The news on Lehman

Is anyone else shaken up by the news on Lehman? I'm really starting to wonder whether it would be a smart idea to hold off applications for a year.

Hold off because you're afraid of finance recruiting or because you're afraid of additonal applicants?

I'm not sure what's going to happen with Lehman. I could see a scenario where they go under in the next two weeks or they are able to ride out the storm and continue, although at a smaller version of their current size. What I'm wondering is why the Koreans got so spooked at the last minute? Of course, who knows what is the truth behind closed doors and what is told to the media.

As far as bschool, I'm applying now and looking to get in on the first floor of the next bull run in the spring of 2011!

I don't think this is really all that much of a surprise. Nothing has change in my thought process about Why MBA Now, but then again I know you are relatively young and waiting a year could very well improve your chances at admission.

I am very scared of finance recruiting and stiff competition and general scarcity of banking internships that will be available for Summer 2010. In my opinion, if I don't break into a top finance job out of my MBA, I would have a very difficult time justifying the foregone income and costs.

Summer internships may be tougher to get, but recruiting should pick up for class of 2011 full time (that recruiting starts in 2 years). You may not have a bulge bracket internship - you may need to settle for a boutique - but then the bulge brackets will come back for full time hiring and take many more full timers than they did interns. There will not be nearly enough bulge bracket interns to fill their full time classes (since intern recruiting was down) so they will significantly broaden their search and anybody that had any kind of finance/boutique ibank internship will have a shot.

That's my guess at least. There is also a chance intern recruiting won't drop to badly since summer interns are relatively cheap (they are only on the hook for about 10-12 weeks worth of pay).

I wouldn't worry about recruiting as much in 2010. ALOT can happen between now and then. I would also guess recruiting will not drop off as much as people think. Take into account that a 1st year Associate is much cheaper to employ than a 3rd year or a VP. When banks do layoffs, they tend to fire the VPs first and then 3rd or even 4th year associates knowing there is not that much of a drop-off in performance between those levels and 2nd year asscoiates, although there is a tremendous cost savings.

As far as where we are in the economic cycle, I would say we are probably 7 years ahead of the 2001 recession and on a pretty similar month by month timeframe. By that logic, the class of 2011 will be in the best shape to take advantage of the next bull market. Expect 3-5 good years before the next fiasco.

Those are both very good points.

On a side note, I want to nominate Terp for most paranoid on this board.

Of course, it's usually the people who end up doing incredible things that worry the most. Just look at 'NervousGmat' last year. Can we do an annual list of awards on this board that are handed out in March or April? examples: Most Paranoid, Biggest Longshot, Surprise Admit, Top Applicant, Highest GMAT, Biggest Contributor, etc.

Honestly, I consider that to be one of my biggest weaknesses. There is a certain level of healthy skepticism that is necessary to be a good business person, but I definitely go over the top sometimes.

Thanks for your input as well by the way. Hopefully things should pick up.

YES! I nominate pelihu for the longest average post that doesn't go off topic.

I wouldn't worry. My opinion is if you're qualified enough to get a top finance job, in any year, then you will be able to find a good position that will justify the costs and experience. Maybe you don't end up with a position at Goldman, but there will be many opportunities out there. If you just plain don't stack up to the competition (not saying this is the case) you probably wouldn't have gotten the top finance job no matter what the economy is like.

One other point to make based on Cogar's comment.

I read "The Accidental Investment Banker" recently and the author makes a pretty good point about banking during bull market times. He talks about the people that were hired during the huge run-up in telecom and media that coincided with the internet bubble and basically came to the conclusion that the bank's hiring standards greatly diminished when times were good. They had to get bodies in the chairs to keep up with the massive deal flow. Now these people weren't necessarily idiots, but they would also never have been hired if the banks weren't making money hand over fist. So what I am saying is that you don't want to be one of these people. You don't want to be the guy (or girl) that got a job due to economic affirmitive action because when everything washes out, you will be the first one fired. You might be able to get by for a few years (and make some great money), but if you aren't good enough to be at a bulge-bracket bank, people will find out soon enough.

I would guess just about everyone on this board wants to find out if they are really good enough to be a good banker and not just an EAA hire. I think only you know if banking is truly a realistic career goal, or just wishful thinking. So if you really are good enough, then I don't think you will have a huge problem. If you aren't good enough then it's not like there aren't a million mid-market banks that wouldn't hire someone from Wharton, Chicago, or Kellogg.

Good analysis and good debate for sure. I have to play devil's advocate though. A lot of people only go into banking wanting to spend 2-3 years as an associate because they know it will provide them a mutlitude of exit opportunities on the buy-side. Sure, they won't likely get into KKR or Blackstone and other very structured mega funds at the associate level (they only hire analysts), but there are still plenty of excellent buy-side exit opportunities out there for those who don't see themselves as career bankers.

With banking (or consulting), if you're only looking to spend 2-3 years to get your stamp of approval on your resume and move on to either a corporate or buy-side role, it really does not matter whether you got in during a good time or a bad time. I would venture to say that it may barely even matter how good of a banker or a consultant you were either. Lastly, the best exit opportunities are obviously had out of the bulge brackets and out of M/B/B, not out of middle-market banks or 2nd tier consulting firms.

I would also venture to guess that it is somewhat difficult to reasonably ascertain whether or not someone is "good enough" for banking from just on-campus interviews and the recruiting process. People either adapt to the lifestyle and the work of banking or they don't and leave.

As for myself, I have no idea if I'm "good enough" to land a job in a bad economic market or a good one. Can I just go through recruiting before I sign on the dotted line for my student loans? That'd be great, thanks in advance.

I've met some people that are the truly top guys at PE shops and bulge-bracket banks. The guys that make $20+ million a year and believe me, you can ascertain they are a bad ass in 5 minutes. It's not that tough to tell.

To come back to Lehman, the loss is hardly a surprise, it was expected by the analysts; Lehman just decided to announce it early.

However, what IS worrying is the threat of a credit downrate: they would then have to find some capital, and the market doesn't believe it can.

Tough times... Recruiting starts in a month for me, not looking forward to it, even in London

Interesting new spin from the WSJ:
'Lehman Brothers Holdings Inc. is actively shopping itself to potential suitors, including Bank of America Corp., people familiar with the matter said Thursday.'

Also:
'Outside Lehman's midtown Manhattan headquarters, employees taking lunch breaks or a few minutes for a smoke early on Thursday afternoon discussed the firm's future. Many sounded dazed. "It's over, man… unless we get bought out in the next 24 hours, it's over," said a young man, in conversation with someone on his cell phone. He declined to identify himself.'

So, do they get bought, if so by whom, and does the government help facilitate a deal like Bear Stearns?

I know of a few people who were supposed to intern at Lehman last summer but it fell through. I would be worried about that happening at more places as time goes on. Banking recruiting is going to be harder. We have been told that more boutiques are showing up since now they can compete with the BBB for talent but BBB hiring is going to be down again.

Are these associates or long time bankers that you are referring to as bad ass? I would think anyone that has been at one company or industry for so long would be a bad ass. I think the question Terp06 was asking is if there are any initial indicators that can reveal one's potential in a specific field like IB. I think that is hard to judge, if not impossible.

I also ask myself the same question. I am a definite career changer, and if I do not get into a top school to break into IB, I can not justify the cost of attending business school; however, I will most likely attend or do something because I am not currently satisfied with where I am and feel that I can do more. I guess it comes down to the individuals drive.

No, it's MD level I'm referring to and you've met these people, they just may not be bankers. The truly great bankers exude confidence, they can chat with a CEO that they first meet and become best friends in 5 minutes. They are charming without being pretentious or arrogant and they also know the numbers cold. These people are the perfect bankers and what people on Wall Street refer to as Big Swinging D*** or BSDs. Smart, ambitious, and can sell. If you aren't any of these things, then you need to learn them. A person only makes it far in banking if they can sell, although most people that want to do finance probably don't realize this. You may be good at numbers, but if you can't speak to people and aren't top 5% in communication skills, then you'll never have a long term career in banking.

*Note* I am talking about bulge bracket Wall Street, and I am speaking in general terms. There are always exceptions.