Wall Street: MBAs to M&A, a reader mailbag

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10 THINGS ON WALL STREET

Hey there! Dan DeFrancesco in NYC.

Fun fact Friday: Parents in cities, including Eleanor Roosevelt, used to put their children in cages that hung out their windows in order for them to get fresh air.

With the stock market closed today, we decided to shake things up a bit. Today's edition consists of reader-submitted questions. 

One quick note: Some of you had questions related to personal finance, a topic I'm not qualified to give advice on - just ask my 401(k). I urge you to subscribe to 10 Things Before the Bell, which is much more focused on the daily moves of the market. 

Alright, let's get into it.


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mailman

1. Mail time!

Why is there so much misinformation regarding the status of the market for any given day or for any given stock on any given day?

Misinformation is an issue that plagues every industry, but its impact in finance is felt particularly hard. It's easier to leverage misinformation for personal gain within the world of finance than perhaps any other industry. 

So what's one to do? I'm not the type to suggest the only real information you can get on the markets is from established news outlets. That being said, some general rules to follow:

1. No one can guarantee you returns.

2. If it seems like it's too good to be true, it probably is.

3. Don't trust anyone that uses emojis to detail their investing strategy.


No one seems to cover commodity traders anymore. Can you tell me where can I find stories on successful CTAs or commodity hedge funds?

I love commodities! I had a brief run covering the space at my old gig. I agree the space is under-covered compared to other markets. One main issue is space can be painfully insular at times and somewhat daunting to newcomers. (Have you ever tried understanding contango and backwardation?)

I think our colleagues over at Markets Insider do a good job of hitting the daily highlights. If you're looking for commentary on the space, Javier Blas is as good as it gets, and also the author of one of my favorite commodity stories ever.


Do you think the legacy media is fearful of Elon Musk's new Twitter?

I'm not sure fearful is the right word. There's a common misconception that Twitter is a massive driver of clicks for media organizations. (It's not.) That's not to say it doesn't play a crucial role in the sharing of information. I just think the discourse on Twitter is very different from what you'd find on a media website. 

But even if they don't want to admit it, journalists care a lot about Twitter. Meanwhile, Musk has been pretty open about his disdain for the media. That creates this weird dynamic where you have a business owner fighting with some of his biggest customers (albeit, not paying ones).


What are the problems in bitcoin?

This question could encompass its own mailbag, but I'll try to keep it simple.

My position on bitcoin, and the wider digital-currency ecosystem, is that it's too often a solution looking for a problem.

The tech has so much fascinating potential, but it's just that. Potential. And for all the talk of decentralization, these new offerings sometimes aren't about truly democratizing access to things. Many times, they're just about supplanting the current people in power. 


I am a student pursuing B.Tech in mathematics and computing at Delhi Technological University. I want to end up with a job in finance. What would be a better domain to work in so I can get into an MBA program in top B-schools in the US after 2-3 years work experience? SDE [software development engineer] at a bank like Goldman/JPMC or at a HFT firm? 

Here's a question for you: Why do you need an MBA? 

If you are dead set on getting into some type of front-office role, you might view it as a necessary requirement. But as the importance of tech continues to rise on Wall Street, those lines are starting to blur. Blackstone, for example, has been incorporating its technologists in the dealmaking process. And it is not alone, as more firms look to have technologists and dealmakers work hand in hand.

I'd also argue that working in tech typically comes with better hours, more flexibility and less stress. It's true you won't get paid as much as an investment banker or PE dealmaker, but it's not like you'll be making peanuts.  

But to answer your original question, I'd opt for the HFT firm. With all due respect to the big banks, there still remain challenges with how they manage tech talent. A well-known HFT firm on your CV could open plenty of doors. And maybe you'll get the greatest gift of all: garden leave.


I'm curious as to why we're not seeing M&A dealmaking, in either public or private markets, rise at least a little bit more than we have YTD. PEs are flushed with dry powder and valuations are at much more appealing levels than they've been in years. Do we chalk it up to group think — there is a bit of market uncertainty in the near-term and my competitors are being conservative, therefore I should be conservative too?

Your analysis is spot on. So much so, I almost didn't want to include it so I could steal it as my own.

To expand on your point. The M&A market is in a massive game of standoff. PE firms are on one side. On the other are companies still hoping to revert back to their 2021 valuations. Both sides have dug their heels in, but are also starting to feel pressure.

For PE firms, their LPs expect them to eventually put that cash to work. For the acquisition targets, many of which are burning cash, there's pressure to get more capital.

Industry consensus was that things wouldn't pick up until about halfway into 2023. Initially, I thought Silicon Valley Bank's collapse might push that back further. But with the uncertainty in venture debt, I wonder if everyone will just bite the bullet and dive in.


What's your take on SAM (Boston Beer Company)?

I'll take two. Preferably cold and with some friends.


Curated by Dan DeFrancesco in New York. Feedback or tips? Email ddefrancesco@insider.com, tweet @dandefrancesco, or connect on LinkedIn. Edited by Jeffrey Cane (tweet @jeffrey_cane).

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