by Brian DeChesare Comments (41)

No, Don’t Go Back to School, Become a Ski Bum or Even Think About Chinese Gold Farming: Why You Shouldn’t Time the Market

“Wait, so should I go to business school?  Things will be better 2 years from now, right?”

“Should I join the Peace Corps and start my job search afterwards?”

“What if I become a ski bum temporarily and then take advantage of the next upturn in the market?”

No, no, no.

The market might be much worse 2 years from now. The world might go into a deep, 20-year depression that makes that Great Depression thing look like a minor blip.

Or maybe we’ll pull through this in under a year and get back to those attention-starved models and bottles.

But truthfully, I haven’t a clue as to what will happen and neither does anyone else – and trying to “time the market” is like spending all your spare cash on lottery tickets: time-consuming and expensive with no guarantee of a payoff.

The Flawed Logic of Timing the Market

The most commonly used “logic” goes like this:

“Right now, things are really bad and getting worse. But no recessions last longer than 1-2 years, and everyone thinks things will be much better by then.

So if I go to business school, or go and do something else for a few years, I can be in a much better position when I come back and start interviewing after things have picked up.”

This logic depends on 3 key assumptions:

  1. The market will get even worse in the near future.
  2. No recessions last longer than 1-2 years.
  3. You will be in a better position if you do something unrelated, such as school, travel or volunteer work, for a few years.

But forget about CNBC or what you’ve read from “the experts” – are those key assumptions true?

So, Will Things Keep Getting Worse?

Sure, back when Bear Stearns failed we thought we had reached a bottom. And then when Freddie and Fannie went under, we thought that was the real bottom.

And then September came.

So the market has certainly taken a turn for the worst – but will it keep worsening in the near future? No one knows.

No Recession Lasts Longer Than 1-2 Years, Right?

Wrong – just consult Wikipedia. Sure, the longer recessions on the list are from a long time ago – but pay attention to what’s written under “Causes” for the “Great Depression” entry:

“Stock markets crashed worldwide, and a banking collapse took place in the United States. This sparked a global downturn…”

Sound familiar?

You’ll Be Better Off Elsewhere, Right?

Sure, it’s better to volunteer somewhere rather than watch TV all day.

But is it better to jump into business school if you have almost no experience?

Will teaching English in Asia for 2 years give you that needed boost in banking or consulting interviews?

No on both counts – and we’ll see why in more detail below.

Why Timing the Market is a Bad Idea

There are 3 major flaws with trying to time the market:

  1. No one knows when, how, or by how much the market will improve.
  2. You may not, in fact, be better off with whatever you do in the meantime.
  3. Everyone else is thinking the same way you are.

We’ve already gone into some detail on #1 – no one can predict the future.  And from our list of historical recessions, we know they can last anywhere from 1 year to…

23 years.

Not to be pessimistic or anything.

Will You Be Better Off Elsewhere?

No, not necessarily. There are several ways you can get this wrong, but one common mistake is thinking that an MBA program will be a gateway into whatever bank (or other job) you’re after.

These days business schools are recruiting younger and younger students. But don’t be misled – getting into business school and getting into investment banking via business school are 2 very different things.

Unless you’ve had substantial work experience (3-5 years, at the minimum) it’s tough to get into banking.  We usually placed Associate candidates with less experience in the “pass” pile.

Another popular option is to work at a nonprofit, volunteer, teach English or do other “non-business work.”

Only one problem: this type of strategy doesn’t work well for getting into finance.  The less relevant your industry is, the more of an uphill battle you’ll face – and the longer you’ve been doing it, the steeper the hill will be.

I’d refer you to some of my friends who just returned from teaching English elsewhere in the world for more on this one, but they’re too busy looking for work right now.

Everyone Else is Thinking the Same Way You Are

It doesn’t matter if it’s getting a job, getting into college / business school, or starting a business: the worst way to succeed is to follow what everyone else is doing.

I’ve seen this one firsthand recently as I’ve spoken with readers who have gotten into finance, even in this market environment.

And I’ve heard some crazy stories of how people got in by going around the usual process and “thinking outside the box.”  I respect privacy so I cannot mention anything specific, but trust me when I say that creativity pays off when recruiting.

Lately, you’ve probably seen a lot of stories about “MBA applications on the rise.”

Even if you have a good shot at getting in, do you want to compete when everyone else is thinking “Gee, now is a great time to apply to business school!”?

Even other programs, like Fulbright and Teach for America, are sure to receive increased applications with the downturn.

If you can find the right program for you then go ahead and do it, but be wary of going to business school (or anything else) just because everyone says, “It’s the thing to do!”

The Story of 2003 and Why You Shouldn’t Do What Everyone Else Does

By the spring of 2003, the economy had already been in a recession for 2 years and things looked pretty bleak.

Layoffs continued throughout the spring and then, as now, banks claimed they would only hire from their summer intern classes – for both Analyst and Associate positions.

By the fall of 2003, the economy had recovered, deal activity had picked up and banks were paying huge bonuses to headhunters, junior bankers, and anyone else who could recruit full-timers.

It didn’t matter if you had “only” worked at a boutique or were an accountant, consultant or even a Chinese gold farmer: If you could use Excel and were a “team player,” banks wanted you.

In case you missed that, I’ll repeat it: in under a year, banks went from hiring freezes and laying people off to giving out huge rewards for anyone they could find.

So if you had gone off and done volunteer work for a few years, you would have missed the hiring frenzy.

So, What Should You Do?

Ok, so no one knows when things will recover, everyone else is thinking about the same options to “weather the storm,” and on top of all that, you might not be better off even if you go elsewhere.

So what should you do?

What you’ve been doing already: move into something that’s as closely related as possible to your long-term goals.

In other words, don’t do something unrelated just to “shield yourself” from the downturn.

If you had no interest in nonprofits before, why would you suddenly want to join the Peace Corps now?

If you just graduated a few months ago, why would you even think about applying to business school?

If you worked as a banking analyst for a few years and couldn’t get another job afterwards, do you really think that business school help you get into private equity?

There’s never a “good time” to do anything, whether it’s buying a house, having kids, getting into an industry, or going back to school.

So don’t try to time the market – get on with your life, and adapt accordingly.

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. Non-banking internship matters?

    Hi Brian, can’t help but notice that you recommend investment banking internship to others when the ultimate goal is to land a job in one of those BBs.
    Nonetheless, when I looked at some of the positions offered (whether full-time or intern), many put a value on sector/industry related knowledge – i.e. experience working in the oil/gas/energy industry. Many also stressed the value of a previous audit relationship (4 out of 5 in my experience). To this end, would a sector specific internship or an audit one, not give you more of an edge breaking into Investment Banks:? (particularly corporate finance, M&A and the like)
    Thanks in advance for your advice.

    1. M&I - Nicole

      I don’t believe auditing gives you as much of an “edge” as experience in IB (deal experience) will give you
      Sector specific internship – yes if the role is related to the sector in IB you are applying to
      Re auditing and accounting experience’s relevance in IB, pls check

  2. I’ve pretty much given on IB. Really trying to be creative now.

    I’m curious what you might think about taking an offer in a developing country (like China) @ local pay? Let’s say it was in some sort of technology consultancy role with a major multinational firm like IBM … could this be weighed better than the ski bum, non profit, and teaching English cop outs?

    1. Sure, it would be better but keep in mind it’s still difficult to transition in from something like tech consulting.

      I recently had a reader who did just that and moved to a boutique, but it’s hard to do, say, local tech consulting in China ==> Goldman Sachs TMT.

      If that’s your best option, though, I would probably take it.

  3. I seems that people forget the basic premise of Business School is to learn how to run a business, not just operate in the vaporware of financial modeling, etc. If the recent events haven’t shown you that those prestigious jobs at PEGs and Hedge Funds, etc. have no real roots in the economy, and can go away in a minute, nothing will. Learn to operate your own business – that’s where real value is created.

    1. I agree completely, but actually running a business is not for everyone – some people don’t want to take on the risk.

      Still, I wish more people would consider what you’ve just pointed out.

  4. Like the content – I recently spoke with an M&A executive who (in his spare time) handles regional interviews for a TOP 3 MBA program. He elaborated on the breadth and depth of candidates in the current pool — more and more competition for the same number of slots. So anticipate average experience to be on the rise as a result. Obviously more and more PEG, Hedge Fund and Investment Bankers, both past who have lost their jobs and those who are interested in access to that career path. Having utilized an MBA to transition myself, I do believe in the concept but agree — don’t pursue an MBA unless you have passion for it and a compelling reason (beyond can’t find a job).

    1. Yup, very true. Whenever the economy goes down, competition for both business school and jobs goes way up.

  5. […] 29, 2008 in Uncategorized | Tags: Career nice article, as always. from mergers & inquisitions. […]

  6. Sorry I forgot to put that bit in…. :)

  7. I’m sorry but you’ve made it a bit too confusing for me……
    Anyway, 1 quick question…… I will be graduating soon and am planning to enrol myself in a undergraduate program for economics and later hoping to get into a 2 year IB contract as an analyst at a big investment bank. Then I would enroll myself ub ab MBA at a b school. And then hopefully get into private equity….

    Is there any problems or flaws in that plan….. keeping in mind I am not trying to time the market as such….

    1. Yes, there’s a big problem: you’ve decided you want to do banking without having even entered college yet. Don’t commit yourself to a specific path until you are a bit older…

  8. Graduating Early?

    Nice article and blog.
    I’m currently a 2nd year undergrad planning to graduate early, which makes me a junior right now. (I will be applying for an SA position for the upcoming summer.) I heard that bankers don’t look favorably at this and would put me at a disadvantage. Is that true?


    1. Yes, you will be at a disadvantage because others have had more experience than you and can therefore write about/talk about more. I would advise against early graduation in almost all cases unless you really can’t afford to stay for 4 years.

      1. Graduating Early?

        Should I just go through recruiting then, just to get some experience?

        1. Sure, it doesn’t hurt to get the experience.

  9. Scared M&A Intern


    Great article. Quick question – assuming I was not offered a gradute position following a summer internship due to economic uncertainty, would a stint as a qualified accountant in a big 4 (potentially audit) place me in a reasonable position to capitalise on a market recovery?


    1. It’s better than doing something completely unrelated, but it is worse than, for example, PWM/consulting/corporate finance etc.

  10. Wake Up and Smell the Red Bull

    Great post! One thing that always annoys me with people talking about getting into MBA programs immediately after undergrad is this: No quality program (certainly forget about Harvard, Wharton, Stanford, Georgetown, or the like) will accept you into their program without any after college work experience (and no, those one or two internships while in college won’t cut it in this case). So, what’s the value add in continuing education immediately? It, at best is ZERO, maybe NEGATIVE! And, what’s the cost: One, the obvious tuition expenses of the crappy program (prob more than you think), plus the lost income you would have made working. There’s still a lot of quality internal corporate finance and consulting jobs out there, so go after them. Continuing with our analysis, let’s assume that your MBA program at Podunk community college costs, in total, $75,000. Your lost income, over two years, totals $150,000. You’ve lost $225,000 and gained nothing (we will ignore discounting for this example)! In essence, your investment is $225k with no, or negative return! Anyone like that ROI? If you do, you surly don’t belong in any finance role! So the next time you consider adding an MBA from Podunk to your resume, above your 3.9 from Harvard undergrad coupled with two years internship experience in GS IBD, think again! Instead, do what I did, get a comparable finance job, earn a steady income, and see what happens. Either the market picks up and you can slide back into banking/S&T, go back to bus. school ( a top-tier program) after 2-3 yrs., or possibly enter consulting as a permanent career. Bottom line: Stay FLEXIBLE and COPETITIVE! While Teach for America and the Peace Corps might make recruiters feel warm inside, they likely won’t land you interviews and certainly won’t impress MD’s counting on you to work through models, do the grunt work, and add value! Stay the course and continue to build transferable, comparable skills.

    1. Interested in becoming a guest writer? :)

  11. Can you stop giving advice which suggests that its is a good idea not to do what everyone else is doing (i.e wait out the crisis and do something else because there are NO jobs in finance at the moment). You are ruining it for those people who have twigged that this is not the case ;-)

    1. No, I only give contrarian advice. :)

  12. Hi Inquisitor,

    I have an offer at a large multinational company as part of their inaugural 3-year rotational Finance Development Program, after striking out with banks. They have a $40Bn market cap, and have a massive amount of brand equity, but I was really set on doing IB after having top-BB SA experience. How easy/likely would it be to exit into either consulting or IB like coming out of this 3-year rotational program? Thanks.

    1. It would be hard if you actually stay for 3 years. Maybe just stay for 1 year and then try to switch out… the longer you do something else, the harder it is to switch.

  13. So how many internships do competitive applicants usually have? 3?

    I currently intern at a startup RE PE shop. How much will that help me in IBD SA recruiting, if at all? Also, how can I “bankify” my resume with my current experience there? I don’t think they’ll be giving me any modeling/valuation projects in the near future.


    1. I worked at an accounting firm and got multiple full-time offers from boutique banks. I had just that one internship to get a full-time offer. I bet that your RE PE experience will look good on a resume, certainly for an SA position. You really are in good shape. I would suggest a resume service like Inquisitor’s to help “bankify” your resume. But you should be good with an internship at a RE PE firm for an SA spot.

    2. It’s not a science… some have 1, some have 2, some have 3, some even have 0.

      RE PE will definitely help… in terms of enhancing your experience it’s hard for me to say without looking at your resume but just emphasize the impact you had and the parts of the deals/prospective deals you worked on.

  14. What sort of previous internships stand out the most to recruiters when applying for IB Summer Analyst positions? In other words, what’s the best way to differentiate oneself through experience whether it be through clubs or internships?

    1. It’s hard to answer that question generically, but banking/PE is best, followed by anything else in finance and (management) consulting. Corp. fin at a company as well as sales or any other “business” position also work well. Even accounting can help you if it’s for a summer internship.

      In general, clubs/activities don’t really help you nearly as much as you think. Work experience, or anything that can be spun into “work experience” plays the biggest role.

  15. How does performance auditing* for the Federal government sound? I’m thinking up ways to “bankify” such experience as we speak.

    “Quantitatively value Government Departments?”


    1. Hmm it’s hard to say without seeing it on paper but I might just say “Perform valuation for government departments based on…” or something like that. “Quantitatively value” sounds kind of awkward.

      1. Thanks. I get the impression being able to use quantitative methods in work will always look better for a banker resume.

  16. Hi Inquisitor,

    Two questions unrelated to the article.

    1. I have accepted an offer to become a full-time IB Analyst beginning in July at a boutique. However, through an alumni connection, I still have the option of interviewing at a “BB” (think top 3 prior to this mess), though their recruiting process will not begin until January due to other issues at-hand. What do you suggest I do? Should I stick with the boutique and forego this opportunity, or should I go through the interview process? If I chose to go through the process and got an offer, what would you recommend?

    2. As of now, I think I am using IB as a way to get into PE – that is what I ultimately want to do. Suppose these PE managers are right and the market for PE firms begins to turn around in mid-to-late 2010. Does that make it likely that there will be a hiring frenzy for PE firms similar to the hiring frenzy for banks in the 2006 time period? I guess this is more of a “will PE follow a similar pattern as banks” type of question.

    Thanks a lot!

    1. 1. Stick with the boutique but go through with the opp anyway. If you get it, renege on the boutique offer… sure they’ll hate you but it will be better in the long run.

      2. Keep in mind that PE does not require nearly as many people as banks do… even the LARGEST PE firm (Blackstone) only has around 500 investors! So they may hire more, but the effect of the economy is not as big in PE hiring as it is in banking hiring.

  17. You never said what we should do, only what we shouldn’t. So what’s your brilliant idea, Sherlock? Start our own boutique? Whatever, I’m premed now.

    1. See above:

      “What you’ve been doing already: move into something that’s as closely related as possible to your long-term goals.”

      So if you can’t into banking, broaden your expectations and think about PWM, consulting, etc. Or maybe even working in corp fin somewhere.

      Starting a boutique is an awful idea unless you have 20+ years of experience and are already an MD somewhere.

    2. I advise you to switch out of premed. It’s already too late for me, but if you don’t absolutely love practicing medicine, it’s a shitfest. Furthermore, if health care reform isn’t on the horizon, maybe I’d stay, but more likely than not, doctors won’t be earning more than $250k in 5 years time.

    1. Ehh I’m not convinced…

  18. Business school is not a market-timer! It’s a boot camp and one-in-a-lifetime networking opportunity. These should be the reasons for joining. If anyone’s top rationale for b-school is based on some “ducking in a hole” theory, then I got a shovel to sell to you.

    1. Haha well played Cuban … well played

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