Today I finished day 4 of my investment banking career. I've learned a lot. That being said…
"Pure arbitrage involves buying cheap securities and selling rich securities (or derivatives on those securities) in such a fashion that the two positions are perfect offsets for one another. This may involve buying a coupon Treasury and selling a strip of Treasury zeros."
I'm looking at two graphics that apparently illuminate this point.
You'll be happy to know, however, that I do have a basic understanding of what my department does on a day-to-day basis. We're in prime brokerage and alongside risk management, we deal with hedge funds. Hedge funds are really big, sometimes risky investments, and clients borrow money from us in order to fund them. Our risk management team issues each client a margin, kind of like insurance for us in case the client goes under, based on a variety of factors related to the client's stability and the nature of their portfolio. The margin increases or decreases daily, depending on the fluctuating value of the client's portfolio. In prime brokerage, our job is to monitor the margin calls - who owes us what - and ensure that clients pay us before the close of business in London. We work closely with teams in Hong Kong, New York, and South Africa, too. So when I take over accounts, I'll be like, "You haven't sent us the 130 mil to meet your margin. Are there any problems?" And they'll be like, "Sending $140 million to account xyz now, thanks."
No big deal.
Right now, I'm harassing IT for access to the billion computer programs and shared folders I'll eventually need and learning some dull but essential (or so they tell me) daily tasks that I'll take over next week.
I like everyone on my team. They're friendly and aware that I come from a finance-free (and mostly number-free) academic background. Many of them did, too, and apparently I'll learn everything I need to know in the coming months. But if anyone can explain "going long" and "going short" and short versus long positions, please email me. Three guys have explained it already - it seems like a very basic investment idea - but I just don't get it.
Least favorite thing: professional footwear. I've been wearing bandaids since I started.
Favorite thing: lunchtime. Working all day makes me hungry. Last week I had lunch with fellow employees and interns every day… meat pies and Krispy Kreme, paninis and coffee, Japanese noodles and salmon rolls.
Unfortunately, this week, I've started to bring my lunch. Today was peanut butter and jelly. (Excuse me - jam, not jelly. Jelly is jello here.) Meh. I'll have to get more creative if I'm going to resist all the amazing ethnic restaurants 30 seconds from my office.
Culture shock notes.
One, English pb&js don't taste like American pb&js and two, London has been true to its stereotype thus far: cold and gray. I'm trying to cheerfully adjust, but geeze, it's September! I shouldn't need a trench coat!