Hawk Search Executive Recruitment

GUEST BLOGGER ANDRES JAIME GIVES US AN INSIGHT INTO HIS WORK FOR A CENTRAL BANK

A big thank you to Andres Jaime for writing a guest blog post sharing with us what he learned whilst working at a Central Bank. As an introduction, Andres is currently reading a Masters in Mathematics of Finance at Columbia University. Before that he worked in various teams with The Central Bank of Mexico. Banco de México was established in July 1931.

 

Here's his summary...

 

My 5 years at the Banco de México were definitive in forming and solidifying my passion for my job in the financial markets.

 

Before I joined the bank I had a vague idea about what financial markets are, how they work, their size and their complexity. I''d gained that via a first degree in Economics. My time at the bank brought to light the huge implications that financial decisions have on the real economy, and as a consequence on the world.

 

I began my career in the bank at the money market operations desk, in which all the monetary policy for Mexico is implemented. During the first year I wasn’t aware of the big responsibility that this implied. Open Market operations provide liquidity to banks, which my team worked on, as well as being responsible for the primary offer of Mexican debt denominated in MXN (Mexican Peso).

While I learnt a lot during my first year, a big shift came about with the financial crisis. From a policy maker perspective it was a significant challenge, since almost no one had experienced a similar situation before. The excitement and challenge of solving complex problems while the financial system was collapsing liquidity, market depth and pushing real economy into recession were the main reasons why I was so attracted to financial markets. Furthermore, during the crisis, the high volatility in the MXN market was very difficult to cope with. Managing speculator flows while trying to keep the “free float” of the currency was a very hard task for the local desks. I remember the day when we all began in the Mexican markets, the turning point was when the General Director of operations stepped into the trading room and he started trading as he did 30 years ago.

Later on, I was promoted to the international foreign exchange desk, in which a considerable share of the international reserves is managed (EUR, CAD, GBP, JPY, CHF, NZD, AUD and Gold). During the two years I spent at the desk, I had the opportunity to lead a team of very young people to whom I delegated a lot of significant tasks. One of the most fun and challenging projects that I headed was an important gold accumulation program (100 tons). One of the main problems was the time restriction of one month for completion, which made this program one of the fastest occurring in the last 10 years. Some other diversification programs came out during the last year when we included AUD and NZD into our basket of tradable currencies.

Throughout my career *crisis* would be a word that most accurately has described markets for me. In the following years, we will experience an evolution in the nature of financial markets, perhaps adopting different features for all of us; and it is exactly that which makes them addictive and motivates me to continue to play a role in them.

So, having read a degree in Economics and then spent five years at a Central Bank, Andres hopes that his Masters study can take him into a role where he can be directly involved in investment strategies. This would ideally be a quant role but more involved in the macro side of markets and taking part in investments.

It was very enjoyable talking with Andres. You can keep in touch with him via Twitter. His handle is @andres_jaime.

WHY WOULD SOMEONE EARN A LIVING RECOMMENDING SHARES?

We thank Alex Wisch, Equity Research Analyst (Media Sector) at Standard & Poor's Equity Research for writing a guest blog post on why he enjoys earning a living recommending shares.

Why I recommend shares – for a living

Have you read an equity research note lately? It will have a recommendation to buy/hold/sell a certain stock, a 12-month target price, a basis for valuation and, if you are lucky, a good few numbers with sales, earnings and cash flow forecasts for the next few years. It’s not rocket science, but it certainly keeps me (and my clients) busy. People often ask me whether I would not make more money trading my own ideas in the Caribbean, rather than selling those ideas on paper. Although the idea (Caribbean specially) sounds appealing, there is a different set of skills required. I’m not a gambler, but an analyst. I enjoy providing insight so that institutional fund managers can make better investment decisions.

So what is it that equity research analysts do?

Arguably the best thing an analyst can do is get it right, i.e, set a 12-month target price on the shares that is actually met after 12 months, give or take. I’m not that bad on that score, but that’s not what gets me – and many of my colleagues – ticking, for the most part. Let me explain. While there is value in getting a recommendation right, sadly that value is realised ex-post and not ex-ante. This applies in life as well: the trick with life is it has to be lived forward, but is mostly understood backwards. Pretty much, like equity markets.

So what value can we, equity research experts, provide, if any? Well, the first one that comes to mind is the provision of insight on an investment case, or what I would call telling a story. Shares do not exist in a vacuum. There are market trends (fads sometimes), and industrial trends that change as often as fashion in Milan. I spend my life understanding these trends and how individual shares fit in the broader market narrative. There are times when a hike in the dividend will be perceived as a positive catalyst (think of the credit crisis), but others as a negative catalyst, as a signal that the company is going ex-growth.

Another kick we get out of equity research is forecasting what the next quarter, half year and full years will hold. And that’s where we walk the talk. We can talk forever on the likely impact of the iPad in book publishing, but at some stage I need to put a number for sales and earnings from book publishing in the next quarter, iPad or no iPad. This is where the art of forecasting meets science, if you want. You can believe that print books will be completely banished. But as analysts, we need to attach a number for it, in terms of when and how many and how much.

Financial Modelling

Everyday I play with my models, inputting new data coming from the companies or the market. A change in exchange rates, commodity prices, input prices today will definitely have an impact on sales and margins going forward. Our models capture those factors and their impact five or ten years down the line, and then bring it back to today’s present value. At the end of the day, the share price today is nothing but the discounted present value of all future cash flows expected from a certain company. Models can be extremely complex in granularity and quantity of inputs, but I tend to prefer simpler ones. In my view, the more inputs you have the more chances you have to get it wrong. After all, I’m human and I cannot possibly keep an eye on 100 inputs on 20 companies every day. It’s better to keep a good handle on the inputs that are relevant, and have a strong and consistent view. When analysing media companies, for example, having a view on global advertising expenditure over the next 24 months comes rather handy.

Not all in the data

So we analyse mountains of data. But again, the problem with most data is that it is backward looking. To understand the future, we need to make assumptions and have a view on what is likely to happen this year, next year, and in 20 years. This is why when I’m not modelling, I am attending company presentations, industry presentations and talking to key market leaders in the industry I’m analysing. You will see me having coffee at an investor roundtable, a capital markets day, or meeting an investor relations officer for a clearer understanding of a company strategy and where it wants to be in the future. By the way, I don’t think books will disappear, but I do wonder sometimes.

Here's Alex talking about News Corporations and BSkyB on Bloomberg and here on CNBC talking about the media sector.

JEFF CHEAH, CHIEF TECHNICAL ANALYST AT THOMSON REUTERS, SHARES WHY HE'S ENJOYED ALL HIS JOBS IN FINANCIAL MARKETS

Jeff Cheah CMT talks to Hawk Search about why he’s enjoyed all his jobs in the financial markets and why he loves his current role as Chief Technical Analyst at Thomson Reuters…

Images of people having two phones glued to their ears, and shouting prices across a room was what got me interested and excited about a career in the financial markets. You have to imagine that headsets and cell phones had not been invented back when I first entered the world of FX & derivatives trading. All those screens with scrolling green flashes of news and blinking price updates seemed so fancy and a wonderful perk to have in any office …I remembered thinking. I also recall saying vividly to myself “I don’t know what that job is, but it looks like a lot of fun and I want in!” It turns out that that image was one of a Foreign Exchange (FX) Trader.

I found out soon enough that the picture I portrayed above almost always had to do with a stressful moment or a crisis type situation within the financial markets. I experienced many of those moments intensely as an FX Trader. It is the same pressure you would feel as a Money Markets & Derivatives Trader, or as a Market Strategist commenting on and writing about market risks and trading strategies. Even as a Policy Maker sitting in the Bank of Canada’s trading room, you’d feel the tension when the markets seized up. One thing is certain; it does not matter if you are in Tokyo or in Toronto, emotions in the financial markets are universal.

The pressure is less intense these days for me. In my current role as Chief Technical Analyst at Thomson Reuters, I interact with market participants in classrooms, boardrooms and via virtual learning portals. My job is to engage with our clients and prospects to get them excited about the firm’s financial products. I achieve this by generating market ideas. I also teach and produce video content relating to Technical Analysis on the markets. I speak at events, for example, I’ll be speaking at the annual Canadian Society of Technical Analysts event on December 6th & 7^th 2010.

It is a role that still gives me close proximity to the markets …so close that I do sometimes imagine hearing the pulse of the market beating to the screaming rhythm of buy and sell orders.

What I have loved about all my jobs:

• I have the opportunity to promote technical analysis as a profession. It’s a great honour to be able to share and pass on knowledge.
• I can use my knowledge base in economics and technical analysis to make decisions I am comfortable with. I want to be able to take full responsibility for my decisions.
• I have always had access to huge databases and to real-time information. I like to dig and let the data generate actionable ideas. Access to data also gives me the freedom to challenge and not take what I read at face value. This gives me reasons to be passionate about what I believe in.
• The financial markets feel like a small place. Some of my best relationships were forged over the phone over many years with my peers in far corners of the world. I feel very connected to the world.
• Working for global companies presents many opportunities to collaborate with some of the greatest minds on this planet. This opens up doors to fresh ideas and to be innovative.
• I spend most of my working day thinking about market risks. It’s a great hobby to have.
• Bottomline: I know I am lucky to experience jobs that are fulfilling and ones that I can feel passionate about. It is important to find happiness in your job.

If I had to start my career all over again, I would not swap much. The addition of psychology and history degrees to my Economics and Finance academic background would be uber cool. This is because I still have a lot to learn about market sentiment and a lot from history.

Here are some links relating to technical analysis:

Jeff Cheah has co-authored a book with Russel D. Ogden, The Fog Index: Recognizing Extremes of Fear or Greed in the Financial Markets

Market Technicians Association

The Society of Technical Analysts

Technical Analysis on Wikipedia

An Introduction to Technical Analysis on Investopedia

WHY I LIKE BEING A HEADHUNTER

We've added a new category to the blog today (OTHER PEOPLE'S JOBS) where we are going to invite contacts in the industry to write about their jobs and share what's involved in them. To kick off this series, we thought we'd say what it's like being a headhunter. In the next few months we'll have Analysts, Editors, Journalists, Economists, Sales Directors, Product Managers, Client Support Managers, HR Managers, Market Data Managers (and many more!) write guest comments to give you an insight into their jobs.

So, headhunting...

I remember when I first made the career move from managing client service teams to the world of recruitment. I confided in a friend that I was going to make the switch and her response was, "It will be like sticking a fork in your eye!" Another friend who had spent one year post-university working for a large recruitment firm said, "It's so boring. You throw out a load of CVs and hope one sticks."

It's not a great endorsement for the recruitment industry! Seven years down the line I'm happy to report that both predictions were wrong. I've never regretted making the switch.

So, why do I really enjoy it? 

Easy. In a nutshell, there's no mystique to my world of headhunting. There's a structure I follow each time which is encapsulated in a simple six step approach.

STEP ONE

I ask lots and lots of questions to understand the client's requirements and (very importantly!) to learn what type of people thrive in their culture. If I think I can help, I start the process by agreeing terms and taking on the search mandate. This involves agreement of a fee structure as well as time lines.

STEP TWO

The next stage involves networking and research. The first port of call will be to seek personal recommendations. I've got a large network of contacts that I trust. I also conduct web research using networking websites, search engines, the trade press, trade events etc. Of the roles I have filled in the last year, only 10% of the candidates were known to me already, and 90% were sourced through personal recommendation, supported by web research. It's time intensive but it's all part of a process of matching square pegs with square holes.

STEP THREE

Then I present a long list to my client and, working together, we whittle it down to a short list. The long list has full biographies of candidates, if they are in the public domain. All the time, I'm learning and judging what will work and what won't. At this stage we usually haven't yet spoken to any candidates but we've done a lot of groundwork.

STEP FOUR

I make the candidate approaches. This is all about making a strong first impression. I meet all candidates face-to-face and, we talk. It isn't a grilling. It's an open conversation. If it seems appropriate, I'll talk to them about my client and the career opportunity. I'll judge which candidates are suitable to go forward to interview.

STEP FIVE

I manage the interview process including the logistics of interviews and communicating feedback my client and candidate. There can be many people involved throughout these stages, often across different time zones.

STEP SIX

The final stage involves negotiating the offer on behalf of my client and agreeing start dates. Salary expectations are generally managed early on in the process so this doesn't tend to be a drawn out process. 

I am constantly learning about new markets and products and thoroughly enjoy the networking my job involves. It is great building an instant rapport and gaining people’s confidence. To say that I feel proud that my clients trust me to make decisions is an understatement.

It is extremely satisfying helping someone make a career move. In fact, it’s nothing like sticking a fork in your eye!