From the monthly archives:

August 2008

sock.jpgInvestment banking job interviews are meant to test your ability to think on your feet. Before you draw any attention to your shoes, make sure they are polished and your socks match…

Q: Let’s say you need to get up very early for an interview – in fact, before sunrise. You don’t want to wake your spouse, so you need to select your socks in the dark. In your drawer you have 8 red socks and 11 blue socks that are otherwise identical. What is the minimum number of socks you will need to take out of your drawer and carry into the other room to ensure you have a matching pair?

A: An oldie but goodie, this question is commonly asked and the solution is quite simple. The answer is you need to take three socks, that’s it. Two socks can be different, but a third must match one of the first two.

Special thanks for this interview question to Timothy Crack, author of Heard on the Street: Quantitative Questions from Wall Street Job Interviews

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Whenever one hears of an investment banker, one draws a mental picture of someone wearing an expensive suit and eating at ultra-luxurious restaurants. However, with the number of layoffs and the the market becoming more volatile, you may see more than a few casually dressed investment bankers at the local deli.

Bear in mind that the future of financial markets, and consequently that of investment banking, is inextricably linked to the direction in which the economy is headed. Therefore, turbulent economic times spell job insecurity for investment bankers. The latest credit crunch and economic downturn have jeopardized thousands of investment banking jobs. While Citigroup is preparing to layoff employees from its investment banking operations across the globe, Goldman Sachs has downsizing its investment banking division by 10%.

With bulge bracket firms continuing to announce layoffs, there are likely to be fewer job openings in the near future, resulting in fierce competition. Even when the number of job openings grow, the demand for investment banking jobs will remain high, since the potential for massive compensation and the promise of a lavish lifestyle help investment banks attract the best talent.

Investment banking is at the nexus of some of the most significant deals. Our prediction is that investment banking hiring will surge the moment the economy begins to bounce back. Now, once the positive movement begins, count on stiff competition continuing for those who choose to pursue a career in investment banking.

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The International Herald Tribune posted an article on Wall Street firms moving to India. It raised some interesting points on the investment banking jobs front.

The bulge bracket firms have taken full advantage of the low-cost, highly educated work force that India provides. The overseas firm mentioned in the article, in fact, has grown 40% this year alone. It seems India is gaining big time from the losses on Wall Street – especially for the lower level jobs (think research front lines and pitch books). We’re talking about the big boys – Goldman Sachs, JPMorgan, Citigroup and others. The rule that said an analyst has to be within shouting distance just is no longer true.

It is only a matter of time before the next level of work gets moved. Quant model development and trading is surely to follow the same path. And why not? With the technology connections available, Wall Street will welcome the low cost resources. We could end up with all but the sale and marketing teams and the face-to-face deal makers residing off shore. Investors don’t care about the size of the New York office anymore. They want solid returns.

The prediction for reductions in ibanking jobs is as high as 200,000 but often times these jobs are not eliminated, they are just moved off shore. When it comes to the overall number of Investment Banking Jobs, however, we are seeing plenty here in the US. We are, however, starting to see the movement overseas as the investment banking game becomes more international every year.

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