The Buy-Side vs. The Sell-Side: The Worst Way to Categorize Finance Firms?

“Yo, you’ll make bank when you move to the buy-side! Screw this stupid investment banking job.”

“Yeah, I heard everyone at hedge funds makes at least $1 million and gets a castle as their signing bonus.”

“So when’s your interview?”

Ah, yes: that classic debate about the buy-side vs. the sell-side. Although the conversation above is fictional, similar exchanges are taking place in cubicles across the world as you read this.

You hear about the buy-side vs. sell-side distinction everywhere, whether you search online, browse through you message boards, or even (gasp) talk to people in real life.

The only problem is that “buy-side vs. sell-side” is the worst way to categorize financial services firms.

Buy, Sell, or Hold: How to Break Into Equity Research and Pitch Stocks Like a Pro

So I was looking at the most popular search terms on M&I the other day, and reached two conclusions:

1. You really like that silly little cover letter template I created.
2. It seems a few people might want to hear about this thing called “equity research” – I guess that might be a good idea one of these days?

We’ve already been through everything else on the list to the right, so now we’re going to apply the magical process of elimination and focus on equity research: what it is, how you break in, and how to dominate your interviews and land offers.

You’ll get to learn all of that straight from the source: a reader who has worked in equity research at both boutiques and bulge bracket banks and seen the market in the best of times and the worst of times.

Let’s get started.

Hedge Funds vs. Institutional Asset Management: Is a Billion Dollars Really Cooler Than a Million Dollars?

This is a guest post from John Q. Buyside, a portfolio manager at a long-only asset management firm. He started Life on the Buy Side to teach you what it’s like working in asset management, hedge funds, and more. Since he wants to keep his job (for now) he must write anonymously.

Aspiring analysts often tell me that they want to work at a hedge fund one day. The most obvious reason is money.

Starting the next Facebook is way too risky if you want to make a billion dollars, so hedge funds seem like the next best alternative.

And since they’re limited to accredited investors – people with a net worth of at least $1 million or more than $200K of income – you’ve also got that air of exclusivity.

But beyond these points, few people understand the differences between hedge funds and traditional money management – how their investment strategies differ, what it takes to get in, what you do on the job, and what you do afterward.

So let’s dive right in and see whether a billion dollars really is cooler than a million dollars.