Institutional bond trader?

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Jan 3, 2010 3:36 pm

i know a guy who works as an institutional bond trader, rakes in significantly more money than any FA i know and works conventional hours. any one have experience in this field? what are the draw backs, and how can one start a career as a bond trader?

Jan 3, 2010 3:48 pm

I feel like there was another thread just like this.

Jan 3, 2010 3:55 pm

well, if you can find it, a link would be appreciated. otherwise, if you have any input, please do share.

Jan 4, 2010 8:43 am

http://forums.registeredrep.com/forumposts.asp?TID=10272&KW=institutional&PID=166102#166102

Jan 4, 2010 10:32 am

no no. thanks we blanket, but that post is about institutional brokers and i'm asking about institutional trading -- 2 different jobs: one is essentially a salesman, like most of us, only he covers institutional clients rather than retail clients. the other is a trader, and that's the role i'd like a bit more insight about. mlgone, ur a f***in loser.

Jan 4, 2010 3:19 pm
twoeyeguy:

i know a guy who works as an institutional bond trader, rakes in significantly more money than any FA i know and works conventional hours. any one have experience in this field? what are the draw backs, and how can one start a career as a bond trader?

 
I think most work up to full trader positions.  The one's I know started out as analysts, and worked their way up.  And it's only lucrative if you are on a for-profit trading desk.  For example, Jones bond traders are probably just salaried, as they don't trade for profit, they only trade for inventory.
 
But you also have to be good.  It's basically like day trading, but with huge numbers.
Jan 4, 2010 3:21 pm

Yeah, I don't think there is a clear career path to become an institutional trader - you just end up there...like the Waffle House.

Jan 4, 2010 4:38 pm
Read Liar's Poker by Michael Lewis.
 
Traders are born, not made.
 
Good luck!
 
Jan 4, 2010 5:04 pm

i wouldnt bother asking if i didnt think id be good at it.

Jan 4, 2010 5:05 pm
twoeyeguy:

i wouldnt bother asking if i didnt think id be good at it.

 
How do you know you would be good at it? Do you know what it is?
Jan 4, 2010 5:09 pm

yeah, i think i have a pretty clear understanding of what it is. u spend most ur day on bloomberg looking for under-priced bonds to sell to institutional clients for a profit.

Jan 4, 2010 5:49 pm
twoeyeguy:

yeah, i think i have a pretty clear understanding of what it is. u spend most ur day on bloomberg looking for under-priced bonds to sell to institutional clients for a profit.

 
You make it sound easy!
 
Start knocking on doors to get on a desk. If you have a connection, use it. Don't be surprised by the small salaries offered, if you get any offers, it's the education you're after.
 
Note that Lewis Ranieri, who played a heavy roll in the securitzation of the mortgage markets, eventually became Vice Chairman of Salomon Brothers, started in the mailroom. In between stints in the mailroom and the corner office he was a master bond trader. He managed that without a college degree, and if you believe some, without a high school diploma. He was fired by Salomon when they decided to professionalize the firm by only hiring grads of big ticket schools. Big mistake! Really stupid mistake that led to the firm's downfall.
 
As i said, born, not made.
 
Good luck!
Jan 4, 2010 7:08 pm
twoeyeguy:

i know a guy who works as an institutional bond trader, rakes in significantly more money than any FA i know and works conventional hours. any one have experience in this field? what are the draw backs, and how can one start a career as a bond trader?





 
You know a guy.........Have you asked this guy how he got started........If he could help you understand the path, possibly get you in the door somewhere, etc......
Jan 4, 2010 11:30 pm
BondGuy:
twoeyeguy:

yeah, i think i have a pretty clear understanding of what it is. u spend most ur day on bloomberg looking for under-priced bonds to sell to institutional clients for a profit.

 
You make it sound easy!
 
Start knocking on doors to get on a desk. If you have a connection, use it. Don't be surprised by the small salaries offered, if you get any offers, it's the education you're after.
 
Note that Lewis Ranieri, who played a heavy roll in the securitzation of the mortgage markets, eventually became Vice Chairman of Salomon Brothers, started in the mailroom. In between stints in the mailroom and the corner office he was a master bond trader. He managed that without a college degree, and if you believe some, without a high school diploma. He was fired by Salomon when they decided to professionalize the firm by only hiring grads of big ticket schools. Big mistake! Really stupid mistake that led to the firm's downfall.
 
As i said, born, not made.
 
Good luck!
 
Bond Guy is being extraordinarily diplomatic.  It is not NEARLY as easy as you make it sound to find mis-priced bonds and trust me, there will be lots of traders much better and more experienced than you doing the same thing and eating your lunch on a regular basis.  Bond Guy is one of them.  It's going to take time and significant effort to be successful at institutional bond trading.  Listen to what he says and understand that you're not just going to magically fall into it.
Jan 4, 2010 11:55 pm

i understand it wouldnt be easy. becoming a successful FA wouldn't be easyy either. since were on the topic, what career do you guys consider more desirable? if you were just entering the biz which role would you pursue knowing what you know now - FA, or institutional broker/trader?



this question goes out to anyone willing to share some insight, and frustrated douchebags need not contribute. mlgone, kindly exclude yourself from the rest of this thread and find a cozy corner in which to go f*** yourself.

Jan 5, 2010 9:37 am

I would still be an FA.  Once you are established, even though good traders can make a whole lot more, the quality of life and job security as an FA are much, much better.  As a trader, you are a hired gun.  I know of several traders that lost 500K a year jobs during the crash.  Good luck replacing that income. 

Jan 5, 2010 1:07 pm

good points B24. but you say a trader can make a lot more than an FA - by that do you mean that typically a trader will, on the average, earn more than an FA at a comparable stage of his career? clearly longevity favors the FA but i think id rather make a couple mill in 5 years and get the axe than make the same couple mill over the course of 15 years.    



and you mentioned the quality of life of an FA. can you elaborate?

Jan 5, 2010 1:58 pm
twoeyeguy:

good points B24. but you say a trader can make a lot more than an FA - by that do you mean that typically a trader will, on the average, earn more than an FA at a comparable stage of his career? clearly longevity favors the FA but i think id rather make a couple mill in 5 years and get the axe than make the same couple mill over the course of 15 years.    



and you mentioned the quality of life of an FA. can you elaborate?



Quality of life for an FA.  Low stress, work when you want (doesn't matter if the market is open).  If you do it right, your FA business can be your retirement plan.  Really, it can generate streams of income for the rest of your life.  In a sense, it can even be an insurance policy, if you set up a buy-sell agreement with someone.

Quality of life for a trader.  High stress.  Work when the market is open.  You are only as good as your last trade (as BondGuy said somewhere).  Your retirement plan is likely some sort of 401k profit sharing plan, is likely finite and you cannot be a trader forever (maybe you can, but a lot of people burn out). 

Jan 5, 2010 2:58 pm
Moraen:
twoeyeguy:

good points B24. but you say a trader can make a lot more than an FA - by that do you mean that typically a trader will, on the average, earn more than an FA at a comparable stage of his career? clearly longevity favors the FA but i think id rather make a couple mill in 5 years and get the axe than make the same couple mill over the course of 15 years.    

and you mentioned the quality of life of an FA. can you elaborate?



Quality of life for an FA.  Low stress, work when you want (doesn't matter if the market is open).  If you do it right, your FA business can be your retirement plan.  Really, it can generate streams of income for the rest of your life.  In a sense, it can even be an insurance policy, if you set up a buy-sell agreement with someone.

Quality of life for a trader.  High stress.  Work when the market is open.  You are only as good as your last trade (as BondGuy said somewhere).  Your retirement plan is likely some sort of 401k profit sharing plan, is likely finite and you cannot be a trader forever (maybe you can, but a lot of people burn out). 

 
And it usually takes several years (like an FA) to become a well-compensated trader.  But there is no guarantee you will ever become that well-compensated trader (nor is there any guarantee of becoming a good FA).  But the long-term rewards of an FA are much better.  Just a much better risk/reward ratio.  Let's assume you "make it" as an FA.  Even if you don't make a ton of money, you will likely have a very nice lifestyle, and can work well into your 70's if you so choose (I have known a few to work into their early 80's, come in for 3 hours, put through a few bond orders, and go home).
 
Very few really well compensated bond traders work into their later years.  It's sort of like being a pro athlete - short shelf life, you burn through too much cash thinking you will make that kind of coin forever, and then you burn out.
Jan 6, 2010 2:23 am

the fact that u can work when the market is closed as an FA seems like a double edged sword though. as a trader ur out of that office by 5 oclock (probably more like 4:15) knowing there's nothing more u can do till the next morning. as an FA it seems like u kind of have to be "on" around the clock, and work is never truly done.



question... what's the vacation situation like when ur at a wire? it would seem to me that u should be able to take some vacations pretty easily as long as ur phone is never too far away. is that usually the case, or does it not work like that?