by Brian DeChesare Comments (37)

5 Mistakes to Avoid in a Market Meltdown

With all the news over the past few days, I’ve been receiving many panicked emails.

Will banking cease to exist?

Will the “glory days of M&A” ever return?

Is the US really being sold to China once the Fed goes bankrupt?

And most importantly, what should you do?

I don’t have a crystal ball, but I do know what it’s like to go through a recession. ¬†Back in 2000-2002, I was in the midst of starting my own Internet company right as… the “Internet economy” collapsed.

And earlier this year, I watched as most of my friends were laid off and forced into “industry.”

I don’t know how severe this crisis will be or when it will be over, but I do know of 5 mistakes you must avoid if you want to work in finance.

1) Give up on your goals.

I’ve been getting a lot of emails similar to the following:

“I’m at [school name] with a GPA of [GPA] and I’ve had previous internships at [various companies]. Can I still get into finance? Should I just give up?”

The short answer?

I don’t know, but if you give up you definitely won’t get in.

You’re certainly not going to break in effortlessly anymore – even if you go to a top school – and I’ve already been over what to do in a bad market multiple times.

If you’re asking, “But will investment banks even exist in the future?” then the answer is simple: yes, but they will look a lot different.

Companies are always buying other companies and always need to raise money, so banks will always be needed.

The remaining independent banks may merge with large commercial banks in the future, but there will still be a need for bankers.

2) Go to business school with no (or minimal) work experience.

This is a bad idea no matter what your logic.

Sure, business schools have been targeting younger candidates… but that doesn’t mean that banks are targeting younger applicants.

You stand a minuscule chance of getting into finance coming out of business school if you go straight from undergrad or with very little (1-2 years) experience . When I reviewed Associate-level resumes at my former office, most had at least 5 years of work experience.

It’s tempting to use an MBA as a way to “shield” yourself against the recession, but you’ll be hurting even more if you graduate from business school and still can’t get into finance because you went prematurely.

3) Stay 100% focused on bulge bracket banks.

I feel like I write about this point every single week, but there are now 2 really good additional reasons not to focus on larger banks: Lehman and Merrill no longer exist.

With only 2 independent US-based investment banks remaining, you’d be foolish to spend all your time chasing Goldman or Morgan – after all, who knows how much longer they’ll still exist?

It’s a different story if you were a summer intern at a large bank and are now trying to move somewhere else; in that case you can certainly try for the top names, but you should still consider other options.

But for everyone else, unless you’re applying to everything from the smallest boutiques all the way up, you’re wasting your time.

4) Stay 100% focused on investment banking.

This might seem like a contradiction of point number 1 (not giving up).

But I’m referring to short-term focus: if your long-term goal is to work in private equity or at a hedge fund, you don’t necessarily need to follow “The Track” to get there.

You may find that it’s too difficult to break into banking right now, but that you can get something relevant, go to business school and then go through recruiting again when the economy has improved.

So you should consider related fields, such as Transaction Advisory Services at an accounting firm, consulting (still hurting, but not as badly as banking), and even working in finance at a “normal” company.

And a little birdie told me a lot of startups in New York are looking for Wall Street refugees – they’re always desperate for people, even if you have to take a pay cut.

5) Rely on snake oil solutions.

No, sorry, “online degrees” will not get you into the industry. Neither will spending thousands of dollars on financial training courses.

And placement agencies that can “guarantee” you a spot at a bank?

Well, let’s just say I have a bridge in Brooklyn I’d like to sell you…

I don’t mean to disparage paid products and services: they can certainly be a part of your recruiting strategy, but you shouldn’t rely on them.

Surviving the Meltdown

If you want to survive the meltdown, there’s no magical solution: keep doing what I’ve been suggesting all along, broaden your options, and don’t fall prey to one of these 5 market meltdown mistakes.

And most importantly, in the immortal words of The Hitchhiker’s Guide To The Galaxy:

Don’t Panic.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hi! I found many articles in this site very helpful. I was graduated from a top US university with engineering degree. I then worked in financial software firm in NY for 2 years. I moved back to HK in the summer and look for career change.
    I did so many mistakes that articles have mentioned (ex. considering going to MBA because it is a bad market, planning to take LLB online). After reading the articles, I realized that I should focus and not give up what I want to do.I really appreciate the advice from the site
    However, since I am lack of IB background, it is very hard to get a role in this difficult time.It is hard to tell when market will get better and I don’t wanna look like I did not work for a long time….
    In this case, should I go to work into back office, or a consulting firm? I am worried that with my background, I can only get a IT role…
    I am not sure if I should wait to get chance to do what I am really interested or should I just start working with what are possible now.

    1. M&I - Nicole

      Network as much as you can and see what opportunities are out there. If you get a job in a role that is less than ideal, try to figure a way to craft that into something you enjoy doing or use that to move to IB. Can’t say which option is better for you because it depends on your circumstance and the projects you will be exposed to in your new job. Just work with what’s possible now and see

      1. Dear Nicole,
        Thank you so much for your advice! I will wok hard to network and see what is available!

        1. For networking in HK, I tried to look up online. However,I don see too many resource. What are some good ways that I can find those opportunity or event?
          Also, I actually had some good interviews but due to the poor economic the bank stop hiring at the last minute..will it be weird if I email IB people who interviewed me in HK before to catch up and ask advice?
          Thank you.

          1. M&I - Nicole

            Go to clubs, gyms, hang out where bankers usually go.

            No, email them. Always good to follow up.

  2. Ok not sure if this is the right place but positing it here anyway..I am an engineering major currently in my final year at NUS in Singapore and I am extremely keen on breaking into investment banking. Unfortunately, I don’t have any previous finance internships but I have worked in a few top tier software firms..I haven’t been able to secure any full-time offers and I am wondering if it is worth working for a couple of years in a back-office role like market risk, getting an MBA and then try breaking into banking..banks seem to be willing to hire people with less experience in Asia after MBA as analysts….do you think it worth applying for internships in the final school is not permitting me to delay graduation..

    1. M&I - Nicole

      Sure if you want to work in back office that is. Not sure if banks take final years as interns.

      1. I don’t but I am wondering what is the best course of action if one is unable to land a full-time offer after graduation. I have read previous posts strongly discouraging taking up a back office role but instead if I go into something non-finance/purely technical, wouldn’t be hard to land an offer even after an MBA? I can right now see only 2 choices – work in a back office role or take up a position in a top-tier software firm – the likes of Google/ there another alternative?

        1. M&I - Nicole

          I actually like the option of working at a top-tier software firm, probably more so than a back office role. I think the skills you develop at these software firms in some ways can be translated to some quant HFs (perhaps back/middle office). I think this route is more interesting that going through the “back office route”

          It really depends on what you want to do and where your interests lie. You can also network intensively and try to land yourself a role in a 2nd/3rd tier firm

          1. Thanks a lot for the advice! I am curious to know what is your opinion specifically about the ‘Market Risk’ division in terms of quality work, perception within the industry and knowledge gained while working there. The division is organized slightly differently in different banks but it basically generates reports about the risk positions as a result of the daily trading activities.

  3. How do you think the business models of GS and MS will change with respect to their capital raising efforts? It seems part of this reclassification was intended to de-leverage the companies, but also provide a more stable source of funding other than money markets so then what types of deposits will these companies be taking and what other sources of funding will they have now besides permanent access to the discount window?

    I ask because I very much doubt we’ll be seeing a Goldman Sachs branch down the street anytime soon…

    1. Yeah they probably won’t open consumer branches anytime soon. I actually don’t think their business models will change all that much, simply because they did this in large part to calm market fears and avoid further panic… they still don’t feel they necessarily *need* the consumer deposits.

      Beyond the discount window, I would imagine they will expand their retail deposit businesses (both already have them) and perhaps target the higher-end of the market.

  4. I’m amazed GS and MS did that. Less than a year ago gov’t regulations were seen as the devil…

    1. Yeah, things can change quickly in a year though…. who knows if they would have survived as independent entities, but I think they would have been pressured to change regardless.

  5. Is investment banking gonna exist in 10 years time?? and since GD and MG are now officially commercial banks……… what am i gonna do if i want to become a investment banker.

    1. Yes, it will just look different. You would go to a commercial bank that also does investment banking (Citi/JPM/GS/MS/BoA) or to a smaller independent bank.

  6. i think leveragedsellout said it best when they compared the merrill buyout to a situation where target would acquire neiman marcus

    1. Yeah that was a great analogy…

  7. these endless new developments in wall street have left me thoroughly confused. is it still desirable to apply for the remaining big names like goldman, morgan, bofa, jpmorgan, barclays, ubs, credit suisse? i feel that its still best to start a career with a big name then go small and it never works the other way around.

    also as of now goldman and morgan can have commerical banking arms and the fed has decided to clean everything up. does anyone else sense a conspiracy to centralize all money in the united states?

    1. Inquisitor, I’m also wondering what the implications are for GS MS becoming bank holding companies? does this mean the big bonuses will go away??

      1. I don’t think so… things will change, bonuses may be down but effectively they are just like JPM/Citi now… and those banks paid out high bonuses in-line with others. I think people are overly worried – it would have been far worse if they went bankrupt or were acquired.

    2. I don’t know why you -wouldn’t- still apply to those places. No reason not to.

      No one really knows what’s going to happen, and there are always conspiracies you could worry about, but in the end it’s better to get out there and take action rather than thinking too much about it.

  8. I am wondering what the work environment is like in an investment bank. Do people shout a lot or is it reasonably noisy with telephone rings. Tell me what its like in an average day. Do you feel uncomfortable or uneasy?

    I too am interested on how financial consulting compares to ibanking

    1. See my “day in the life” and “week in the life” posts. In general people don’t shout and it’s not overly noisy – remember, it’s not a trading floor. But every office is different so your mileage may vary.

  9. I was wondering if you could give more information about Financial Consulting (or post an entry about it) and how it compares and contrasts to I-Banking (duties and responsibilities, salary, key players, hours, etc.). Thanks.

    1. Will see what I can do.

  10. williambanzai7

    Sympathy for the Shorts
    (Lyrics by WilliamBanzai7)

    Please allow me to introduce myself
    Im a man of wealth and taste
    Ive been around for a long, long year
    Stole many a mans nest egg and faith
    And I was round when Livermore
    Had his moment of doubt and pain
    Made damn sure that Milken
    Washed his hands and sealed his fate
    Pleased to meet you
    Hope you guess my name
    But whats puzzling you
    Is the nature of my game
    I stuck around AIG
    When I saw it was a time for a change
    Fired the CEO and his SVPs
    While Bernanke screamed in vain
    I killed a bank
    Was best friends with Hank
    When the markets raged
    And the cold Pizzas stank
    Pleased to meet you
    Hope you guess my name, oh yeah
    Ah, whats puzzling you
    Is the nature of my game, oh yeah
    I watched with glee
    While your investment banks bleed
    Fought for ten decades
    To kill paper they made
    I shouted out,
    Who killed the GSEs?
    When after all
    It was you and me
    Let me please introduce myself
    Im a man of wealth and taste
    And I laid traps for bankers
    Who get fired before they reach Mumbai
    Pleased to meet you
    Hope you guessed my name, oh yeah
    But whats puzzling you
    Is the nature of my game, oh yeah, get down, baby
    Pleased to meet you
    Hope you guessed my name, oh yeah
    But whats confusing you
    Is just the nature of my game
    Just as every banker is a criminal
    And all the investors saints
    As heads is tails
    Just call me hedge fund joe
    cause Im in need of some restraint
    So if you meet me
    Have some courtesy
    Have some sympathy, and some taste
    Use all your well-learned risk controls
    Or Ill lay your trading book to waste, um yeah
    Pleased to meet you
    Hope you guessed my name, um yeah
    But whats puzzling you
    Is the nature of my game, um mean it, get down
    Woo, who
    Oh yeah, get on down
    Oh yeah
    Oh yeah!
    Tell me baby, whats my name

  11. The Deal Maker

    Quick Question,

    I have an eye for perfection naturally or always strive to have everything to be perfect and make sure every detail is always accounted for. I guess you could say and some have said that I am slightly OCD.

    Would this be a bad thing to mention in interviews and make me seem less attractive as a candidate?

    1. Um, if you say it like that, yes. And not because you’re a perfectionist, but because you’ll sound like… well, like someone the interviewer wouldn’t want to work with.

      I may be wrong here, but it’s always poor to list “being a perfectionist” as a weakness. By the nature of the job, being a perfectionist is an absolute strength. Ensuring valuations are exact, titles are lined up on PowerPoints, or pitch books are put together in a manner pristine is an excellent quality.

      1. Unfortunately I am clearly no perfectionist – pristine manner*, rather than manner pristine.

        1. The Deal Maker

          I agree with your thought process as it seems pretty logical.

          It might give the interviewer the idea that I may be difficult to work with.

          I guess I kinda of already had an idea but needed some reassurance on the specific topic at hand.

          Thanks for the reply Ryan.

    2. Agree with Ryan – odd to mention in an interview.

  12. […] From Mergers & Inquisitions: “I don?t know how severe this crisis will be or when it will be over, but I do know of 5 mistakes you must avoid if you want to work in finance.” […]

  13. Ah, yes, the dominos are set up in a row. Do you think the Feds panic in taking over A.I.G. was because its tentacles reached so far, worldwide, that it risked taking down a host of hedge funds right along with it?

    1. Yes, but the threat was wider than just a host of hedge funds.

  14. Scared M&A Intern

    Another good post inquisitor..nice

    What would you be thinking if you saw a resume of somebody that downgraded from a BB intern to a graduate in a no name Boutique?

    This monkey didn’t have the bananas to get the job in the BB?

    1. Well it’s obviously not a positive sign, but it’s not the end of the world… these days with a crazy market all sorts of strange things are happening. It’s less of an issue if you go to b-school vs. if you pursue PE/other finance first.

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