# Difference between investment banks and hedge funds?



## Lloyd Blankfein (20 November 2013)

Can someone explain to me in simple terms what's the difference between investment banks and hedge funds? Do hedge funds or other investment management companies have long work hours like IBs (if you don't work as a trader)?


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## CanOz (20 November 2013)

Lloyd Blankfein said:


> Can someone explain to me in simple terms what's the difference between investment banks and hedge funds? Do hedge funds or other investment management companies have long work hours like IBs (if you don't work as a trader)?




Lloyd, i hope you see the irony in that question?

McLovin could give you the best answer, from experience.


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## McLovin (20 November 2013)

Lloyd Blankfein said:


> Can someone explain to me in simple terms what's the difference between investment banks and hedge funds? Do hedge funds or other investment management companies have long work hours like IBs (if you don't work as a trader)?




IB's generally facilitate deals ie ABC Ltd wants to buy XYZ or help companies raise capital (debt or equity). They usually also have some sort of dealing room which is both to trade on their own account and to assist their clients (selling new equity, buying shares on behalf of client). Hedge funds work for themselves and are basically hotted up fund managers. In fact, some of them are so large now that they are more like fund managers. Hedge fund seems to be the in vogue word at the moment, even the loan shark out the back of Star City is probably calling himself a distressed debt hedge fund.

You work like a Japanese beaver at both of them, especially when a deal is on. If you're looking for 9-5 then neither is going to give you that. At a hedge fund though, you probably do less travel than you would at an IB. I remember back in 2006/2007 Macquarie was flying young associates over to London for two week stints working there because they couldn't get the staff in London. And my personal favourite was getting approval to fly a bunch of PwC grads from NYC to Eastern Europe to do data entry, and flying them back to NYC every fortnight for the weekend. I think those sort of glory days are well and truly over.


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## skc (20 November 2013)

McLovin said:


> And my personal favourite was getting approval to fly a bunch of PwC grads from NYC to Eastern Europe to do data entry, and flying them back to NYC every fortnight for the weekend. I think those sort of glory days are well and truly over.




Yup. Plus they all stayed at 5 star hotels and had $35 meal allowance everynight (which $10 went to food and $25 to drinks). No wonder the restaurant trade suffers in a downturn.


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## VSntchr (20 November 2013)

skc said:


> Yup. Plus they all stayed at 5 star hotels and had $35 meal allowance everynight (which $10 went to food and $25 to drinks). No wonder the restaurant trade suffers in a downturn.




Having worked within a bank for a short while - there is still some of this stuff going on...however its not as flambuoyant as above  Sounds like I missed the glory days...


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## McLovin (20 November 2013)

skc said:


> Yup. Plus they all stayed at 5 star hotels and had $35 meal allowance everynight (which $10 went to food and $25 to drinks). No wonder the restaurant trade suffers in a downturn.




My top allowance was GBP 62.50...Considering the cost of food in most of the places I went to (soup, steak and a beer for GBP 4), I used to make a massive profit on my per diem. Of course the guys who spent most of their time in Switzerland never fared as well.


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## prawn_86 (20 November 2013)

McLovin said:


> My top allowance was GBP 62.50...Considering the cost of food in most of the places I went to (soup, steak and a beer for GBP 4), I used to make a massive profit on my per diem. Of course the guys who spent most of their time in Switzerland never fared as well.




We only get expenses and no per diem so no profit to be made...


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## DJG (20 November 2013)

Do any of you fella's have hands on experience in the hedge fund scene?

I'm currently completing my finance degree and will eventually be looking to go towards the hedge funds and potential investment banking. I'm looking for admin/data entry/entry level roles (and possibly settlements if no experience is required) in order to get into the door.

Could you share any advice, experiences, anything and everything on investment banks and hedge funds when it comes to a young bloke looking to work?

Thanks all

Daniel


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## Lloyd Blankfein (20 November 2013)

CanOz said:


> Lloyd, i hope you see the irony in that question?




Lol obvious I'm not the real guy lol.

Hey thanks for the replies. I don't want long work hours to destroy my life, 9-5 is the max I'm going to work unless I'm working at home. I'm a math graduate with quant skills, and looking to become successful in life. Ultimate dream is something like starting a hedge fund with other people having business skills and grow it to a multi billion dollar corporation. I know that's too unrealistic, but I want to have it as one of my options to become successful. I think starting a business is the best way to become successful but I need to team up with people with marketing/management skills etc. Right now I'm looking for a job to gain experience and hopefully meet up with people with Steve-Jobs-business-skills, lol.

Do you have any suggestions for me?


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## Trembling Hand (20 November 2013)

Lloyd Blankfein said:


> Hey thanks for the replies. I don't want long work hours to destroy my life, 9-5 is the max I'm going to work unless I'm working at home. I'm a math graduate with quant skills, and looking to become successful in life. Ultimate dream is something like starting a hedge fund with other people having business skills and grow it to a multi billion dollar corporation. I know that's too unrealistic, but I want to have it as one of my options to become successful. I think starting a business is the best way to become successful but I need to team up with people with marketing/management skills etc. Right now I'm looking for a job to gain experience and hopefully meet up with people with Steve-Jobs-business-skills, lol.
> 
> Do you have any suggestions for me?




Mate I like your big thinking but* NO ONE* has ever done what you have listed working 9 to 5. In fact you don't become successful in these things unless they are your whole entire nothing else rates a mention life.

You should start a plan B!


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## CanOz (20 November 2013)

Others may have an opposing opinion. But in my world success and "I don't want long work hours to destroy my life, 9-5 is the max I'm going to work unless I'm working at home" are polar opposites.

To be successful, in whatever you want takes a ton of hard work, end of story.

Once you are successful and can employ good people, then you can think 9 to 5.

If you want to be successful, expect your job to BE your life for a good part of it.

Edit: TH beat me to it as i took a call in the middle of my post...lol


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## tech/a (20 November 2013)

Advice

Read " Wolf of Wall Street "

Then hop on a kite to NY
Invest $10k in NY and look sharp.
Mingle with those who are in the know.
Find where they drink and NETWORK.

Nothing will happen here----not on
That level --- ever.

While quant will be handy street wise will 
Need to be your next degree.


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## burglar (21 November 2013)

tech/a said:


> ... Then hop on a kite to NY ...




I've always said, "I FLY IN THE WRONG CIRCLES"!


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## Lloyd Blankfein (21 November 2013)

Trembling Hand said:


> Mate I like your big thinking but* NO ONE* has ever done what you have listed working 9 to 5. In fact you don't become successful in these things unless they are your whole entire nothing else rates a mention life.
> 
> You should start a plan B!




Yea I get what you mean. I guess I want to enjoy some life right now before I get into it, I don't want to work as hard as Steve Jobs just yet. I definitely have a plan B if I can't get big, and that's to live a normal life like everyone else. But I guess luck also plays a role - Snapchat's CEO Spiegel lolz.

Can you recommend some types of jobs that suits quants like me and allows me to network with big people?


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## Trembling Hand (21 November 2013)

Lloyd Blankfein said:


> Can you recommend some types of jobs that suits quants like me and allows me to network with big people?




Yeah sure, Cocaine Dealer, Silkroad barman or Barista in George street.


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## tech/a (21 November 2013)

> Can you recommend some types of jobs that suits quants like me and allows me to network with big people




Nothing here --you'll need to be in Honkers/NY or London.
You'll need to get a job in the quant tank of preferably the best (As in leading edge) hedge fund you can get involved with.
Get noticed--9-5 wont do it---no sleep probably will.
Get Head Hunted
Get single if you aren't already.


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## Lloyd Blankfein (21 November 2013)

Trembling Hand said:


> Yeah sure, Cocaine Dealer, Silkroad barman or Barista in George street.




Dude, wtf is that supposed to mean?

Thanks for the info tech/a.


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## McLovin (21 November 2013)

Lloyd Blankfein said:


> Yea I get what you mean. I guess I want to enjoy some life right now before I get into it, I don't want to work as hard as Steve Jobs just yet. I definitely have a plan B if I can't get big, and that's to live a normal life like everyone else. But I guess luck also plays a role - Snapchat's CEO Spiegel lolz.
> 
> Can you recommend some types of jobs that suits quants like me and allows me to network with big people?




I know a few guys who work for a market making firm, starts with an O and is from the Netherlands, they actually do seem to work 9-5.

The test to get in ain't no cakewalk though.


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## Trembling Hand (21 November 2013)

McLovin said:


> I know a few guys who work for a market making firm, starts with an O and is from the Netherlands, they actually do seem to work 9-5.
> 
> The test to get in ain't no cakewalk though.




Yeah there is plenty here. Tibra, Optiver, Timber Hill, Merrill control the spi with algos, Kaiser, MW Markets, etc etc.

Get on linkedin and look. Plenty of headhunters there.

Oh and I would try Singapore before Tokyo and Hong Kong.


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## Lloyd Blankfein (21 November 2013)

McLovin said:


> I know a few guys who work for a market making firm, starts with an O and is from the Netherlands, they actually do seem to work 9-5.
> 
> The test to get in ain't no cakewalk though.




Thanks for the info. I didn't really know to have big success an absolute necessity is sacrificing my whole life (ignorant me lolzzz), or just get super lucky like Snapchat or win lottery. Thanx to you guys for telling me. I have to think more, I still have my big dream but I need to plan more realistic approaches as well.


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## McLovin (21 November 2013)

Trembling Hand said:


> Oh and I would try Singapore before Tokyo and Hong Kong.




Singapore seems to be the new Tokyo. Even Macquarie has moved their Asian FX desk up there from Sydney.

I was speaking to a couple of prime brokers up in Honkers a few weeks ago, they weren't very flattering about Australian "hedge funds".


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## McLovin (21 November 2013)

Lloyd Blankfein said:


> Thanks for the info. I didn't really know to have big success an absolute necessity is sacrificing my whole life (ignorant me lolzzz), or just get super lucky like Snapchat or win lottery. Thanx to you guys for telling me. I have to think more, I still have my big dream but I need to plan more realistic approaches as well.




When I finished uni I went to London. First day on the job started at 8am finished at 11pm. And I had it easy, a mate of mine at HSBC in New York had his first day go from 8am until 8pm THE NEXT DAY.


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## prawn_86 (21 November 2013)

Trembling Hand said:


> Yeah sure, Cocaine Dealer, Silkroad barman or Barista in George street.




haha gold.

By some stroke of luck i have managed to be pretty successful (touch wood) and pretty much only work 9-5. I wont ever be able to make a 7 figure salary, but still very comfortable, and have even snagged an overseas move out of it  Most of my mates however are slogging away with longer hours, or in lower paid jobs doing the 9-5 thing, or in the mines


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## Trembling Hand (21 November 2013)

McLovin said:


> Singapore seems to be the new Tokyo. Even Macquarie has moved their Asian FX desk up there from Sydney.
> 
> I was speaking to a couple of prime brokers up in Honkers a few weeks ago, they weren't very flattering about Australian "hedge funds".





Yeah well they are probably screwing them on fees. 

Though I think the days for the $300,000 starting quant are done. Even the blokes at Tibra are driving around in 3 year old Ferraris!! Crisis!


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## kid hustlr (21 November 2013)

Entertaining thread.

Agreed if you want to be a big swinging d*** then getting out Australia is a good decision.

Don't become a broker.


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## Klogg (21 November 2013)

McLovin said:


> When I finished uni I went to London. First day on the job started at 8am finished at 11pm. And I had it easy, a mate of mine at HSBC in New York had his first day go from 8am until 8pm THE NEXT DAY.




Wow, WTF... I have it easy. 
Working at one of the big 4 as an IT contractor. 9-5 and the rates are nothing to complain about.


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## CanOz (21 November 2013)

kid hustlr said:


> Don't become a broker.




As long as you are the broker and not an employee, i think you could still earn some good dosh if you don't trade the clients funds...


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## kid hustlr (21 November 2013)

CanOz said:


> As long as you are the broker and not an employee, i think you could still earn some good dosh if you don't trade the clients funds...




I just couldn't handle being a broker. No doubt if you've got a big book you'd make some decent coin.

That being said if (when?) I fail at this god knows what I'll do.

Maybe move up north like rambo

(Link is worth a watch for those who haven't seen it, and it was uploaded by Sommi!)


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## McLovin (21 November 2013)

kid hustlr said:


> I just couldn't handle being a broker. No doubt if you've got a big book you'd make some decent coin.
> 
> That being said if (when?) I fail at this god knows what I'll do.
> 
> ...




Fark! I remember that dude. I was 15 and doing work experience at the SFE. He was out there.


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## Trembling Hand (21 November 2013)

kid hustlr said:


> I just couldn't handle being a broker. No doubt if you've got a big book you'd make some decent coin.
> 
> That being said if (when?) I fail at this god knows what I'll do.
> 
> ...




ripper, 

"I did 18,000 lots yesterday, probably larger than it should be"........ "I could be over trading" hahahaha


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## kid hustlr (21 November 2013)

Trembling Hand said:


> ripper,
> 
> "I did 18,000 lots yesterday, probably larger than it should be"........ "I could be over trading" hahahaha




There's a few specials later on as well.

"So I was short 250 lots and the market went bid, so I sold 50 more to protect my position, It kept going bid, so I sold 50 more"


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## CanOz (21 November 2013)

I really want to see the whole movie...can't find it on torrent either.

Apparently Rambo is still trading...i know a great guy that knows him really well, him and almost all of the guys in that video clip. He was also on the floor of the SFE around that time, as well as Singapore, and London when Soros moved the pound...

Love to attend a BBQ with all these guys recounting their stories on the floors of the greatest exchanges in the world!

Most of you have heard of him too!


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## kid hustlr (21 November 2013)

CanOz said:


> I really want to see the whole movie...can't find it on torrent either.
> 
> Apparently Rambo is still trading...i know a great guy that knows him really well, him and almost all of the guys in that video clip. He was also on the floor of the SFE around that time, as well as Singapore, and London when Soros moved the pound...
> 
> ...




part 2 is on you tube as well, that's pretty much all of it


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## VSntchr (21 November 2013)

Great video to entertain me at lunch time!

Much better than watching the poms rolling us on channel 9...


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## CanOz (21 November 2013)

kid hustlr said:


> part 2 is on you tube as well, that's pretty much all of it




Link???


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## keithj (21 November 2013)

CanOz said:


> Link???




Part 2 is at http://www.youtube.com/watch?v=IeicBStz8NM

Part 3 doesn't appear to be there though


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## skc (21 November 2013)

kid hustlr said:


> I just couldn't handle being a broker. No doubt if you've got a big book you'd make some decent coin.
> 
> That being said if (when?) I fail at this god knows what I'll do.
> 
> ...




Thanks Kid. Great viewing on a slow day.

Watching videos like these... make me glad that I don't trade futures.


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## kid hustlr (21 November 2013)

keithj said:


> Part 2 is at http://www.youtube.com/watch?v=IeicBStz8NM
> 
> Part 3 doesn't appear to be there though




This is correct, I've got a dvd of it the final part is like 2 mins they are just talking about the floor closing.

EDIT: so no real need for part 3


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## Trembling Hand (21 November 2013)

skc said:


> Watching videos like these... make me glad that I don't trade futures.




Why? Don't you like the taste of your own blood in your mouth?


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## DJG (21 November 2013)

Lloyd Blankfein said:


> or just get super lucky like Snapchat or win lottery. Thanx to you guys for telling me. I have to think more, I still have my big dream but I need to plan more realistic approaches as well.




"lottery and super lucky" shouldn't be in the same sentence  - not in the context of working hard or getting rich from working anyway.



DJG said:


> Do any of you fella's have hands on experience in the hedge fund scene?
> 
> I'm currently completing my finance degree and will eventually be looking to go towards the hedge funds and potential investment banking. I'm looking for admin/data entry/entry level roles (and possibly settlements if no experience is required) in order to get into the door.
> 
> ...




If anyone could give some insight on the above question(s) I posed, that would be great.   - Might be of interest to others too.


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## skc (21 November 2013)

Trembling Hand said:


> Why? Don't you like the taste of your own blood in your mouth?




It's only happened to me once... when MF Global were close to going under and I am waiting for 90% of my capital to be sent back to my bank account on a Friday. The money appeared at 7:30pm and MF never opened its doors on the Monday.

P.S. I feel sorry for that guy's wife...


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## Trembling Hand (21 November 2013)

DJG said:


> Do any of you fella's have hands on experience in the hedge fund scene?
> 
> I'm currently completing my finance degree and will eventually be looking to go towards the hedge funds and potential investment banking. I'm looking for admin/data entry/entry level roles (and possibly settlements if no experience is required) in order to get into the door.
> 
> ...




I'm not so sure a Hedge fund has a career progression path like that. Its only interest is in expertise. You would more likely progress through a bank and then make the hop.

You could always try a prop position then once you have proven yourself slip into a  bag of fruit and pimp yourself to a hedge fund. (but you wouldn't want to, you would have to stop wearing a T-shirt to work! )


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## DJG (21 November 2013)

Trembling Hand said:


> I'm not so sure a Hedge fund has a career progression path like that. Its only interest is in expertise. You would more likely progress through a bank and then make the hop.
> 
> You could always try a prop position then once you have proven yourself slip into a  bag of fruit and pimp yourself to a hedge fund. (but you wouldn't want to, you would have to stop wearing a T-shirt to work! )




Yeah I had a feeling hedge funds only want the professionals (completely understandable of course). Which is why I'd expect to perhaps work for some form of IB entry level, get somewhere near the dealing or portfolio side of things and if I was looking for a change move over to a hedge fund (might like it at the IB). - I don't mind working long hours, especially in something I seriously enjoy!

Just a matter of getting an entry level job in the bank/investment banking side of things. Any recommendations besides:
- Data Entry
- Admin/Clerical type
- Settlements (if I can get in without experience - they require experience these days usually)
- Perhaps customer service or sales consultant?

- Any ideas?


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## kid hustlr (21 November 2013)

DJG said:


> "lottery and super lucky" shouldn't be in the same sentence  - not in the context of working hard or getting rich from working anyway.
> 
> 
> 
> If anyone could give some insight on the above question(s) I posed, that would be great.   - Might be of interest to others too.




you are going to be hard pressed to find any type of hedge fund role in Australia.

the IB's have pretty strict/tough grad programs these days so you'd need to be a 'good candidate' - good uni results, maybe some work exp, clearly a smart person etc etc to have a shot at the 'good' IB grad program positions.

EDIT: do a google search theres plenty of info on this stuff out there.


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## McLovin (21 November 2013)

DJG said:


> If anyone could give some insight on the above question(s) I posed, that would be great.   - Might be of interest to others too.




Hedge funds don't really have that many admin people working for them (they may not have any). All the backoffice stuff is outsourced to custodian companies like State Street. Chances are if you can find one that does have in house back office function then it's really more a fund manager than hedge fund.

In terms of IB, if your grades are good then you might get in on the grad program, otherwise just try and find something on Seek for back or middle office. It's 10x easier to get into IB once you've got something on your resume, just don't expect to be processing super fund redemptions in January and raising capital for BHP by December. Going the back office way is a long slog and most people won't ever get out of it. IB is a bit of a wasteland these days and there will be far more experienced people going for the same jobs you are.

Also, if your grades are OK but not stellar (Credits instead of D/HD), you can check out the Big 4 accounting firms, that's a pretty good pathway to IB, if you work at it.

What's your major/s in?


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## CanOz (21 November 2013)

keithj said:


> Part 2 is at http://www.youtube.com/watch?v=IeicBStz8NM
> 
> Part 3 doesn't appear to be there though





Thanks allot for this, I've been looking for this for a long while...many thanks to you and Kid for bringing it up...


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## Gringotts Bank (21 November 2013)

Two of the main characters in the video talk about meditation, mindfulness, being focussed, being in the now.  
They must not know about the experts on ASF.  I'll email them now and let them know.


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## Trembling Hand (21 November 2013)

Gringotts Bank said:


> Two of the main characters in the video talk about meditation, mindfulness, being focussed, being in the now.
> They must not know about the experts on ASF.  I'll email them now and let them know.




Hows all that working out for you? You have been here for years trading and banging on about this stuff yeah? Guessing you have it all pretty much figured out now with a nice amount of $$s being pulled out of the market?


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## Gringotts Bank (21 November 2013)

Trembling Hand said:


> Hows all that working out for you? You have been here for years trading and banging on about this stuff yeah? Guessing you have it all pretty much figured out now with a nice amount of $$s being pulled out of the market?




I got a reply from one of them.  He thought Trembling Hand was a song.  He hadn't heard of ASF.


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## doctorj (22 November 2013)

Lloyd Blankfein said:


> Can someone explain to me in simple terms what's the difference between investment banks and hedge funds? Do hedge funds or other investment management companies have long work hours like IBs (if you don't work as a trader)?




What actually is your interest? What you're likely to do at a hedge fund is rather different to what most people working for IBs do. If you were perhaps able to share what you were interested in actually doing, it might help.  This earlier post from McLovin is a good start to understand the difference between the two.

The other thing is that working 9-5 only exists in fairy tales and jobs where you're paid by the hour.  As soon as you're paid a salary, you're responsible for delivering some sort of output, not simply sitting in a chair for a number of hours.  Also, at the more junior levels in investment banking, you're more or less expected to be the first guy there and last to leave as you can't really add any value beyond competently doing whatever relatively menial task your associate or above asks you to do whenever he/she might feel the need to ask you to do it.  Very often that may mean them dumping a stack of work on you on their way home for the evening with a request for you to have it ready by the following morning.  The lifestyle isn't for everyone, but it does improve as you get more senior.

The other point I will make is about getting into an IB.  I don't know what it's like in Australia at the moment, but here in London it is extremely rare that someone will be able to make the move from Big4 accounting into investment banking.  You really do need to push to get in as a grad, otherwise it may be very difficult.


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## Trembling Hand (22 November 2013)

Gringotts Bank said:


> I got a reply from one of them.  He thought Trembling Hand was a song.  He hadn't heard of ASF.




Actually I'll tell them you said hello at our X mass party in a few weeks.


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## DJG (22 November 2013)

McLovin said:


> .
> 
> What's your major/s in?




Thanks for all the information mate. Really appreciative. 
Majoring in Finance. - subjects are focused towards analytics, portfolios and investments etc


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## minwa (23 November 2013)

Investment bankers are mostly market making. Their actively managed portfolio(speculation for profit as most retail traders know it) is very small to their overall activity. Hedge fund's main activity is active manage a portfolio, charging fees to stay afloat while trying to grow the fund as big as fast as possible.


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