on an economic calendar in many ways. It means: what will happen to the price if the data is better or worse than the market expects?
That seems easy to answer but it is not.
Consider the example of consumer confidence we had earlier.
One clue is to look at what happened to the price of risk assets at the last event.
For example, let’s say we looked at unemployment and it came in a lot worse than forecast last month. What happened to the S&P back then?
2% drop last time on a 'worse than expected' number ... so it it is 'better than expected' best guess is we rally 2% higher
So this tells us that - at least for our most recent event - the S&P moved 2% lower on a far worse than expected number. This gives us some guidance as to what it might do next time and the direction. Bad number = lower S&P. For a huge surprise 2% is the size of move we’d expect.
Again - this is a real limitation of online calendars. They should show next to the historic results (expected/actual) the reaction of various instruments.
Buy the rumour, sell the factA final example of an unpredictable reaction relates to the old rule of ‘Buy the rumour, sell the fact.’ This captures the tendency for markets to anticipate events and then reverse when they occur.
Buy the rumour, sell the fact
In short: people take profit and close their positions when what they expected to happen is confirmed.
So we have to decide which driver is most important to the market at any point in time. You obviously cannot ask every participant. The best way to do it is to look at what happened recently. Look at the price action during recent releases and you will get a feel for how much the market moves and in which direction.
Trimming or taking off positionsOne thing to note is that events sometimes give smart participants information about positioning. This is because many traders take off or reduce positions ahead of big news events for risk management purposes.
Imagine we see GBPUSD rises in the hour before GDP release. That probably indicates the market is short and has taken off / flattened its positions.
The price action before an event can tell you about speculative positioning
If GDP is merely in line with expectations those same people are likely to add back their positions. They avoided a potential banana skin. This is why sometimes the market moves on an event that seemingly was bang on consensus.
But you have learned something. The speculative market is short and may prove vulnerable to a squeeze.
Two kinds of reversalsFairly often you’ll see the market move in one direction on a release then turn around and go the other way.
These are known as reversals. Traders will often ‘fade’ a move, meaning bet against it and expect it to reverse.
Logical reversalsSometimes this happens when the data looks good at first glance but the details don’t support it.
For example, say the headline is very bullish on German manufacturing numbers but then a minute later it becomes clear the company who releases the data has changed methodology or believes the number is driven by a one-off event. Or maybe the headline number is positive but buried in the detail there is a very negative revision to previous numbers.
Fading the initial spike is one way to trade news. Try looking at what the price action is one minute after the event and thirty minutes afterwards on historic releases.
Some reversals don't make sense
Sometimes a reversal happens for seemingly no fundamental reason. Say you get clearly positive news that is better than anyone expects. There are no caveats to the positive number. Yet the price briefly spikes up and then falls hard. What on earth?
This is a pure supply and demand thing. Even on bullish news the market cannot sustain a rally. The market is telling you it wants to sell this asset. Try not to get in its way.
Some key releasesAs we have already discussed, different releases are important at different times. However, we’ll look at some consistently important ones in this final section.
Interest rates decisionsThese can sometimes be unscheduled. However, normally the decisions are announced monthly. The exact process varies for each central bank. Typically there’s a headline decision e.g. maintain 0.75% rate.
You may also see “minutes” of the meeting in which the decision was reached and a vote tally e.g. 7 for maintain, 2 for lower rates. These are always top-tier data releases and have capacity to move the currency a lot.
A hawkish central bank (higher rates) will tend to move a currency higher whilst a dovish central bank (lower rates) will tend to move a currency lower.
A central banker speaking is always a big event
Non farm payrollsThese are released once per month. This is another top-tier release that will move all USD pairs as well as equities.
There are three numbers:
In general a positive response should move the USD higher but check recent price action.
Other countries each have their own unemployment data releases but this is the single most important release.
SurveysThere are various types of surveys: consumer confidence; house price expectations; purchasing managers index etc.
Each one basically asks a group of people if they expect to make more purchases or activity in their area of expertise to rise. There are so many we won’t go into each one here.
A really useful tool is the tradingeconomics.com economic indicators for each country. You can see all the major indicators and an explanation of each plus the historic results.
GDPGross Domestic Product is another big release. It is a measure of how much a country’s economy is growing.
In general the market focuses more on ‘advance’ GDP forecasts more than ‘final’ numbers, which are often released at the same time.
This is because the final figures are accurate but by the time they come around the market has already seen all the inputs. The advance figure tends to be less accurate but incorporates new information that the market may not have known before the release.
In general a strong GDP number is good for the domestic currency.
InflationCountries tend to release measures of inflation (increase in prices) each month. These releases are important mainly because they may influence the future decisions of the central bank, when setting the interest rate.
See the FX fundamentals section for more details.
Industrial dataThings like factory orders or or inventory levels. These can provide a leading indicator of the strength of the economy.
These numbers can be extremely volatile. This is because a one-off large order can drive the numbers well outside usual levels.
Pay careful attention to previous releases so you have a sense of how noisy each release is and what kind of moves might be expected.
CommentsOften there is really good stuff in the comments/replies. Check out 'squitstoomuch' for some excellent observations on why some news sources are noisy but early (think: Twitter, ZeroHedge). The Softbank story is a good recent example: was in ZeroHedge a day before the FT but the market moved on the FT. Also an interesting comment on mistakes, which definitely happen on breaking news, and can cause massive reversals.
Decisions on a PHEIC always involve politics .... West African countries discouraged a declaration in 2014 after they were hit by the largest Ebola virus outbreak on record, mainly because of concern about the economic impact.------------------------
Since 2017, Trump’s travel bans have never been rooted in national security—they’re about discriminating against people of color. They are, without a doubt, rooted in anti-immigrant, white supremacist ideologies. This travel ban is no different.On Feb 03, criticizing Trump for his travel restrictions continues. Chinese foreign ministry spokeswoman Hua Chunying (华春莹), a Peking University professors James Liang (梁建章), New York Times, the Nation, OBSERVER, the Boston Globe, Yahoo, and Daily Kos were saying,
China's delegate took the floor ... and denounced measures by "some countries" that have denied entry to people holding passports issued in Hubei province - at the centre of the outbreak - and to deny visas and cancel flights.Also on Feb 03, China is expected to gradually implement a larger stimulus packages (in total) than a USD $572 billion from 2008. — We'd never find out but my guess is that the fund will probably go to Shanghai clique.
The speed ... pushing through a new diagnostic test shows just how seriously they’re taking the potentially pandemic threat of 2019-nCoV. It’s also a sign that the world is starting to learn how to deal with an onslaught of new pathogens.Also on Feb 04, the Wuhan Institute of Virology and China's Academy of Military Medical Sciences (AMMS, Chief Chen Wei belongs to) have jointly applied to patent the use of Remdesivir. Scientists from both institutes said in a paper published in Nature’s Cell Research that they found both Remdesivir and Chloroquine to be an effective way to inhibit the coronavirus.
As countries are trying to develop their own control strategies, they are looking for evidence of whether the situation in China is getting worse or better. [But] We still don't have very basic information. [since the WHO just entered China] We hope that information will be coming out.On the same day, the CDC reports that the 15th case in the US was confirmed. The patient was a part of group who were under a federal quarantine order at the JBSA-Lackland base because of a recent trip to Hubei Province, China.
Fast! There is no time difference to raise urgently needed materials! Some Overseas Chinese have used their professions in the field of medicine in order to purchase relevant materials Hubei province in short of supply (to send them to China). .... Some Overseas Chinese took advantage of the connection resources, opened green transportation channels through our embassies and consulates abroad, and their related enterprises, and quickly sent large quantities of medical supplies (to China), making this love relay link and cooperation seamless.On Feb 18, Reuters reports that 3M is on the list of firms eligible for China loans to ease coronavirus crisis.
There is no indication from the list that loans offered will necessarily be sought, or that such firms are in any financial need. The Bank of Shanghai told Reuters it will lend 5.5 billion yuan ($786 million) to 57 firms on its list.On Feb 21, Xi Jinping writes a thank-you letter to Bill Gates for his foundation’s support to China regarding COVID-19 outbreak.
.... the WHO said it has repeatedly asked Chinese officials for "disaggregated" data — meaning specific figures broken out from the overall numbers — that could shed light on hospital transmission and help assess the level of risk front-line workers face. "We received disaggregated information at intervals, though not details about health care workers," said Tarik Jasarevic of the WHO. — The comment, in an email on Feb 22 to the Post, was one of the first instances that the WHO had directly addressed shortcomings in China's reporting or handling of the coronavirus crisis.On Feb 27, after missteps, the CDC says its test kit is ready and the US started to expand testing.
Dr. Li Wenliang said in the interview with Caixin media; [in Dec 2019] another doctor (later turned out to be Dr. Ai Fen) examined and tried to treat a patient who exhibited SARS-like symptoms which akin to influenza resistant to conventional treatment methods. And "the family members who took care of her (the patient) that night also had a fever, and her other daughter also had a fever. This is obviously from person to person" Dr. Li said in the interview."------------------------
If China retaliates against the US at this time, it will also announce strategic control over medical products, and ban exports of said products to the US. ... If China declares today that its drugs are for domestic use only, the US will fall into the hell of new coronavirus epidemic.On Mar 05, Shanghai Index has recovered the coronavirus loss almost completely.
To make it clear again on coronavirus: CureVac has not received from the US government or related entities an offer before, during and since the Task Force meeting in the White House on March 2. CureVac rejects all allegations from press.On Mar 16, the fan club of European globalists has published a piece titled, "China and Coronavirus: From Home-Made Disaster to Global Mega-Opportunity." The piece says:
The Chinese method is the only method that has proved successful [in fighting the virus], is a message spread online in China by influencers, including many essentially promoting propaganda. ... it is certainly a message that seems to be resonating with opinion leaders around the world.On the same day, unlike China that had one epicentre, Wuhan city, the US now overtakes China with most cases reporting multiple epicentres simultaneously.
Although optimal dosing and duration of hydroxychloroquine for treatment of COVID-19 are unknown, some U.S. clinicians have reported anecdotally different hydroxychloroquine dosing such as: 400mg BID on day one, then daily for 5 days; 400 mg BID on day one, then 200mg BID for 4 days; 600 mg BID on day one, then 400mg daily on days 2-5.------------------------
|I have a good friend who is a VP at your firm . They blamed the entire Financial crisis on ' poor people who could not afford their mortgages ' they said this was pretty much he opinion among the investment banks . How do you feel about what happened to Greece and Goldmans hand in it ?||That is not true. Opinion is very much split within the investment banks and there is no right or wrong answer. I personally don't believe at all that the crisis was caused by 'poor people' - and I don't like that sort of categorization of people in the first place. There are perhaps 15/20 different institutions you could blame for the crisis, there's no way of isolating individuals. I'm not sure what exactly you think GS's hand in the Greece affair was. Of course it's a sad story and I feel remorseful - I recently donated £50,000 at a charity ball to help rebuild one of the islands which has almost been burned to the ground. But ultimately Greece employed GS at the time because they wanted to fudge their finances so as to meet entry requirements for the Euro i.e. the greek government was knowingly employing GS to help perform an extremely risky task - GS didn't force anything upon them. If the experiment explodes 10 years later (as it did), should GS really be the party to blame?|
|The next day, you are flipping through television channels and randomly come across a pre-season CFL game between the Toronto Argonauts and the Saskatchewan Roughriders. Knowing your inevitable future, do you now watch it?||Yes of course i fucking do. The future is inevitable. Chuck Klosterman i like your name.|
|I love seeing the ignorance that emerges in these AMA's relating to investment bankers. I am really interested in a career in either IB or Consulting, have a few questions for you.||Thank you to fletch below for answering this question.|
|1) How did you cope with the hours? I like working hard, I like working for my money but I also like enjoying free time and having a social life. When working a 100 hours as an analyst that would certainly have to suffer 2)What were you academic results like through your degree? I'm currently in my second year and will be realistically looking at 2.2, 2.2, 2.1 and 2.1 (years 1-4). This summer I'd hope to get an accountancy internship in one of the big 4 followed by an internship next year in one of the large IBs. I know there's more to a candidate than solely their academic credentials + internship but would this stand me well for a BB in London? (Top Irish university, undergrad will be in Business and French) 3) What is it that makes you enjoy this job? I know the paycheck is certainly a bonus but you've said there's more to it than that?||Whatever your breakdown between modules is, you need a 2.1 overall. Even if your average is 60% or 61%, that's enough to get you past the minimum requirements and through to interviews. After that it's up to you - they'll take someone with a good business mind and strong communications skills irrespective of whether they average 60 or 78 or 92. I disagree with him. My job is extremely rewarding and i wouldn't swap it for any other industry at the moment. If you want evidence of people enjoying their jobs look at the number of years they spend at their respective firms. Most of the partners at GS are 'home-grown' and have spent 20/30 years sweating away but don't regret it for a second.|
|Do you realize that in countries like Spain you're seen as an evil person that only wants to get profit and don't have any soul or feelings and probably kicks puppies for fun? If so, how do you feel about it?||Yes and understand their anger but it should be re-directed to politicians!|
|Proof? and of course... how much did you make in 2012 approximately?||Approx 600k. How do upload proof e.g. photo evidence?|
|Sorry, new to reddit!|
|Do you have free ticket for me? Always looking for handouts.||What is it young people say, lolz??|
|I'm very curious of your opinion of Secretary Geithner's role in LIBOR. Do you think he was guilty? innocent? Thanks!||LIBOR scandal is way too complicated to explain at 2.30 am after a few beers. Many active players are implicated and i think he will be seen in the wrong eventually like many others.|
|What hours do you work?||Approx 80 hours a week not incl. flight time I go to festivals in Europe but would love to go it. Do you have free ticket for me?|
|If the concept and idea of a monetary system was replaced with something better (hypothetically) what would you do? As in for a career or what not since now you are jobless.||Resources will always be scarce so someone will have to ensure an optimal allocation. There will always be a market of some kind whether it be a public market or an internal government one.|
|Hypothetically we could have unlimited power, molecular production, and master matteenergy conversion. Would that change your answer?||Good interview question. I'll keep it in mind.|
|In your view, are there any regulations that could meaningfully alter the moral hazard typified by the 2008-2009 bailout of the financial sector? If so, what might they be? And if not, to what extent does regulatory capture play a role?||Regulatory capture is a seriously problem not just in banking e.g. also in the energy business. How do you reduce it? It won't happen unless the public demand it, as everyone with power tends to benefit from it and so they won't make meaningful steps to change anything, i.e. its a win win situation for government and business. However it needs more than just 'occupy movements' but rather i am talking the mass voter population.|
|Have you seen @gselevator on twitter? if so have you ever contributed/is it legit?||Haha yes i have seen it and no its not legit, well at least i think its not. Seriously though the elevator chats can be quite entertaining and revealing.|
|Do you use a mouse when you work on excel?||Are you joking?|
|In your opinion, do you think the money you make is worth the hell that you go through to make it?||I love my job and so i am lucky that the money is not the only motivator.|
|But yes i love checking my bank balance at an atm.|
|How can i break into finance with a sub-par gpa?||Network and try non BB firms.|
|A company founded by 100 duck sized horses. or A company founded by 1 horse sized duck?||100 duck sized horses every time. Basic risk management theory - don't put all your eggs in one basket. If that 1 horse sized duck isn't exceptional, your business is going down the tubes.|
|Prior to the collapse, did you have any idea what was about to happen?||It was getting obvious that there was a bubble, but never predicted how great the fallout would be and that in 2013 we would still be suffering|
|What do you do day to day?||I work in the energy field in Europe but don't want to get too specific. Day to day we advise natural resource companies on all things financial such as m&a and financing strategy and then execute on their behalf. So I am on the corporate finance side rather than sales and trading. However I work closely with the syndication and sales guys such as if we are executing an IPO or a follow-on share offering.|
|I have a buddy who's small but established clean tech company needs money building biodiesel manufacturing plants around the US that run off garbage and wood chips. The technology is actually coming from a company based in Sweden. Can you help him on the money side?||Send me a link to their website.|
|I find clean tech very interesting.|
|How did you get your job?||Did a summer internship then got FT conversion.|
|What college did you go to?||I went to LSE (university in the UK)|
|What jobs did you work before getting this one?||Did another internship whilst at university at an oil company.|
|At what age did you get this job?||22.|
|I hear the GS company culture is like " a frat on steriods" true or false?||False more than true but depends on team.|
|Is it as cut throat as I have heard with the bottom 50% of people getting sacked each year to make way for new guys who will probably be sacked the year after?||Bottom 5% is more accurate. 7-8% in a bad year, 3-4% in a good year. It's a fine line between 'cut throat' and having a 'healthy competitive atmosphere'. But we'd be out of business very quickly if we kept firing half of our staff every year...|
|Is there any stock I should look into in 2013? Long term or short term.||Short term- African Barrick Gold. The chinese walked away and so the share price plunged and despite serious operational issues, the massive drop has presented a golden buying opportunity.|
|Long term- anything to avoid inflation, inflation scares the crap out of me and is going to be a big problem in the Uk and elsewhere in the future.|
|Also buy into soft commodity boom e.g. meat in africa, think zambeef etc if you can find an attractive entry point.|
|What's the best preparation for an interview with an i-bank? I'm over here in the states and come from a non-target.||Read WSO, the forums are full of useful hints and tips especially for non target guys. Depending on what area you are applying for, make sure you know some really good examples and stock pitches as it is amazing how many candidates lack knowledge e.g. if applying for ECM for god sakes know some of the recent IPO's and likewise for equity research have good stock pitches and have conviction when presenting. Best of luck!|
|How important is your undergrad majogpa I'm double majoring in Econ/Conflict resolution studies with a possible minor in poly sci (depending on how the credits work out) I got a 3.9 gpa last semester but it only brought my overall gpa to a 2.4 because fuck klonopin. I should have at least a 3.0 by graduation, but I'm wondering its worth it to pay for and retake my first semester. Can I have $373 dollars? :D :D I promise only to get moderately drunk with this money. Sorry, a lot of questions, thanks for answering. Oh also, one last thing, all else being equal, is calc I enough math to apply for analyst job? or do I need more?||Undergrad course choice is not that important for IBD but obviously for more quant roles you need maths skills Again i am sorry but i am not very clued up on GPA Ok i give you money but first you have to register yourself as a charity so that you can gift aid it and get much more!|
|Where did you go to college?||LSE.|
|As an undergrad? How hard was it? I hear it's very difficult.||Yes, undergrad.|
|Harder than most places depending on your course. Especially as you are competing with loads of kids from Asia who do extra calculus to relax.|
|How do you see regulation affecting the overall banking culture? Everything I have been reading and what people have been saying is that the culture is changing. Have you been seeing this?||I recommend reading "The Culture of Success" by Lisa Endlich.|
|Also how do you like the goldman culture?||Regulation is hurting us...but: Link to business.financialpost.com|
|How much total did you make in each of your years at the firm?||I don't want to get into specifics.|
|But for your first three years as an analyst roughly 50k-70k (£ not $)|
|As an associate 120k-160k.|
|After that the numbers get exciting.|
|What tools do you use on a regular basis?||Excel, Outlook, Excel, Outlook, Excel, Outlook...powerpoint.|
|What is the biggest reward of working in IB? Where I study, students with high grades are pushed to chase the prestigious internships firms like GS, MS, etc offer. Their reasoning why they chase these jobs is that they think it is the highest (prestige) in finance they can go or are attracted by the money. It seems shallow to me. What does IB offer that makes your career personally fulfilling? Why didn't you choose to work elsewhere?||I find what i do at the front end of the energy sector fascinating. If your interested in business or globalisation or other similiar areas then IBD is pretty much at the cutting edge of it.|
|Thanks for the reply! When you were first starting out at GS, were you able to balance a personal life aside from your work? Has it gotten easier as you have gained more experience? Would you recommend IB as a field to pursue to your own children today? Thanks again!||I'd say during my first 3 years as an analyst the 'balance' was almost non-existent i.e. i was regularly working 100+ hours/week. Since then it's become easier year by year and i think that's true for most. And yes certainly i would encourage my children to pursue it - not that i have any yet.|
|Where did you go to uni what was your gpa? how many physics majors work their? did you start off as an intern? sorry for rapid firing questions.||LSE (london school of economics) - first class honours but don't know how that translates into GPA.|
|I know only 3/4 physics majors in the office at the moment.|
|Yes started as an intern.|
|Do banker run the world? how much political influence do they really have?||It works two ways. Some bankers have their fingers in politics in a way they perhaps shouldn't. But equally many politicians have their fingers in banking and can force our hands.|
|How hard is it for a non ivy leager studying finance to get an entry level job at GS? what about internships?||Tough. But with enough internship experience beforehand it's possible.|
|What do you think of Forex? Would you ever trade on it with your personal money?||Difficult to answer - you can trade forex in a million different ways - some ways are more interesting than others. I don't personally trade it, but others forge a very successful career out of it.|
|What was your bets investment in? (If that's how it works)||That's not really my role in IBD.|
|But outside GS I invested in the Shanghai property market a decade ago or so. My 4 flats there are now worth 10-12 times what they were worth then.|
|WTF caused the 2010 flash crash?||Good question. Nobody knows for sure.|
|From the link you've provided, I find no.2 the most plausible explanation. But I would also add 6. UBS did something stupid again.|
|As hardcore capitalists what is your feeling about (management of) banks that seem to live under the impression that profits are for a happy few while losses should be carried by tax-payers?||That's not what I believe at all.|
|And by the way all of us are tax payers too. The top 5% contribute approx. 50% of the government's taxation revenue. So if losses are being 'carried by tax-payers' - that doesn't exclude people in the banking industry by any means.|
|Matt Levin at Dealbreaker (former GS guy) describes Investment Bankers as "Travelling money salesmen". Do you feel that this description is apt?||The operative word in your question is 'former'|
|Do you think that's how he described investment bankers whilst he was still with the firm?|
|People tend to get very bitter and sensitive after they get fired. See Gregg Smith for further evidence..|
|Is an MBA necessary to be competitive when looking for a job or is a B. Comm enough to compete with others when looking for jobs in the industry?||Depends on what entry point - if you do an mba then you apply for associate entry whereas b.comm is an undergrad degree and so you apply for analyst roles. If you do a b.comm at a top university/college and get some internships then you should be well placed. Good luck!|
|Do any of your co-workers frequent Reddit?||I imagine less than 0.1%.|
|Then again 2 people on this feed at least have claimed to be my co-workers, so who knows...|
|Since you're new to Reddit, what made you want to do an ama here?||I'd like to alter the public perception of bankers - not all of us are the obnoxious greedy individuals you read about in the media.|
|I'm also extremely interested in hearing what non-finance people see as our key economic issues at the moment - this seemed a good way to find out.|
|Proof?||How do i upload photos? i will upload photo proof. Sorry not very experienced with reddit!|
|I am a senior in high school and I am interested in majoring in either accounting or finance, but I don't think I know enough about either career path to make the best decision, can you explain the large differences the two paths I would go down depending on major, or any advice that may influence my decision that I would not know at this point?||What you choose to study doesn't necessarily determine the industry you'll end up in. We have guys in the office who studied history, languages, even medicine. Just go for what interests you the most and focus on getting high marks.|
|Curious as to what kind of degree you hold/what was your GPA in college?||BSc. Economics degree from LSE. First class honours, don't know about gpa|
|I used to work for the swiss banks and swiss stock market indirectly, and have a few friends in the banking business, including GS and Nakamura in London. What is your personall opinion on prostitution, cocaine, and medication misusage in your business? Also, also what is your stance on GS' questionable involvment in Backpage.com?||With regards to backpage.com, the guys on the deal did not do their KYC checks properly. KYC checks are crucial for banks- your reputation and future success is more important than any single customer. Look up riggs bank and the Obiang family and then you'll see!|
|Possible. But realistically those kind of excuses are given no matter what really happened. For a company as big and powerful as GS I can only take it with a grain of salt. Are you content in the way GS does business from a moral point of view?||It's either a pinch of salt, or a grain of sand...|
|Thanks. I'm not a native english speaker and have not used it regularly for years, so it's gotten pretty shit. Any chance you answer the other questions?||Yes, apologies. I think some of our deals have been morally reprehensible in the past. The same goes for any major investment bank. But i think we've done a very good job in 'cleaning up our act' over the past few years and the public has played a large part in that. With any luck we will see a much healthier banking industry soon.|
|How accurate is what is said on the Twitter handle @GSElevator?||It's grossly exaggerated, but not entirely inaccurate...|
|You guys got trolled hard. A GS IBD guy not knowing how to upload something to the internet? Seriously wtf. Probably some guy from wso who wanted to feel like he was "in".||Link to i.imgur.com Just doing some work now! Link to i.imgur.com In case you wondered what Lloyd's signature looked like.|
|Is there anyway you can help me out, connections or anything, someone I should talk to to get a interview? Can you interview me, I shall forward you my resume!||Private message me and we will discuss. Sure i can help you out. I know how tough it is for you guys who are trying to get in!|
|Any thoughts on the MSI/SSG mini-scandal this week?||Yes but won't comment.|
|Very hush hush.|
|I also work for GS. Which building are you in? I'm based in PBC. Also IBD, North. Would do an AMA and provide proof.||I'm in PBC too, moved from RC quite a few years ago. I'm not sure exactly what sort of proof i'm supposed to provide...?|
|Would you say you were groomed for this kind of work from a young age? LSE is an elite school. Did you go to elite private schools growing up or were you an exceptional student at a normal school?||Yes, Jimmy groomed me from four years old|
|Do you like your job, or should i say career?||Yes. If i did not then i would go and sail around the world again.|
|From your experience, how relevant is CFA nowdays?||Definitely worth doing.|
|How large was your Xmas bonus and did it get taxed over 50%?||See below - total comp was c.600k and yes taxed above 50%|
|You said in other replies that you were 22 when you got this job and make 600K now. How old are you now, and how long did it take you to get the that salary level? Is it all commission?||Was analyst at 22 and then moved up the ranks. Just turned 30, feeling old now!.|
|Can you give some insight on the business model of Investment banking? (I have no clue to be honest) . And what does a portfolio manager do exactly?||Portfolio manager is not IBD. He/she would work in investment management e.g. for blackrock or GSAM or a hedge fund.|
|I'm currently writing a thesis on the future of rentierism in the gulf with an emphasis on Saudi Arabia. I don't have much of an economic background apart from this, but the international energy market is obviously important to my research. Can you recommend any good (preferably free or low cost) primers and newsletters on the subject?||Hmm there are many on energy market but not too sure about rentier specific ones. Will have a think. I did my university thesis on Saudi and so will have a dig around.|
|How do you live with yourself? Knowing that the company that you work for doesn't give a fuck about you or anybody. All they care about is money. They have ruined america many times over. Seriously, how do you live with yourself?||Actually our business is dependent on America and more importantly the rest of the world's prosperity. So actually our interests are nicely aligned.|
|Link to www.rollingstone.com. Seems to me like your bosses and former bosses don't give a flying fuck about anyone but themselves. Can you name one good thing Sachs has done since you have been there?||I think you meant 'don't give a flying fuck" in your comment.|
|Do you happen to work with quantitative analysts?||Depends which deal we are working on. Sometimes we need them, other times we don't.|
|What's your retirement savings invested in?||Property (international and uk), shares mainly through tax efficient ways e.g. isa and EIS, pensions and artwork.|
|No swiss bank account i am afraid.|
|"The first thing you'll realize is that they are extremely disciplined. You would never come across a Goldman employee, who would, after two or three beers, say "My colleagues are a bunch of dickheads" From Money and Power William D Cohan. What do you have to say about this?||I agree with it.|
|What advice would you give someone who is interested in going into finance and is currently in university. What would you have liked to do in your time spent at LSE now looking back?||Party more! You only live once. You can have that advice for free.|
|Thanks for the AMA. Do you know anybody I could speak with regarding interviewing and internship opportunities?||Private message me.|
|Doing an AMAA are you putting your job at risk for releasing company secrets/opinions whatever?||I've not released a single company secret.|
|Edit: added an A to AMA.||There's nothing in my contract to say I can't express my own opinions.|
|What do the hopes and dreams of Americans taste like?||Raspberry sorbet, in my opinion|
|What is your feeling on the separation of traditional banking and investment banking as is proposed by the FSA?||I think overall it's sensible - Barclays being the best example of why they should be separated.|
|At GS specifically of course we're not involved in traditional retail banking at all so it's not the most pressing issue for us at the moment.|
|You mentioned 80 hour work weeks. Could you explain the timeline for your typical work day. Do you work 7 days per week? Is your work more project based where you go non stop and have some time off between projects?||There's no typical working day - some days are 18 hours and others are 12. Depends entirely what stage of a deal we are at. Generally I work 5/6 days a week, but keep in email contact with the office 24/7.|
|Yes, entirely project based. But if we are doing our jobs properly there's not much 'time off' in between.|
|I'm currently on target for a 2:1 or a first at university in my economics degree. But due to a slight hiccup in my a-levels, in which i got A* A C, still managed to go to a top 10 university but do they look at the C, which was in maths.||Your university grades are definitely more important. If you do well in a mathematical module at uni that will allay any fears they have about an A-level grade.|
|Do they look at a-level grades and expect a minimum maths grade? I'm not bad at maths by any means, just an unfortunate anomaly in the exam season.||Which uni are you at and what do you study?|
|Manchester and economics BA - but i have econometric modules and another mathematical module for 2nd year.||Any chance of switching it to a BSc? Immediately reassures employers about your quantitative skills..|
|Hello there, first of all I want to thank you for doing this AMA. I am a dutch college student and currently I'm writing an essay about the BRIC countries. I used your book to write down predictions of their economic future, and I'd like to ask: did you participate in writing that book?||Are you referring to Jim O'Neill's book? I have a copy on my desk, but no I wasn't involved in writing it.|
|What do the guys at GS think about @gselevator?||See same q&a earlier on!|
|How often do interns get recommended to come back?||In a good year, approx. 50% of an intern class will get hired.|
|In a bad year (2008 for example) perhaps only 10% or 20%|
|Any opinion on Nautilus Minerals?||Can't comment on that company i am afraid.|
|How do you feel about manipulating the currency markets to screw over the average retail trader?||I don't know what you are talking about.|
|Have you ever seen American Psycho?||Yes.|
|I am going to copy and paste this in an email and send it around my team. You will famous at the firm, well at least in my team in london anyway! Yes of course i fucking do. The future is inevitable. Chuck Klosterman i like your name.||That would also be an awesome interview question! And i give them 5 secs to answer.|
|I highly doubt GS interns work for free. I've almost never heard of an internship in finance that didn't pay -- most firms I've encountered usually pay the same base wage as the first year full timer positions you are interning for.||Interns in front office at GS in london get circa £42k pro rata. So not bad for a summer job and remember no tax as they are below threshold across the year!|
|Gold Mansachs.||Not sure about that one.|
|I prefer Goldman Snachs, the name of our canteen.|
|Yes, Jimmy groomed me from four years old||But yes went to a private boarding school before. Widening the diversity of applicants in IB is a key target for HCM.|
|What is the future of investment banking in a new world order where both governments and the people are fed up with the excesses that led us into this credit crisis.||The industry is always evolving, that's what makes it an exciting industry to be in. I imagine it will take us a good few years to fully regain the trust of certain clients, but ultimately if this whole saga causes us to readdress our methods and practices to improve our service then in the long run it's a positive outcome.|
|PS. Do you not think people should be fed up with the governments too, as well as the banks?|
|Not OP but I can answer this as a 2012 intern who got converted for Programming. A Math degree is a good +. There are 2 ways. Either join in as a programmer, show your merit and change departments, ie move to Quant side. Other option is to get a MBA, and join the I-Banking dept you want.||What's your name?|
|Do you have any books or resources you'd recommend the layman for learning investment skills (i.e. the wealthy barber) I ask because i feel there is a lot of crap out there and would like to genuinely learn.||I have never heard of the wealthy barber.|
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