It’s interview season, time of great joy and nostalgia: over the past decade, I have been in both sides of many interview tables, BB, consulting, HFs, you name it. If you are interviewing for S&T, today is your lucky day, I will share a few thoughts and tips on S&T interviews.
But remember: this is only my opinion, and I make no claim as to the helpfulness of any of this. Plus, I accept no responsibility for anything that happens to you if you take my tips at face value. That’s for symmetry: you won’t send me a check if they get you to your dream job.
You may have heard that the most recurring phrase in IBD is “this is very interesting” whereas in S&T, it is “f*ck you”. Maybe that’s why I am so fond of S&T people. Sales and Trading is a true relationship business. You may have heard that electronic trading does most of the work a broker does, at a fraction of the cost, and this is true. Why are there still a good bunch of brokers (although way less than before)?
Because if you’re an investor, the average algorithm won’t tell you how it’s feeling about the stocks X, Y and Z. It won’t give you trading ideas involving EM currencies. Hell, it won’t even encourage you to tell your adultery stories or pay you Thursday drinks.
In other words, unless we’re talking about a hardcore quant fund with no subjective inputs in its models, talking to brokers and running ideas through sanity checks is part of every PM’s day. If you’re good at maths but you dislike heavy networking and goofing around at the phone, you don’t belong here. Maybe ER. Certifications, credentials, financial proficiency, it all helps, sure. But being likeable is rule #0. Period.
Also, when you look at the typical “trade idea”, you will sometimes see stuff like DCF, multiples and technicals all mixed up. This doesn’t mean S&T people despise any form of the EMH, but rather that the client is always right. It doesn’t matter whether the client is a hedge fund based on pseudoscientific futurology, or an UHNW individual who claims she contacts alien civilizations on a daily basis before deploying her cash. If you relate to them, you get their business. That understood, you do need to know some stuff.
Think an equity desk: as you may know, stocks are a residual claim of investors in the assets of an issuer. Big deal. How does it work? It goes like this: the desk sells to investors whatever crap IBD originates, and then encourages them to trade with each other. You need to know your sector/region quite well, but unlike people in ER or IB, you can forget about profitability levers, deal synergies and all of that crap.
What actually makes a difference in equity is having an awesome price memory (1 week high/low of VOD LN, down to the penny, AAPL yesterday’s close?) and knowledge of the market’s trading dynamics (volume curves, order sizes, preferred trading venues). The day you realise you actually know a lot of clients, and on top of that, you can tell which like or dislike each name you cover, you know you are on the right track. Don’t fight the tape.
Another example: FX. Huge. Around 4-5 trillion USD change hands every day in those markets. FX traders see themselves as arbitrageurs par excellence. A successful FX trader is a cold-blooded bipolar (nice with clients, psycho-killer with everyone else) individual with a huge ability to focus, and makes a ton of cash. But no jokes, no lunches, no small talk. In that desk, you need fast risk assessment skills, on the fly calculations and very little to no fear.
Knowing this sort of stuff in advance will save you a lot of guesswork. If you can only take away one idea from this entire text, take this one: in S&T interviews, reading the Vault guide and memorizing the answer for the most common questions is far from enough. Why?
Because unlike in IB or even consulting, there isn’t such thing as “the right answer”. Different interviewers will expect different answers to the same question, and you need thoughtful prep and amazing people-reading skills to go well. Makes sense, as this is the bulk of the work.