A Day in the Life Of...An Equity Research Analyst

I’m on the Buy side as an analyst, and have been doing so for 3+ years. I also have interaction with SS analysts, this is what I see:
1) SS associates work a 7am~7pm schedule, except in 4 out the of 52 weeks during earnings season they work from 7am til 10pm or midnight.
2) Saturday’s are rare, some choose to go in on Sunday to start the week
3) Odds of breaking into the buy side without any sell side experience is slim to none unless your dad knows a PM/analyst of the fund who’s willing to interview you.
4) IB analysts have it really tough. The pay depends on how capable the MD is at closing deals. There are analysts who do pitch books and drive deals just to see it blow up (and see zero bonus), but work the same amount of hours of an analyst who’s on a team that closes deals.
5) Buy side hours are not “lighter,” but more flexible. If your ideas are working out and the firm is making millions from your brilliant mind, go ahead and work 7hr day. If your stocks aren’t going up and you choose to waltz in at 9am and leave at 4:30pm, your comp is probably shitty and might go to zero.
 
Folks Carson is pretty much correct.
I went from the buyside to the sell side and now back to the buyside managing money. After spending time making real money decisions on a portfolio, I can tell you a few differences from my point of view:
1. SS analyst job is to analyze companies, buy side job is to buy good companies, but more importantly pick stocks! There is a difference, and a lot of people don’t get that good companies are not often good stocks. We use them to get market insights, their ratings are not that value added. Actually I want to own a stock before they upgrade it.
2. Buyside is more entrepreneurial, there is no one telling you how to analyze your companies. Models while important, aren’t driving your business. Ten models for a company means jack sh*t if the stock keeps going down. Models don’t factor in the fact that no one is buying your thesis but you!
3. Buyside is one of the few businesses where you are given a scorecard every day. Anyone can look at my portfolio performance on a daily basis and compare it to a relevant benchmark. In this way, it can be very daunting and stressful. Everyone knows when you are sucking! Been there! Sell Side is more nebulous in that respect.
4. The problem I had with the sell side was that your industry is your silo. Your job is to look at 15 companies and know everything you can about the industry. Buyside forces you to understand how the overall market affects your portfolio. Even a buyside industry specialist is more macro than a sell sider.
5. Hours are worse on the sell side, and earnings season is a mess. On the buyside, while hours can be long, you are not constantly churning out written filler, so you can actually sit back and understand how things play out.
6. Pay is more inconsistent on the buyside. There are so many types of shops, so pay is all over the place.
….just my two cents
 
The last two posts have put it best from my experience.
7-7 is a reasonable assumption for hours depending on your shop, your analyst, and the companies you cover.
 
Kevin I agree with you on all your points except number 3. I guess it depends on the type of shop. Big shops who have analysts for every friggin industry, and who have say a senior analyst covering a sector, SS would be beneficial. A lot of these folks will be career analysts at a fund company (and can make good money) so it fits. The PMs, not necessarily. Most seem to have generalist backgrounds with several years experience. I believe it boils down to the shop. Hedge funds, I would say it doesn’t matter, they just want alpha generators. They look at traders, IB’s, etc.
Sounds like you may be affiliated with a mega shop, but I could be wrong…….just like I was on this stock I just sold……
You sound solid, so best of luck in your studies as well
 
It does seems like exit opportunities are pretty decent for ER. I’ve seen some go straight into their industry into senior management positions. In fact, one former Senior Analyst / MD is now on the board of directors at my firm. And of course there is the buyside and what not.
 
Yeah I agree with what boondocksaint said. I think comment 3 is a good point actually. I’ve seen fund managers whose portfolio is really behind the index suffer a lot of stress over it.
And I’d have thought 7-7 is a reasonable stab at an average SS research day. 7-6 a lot of the time but maybe 7-10 in earnings season. The impression I get off people I know in ibanking is that the late hours are fairly constant, but I accept their hours overall may not be any worse than those in SS research. I’ve seen guys in my previous company coming in at 11am the morning after very late nights, so I guess it levels out to an extent.
 
One problem with SS reseach I’ve found is that you’re always technically “on call” and at the mercy of the markets. If a company you cover puts out a press release at 11pm you’re expected to see it and have something out for the morning package.
It’s even worse for the analysts when they are on the road marketing.
 
Thanks all for your input. I hate to hijack the topic of my own forum thread, but let’s switch gears for a second: can any ex-traders or knowledgeable folks out there comment on a day in the life of a trader? What are typical career paths there? How’s pay in comparison to SS/BS ER’s? Hours? Perhaps most relevant to me, how do most traders get their start?
 
Traders generally have better hours and more pay than ER. However, trading can potentially be very stressful since 1) a higher % of your compensation is comprised of performance-based bonuses, and 2) you can get fired for a single mistake if it is loses a lot of money.
There also doesn’t seem to be a fixed entry path for trading, as far as I have observed, anyway. Of the people I know, some are ex-quants, some are ex-sales, some clerked at exchanges, some came out of college/MBA/MFE, and a very small number used to work in middle office or other roles in the company.
 
Please don’t take any offense to this question.
How did you guys manage to get these jobs and most importantly perform on the job without even completing your CFA?
I analyze stocks on my own, and personally, the CFA is a joke compared to what actually goes into analyzing and understanding companies. My take is, if you can analyze a company properly which i believe at least those on the buyside are able to do, the CFA is like learning addition after getting A’s in calculus.
 
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