Requiem For The Researchers?

Every summer, droves of newly minted collegeequity research departments as a cost drain and
graduates descend on Wall Street for an annual ritedrastically drying up opportunities for recent
of passage: two-month training programs.graduates.
Armed with standard signing bonuses and"Research has been so tapered in terms of
Hewlett-Packard financial calculators, these juniorregulatory restrictions," said Shahriar Shahida, who
analysts-to-be are treated to professional baseballrecruits undergraduates for Constellation Capital
games, cruises around Manhattan and meals in theManagement, a hedge fund in which he is a principal.
city's finest steakhouses. In turn, they earnestly listen"The broad appeal for college hires has diminished,
to speeches from senior executives whom they willespecially in terms of compensation."
probably never see again.Though most junior analysts, regardless of division,
Tim Nguyen, 22, joined Merrill Lynch last month as astart at a base salary of ,000 to ,000, those in
junior analyst with a research team in San Francisco.mergers and acquisitions and sales and trading are
But since 2001, in the era after the fall of theeligible for the highest performance bonuses, which in
dot-coms and the rise of Eliot Spitzer, the financialflush times can surpass half their salaries.
industry has shed some 55,000 jobs, according to theStill, Mr. Nguyen insisted he was not in it for the pay.
Securities Industry Association, and the ranks of Wall"I look at it as an opportunity to gain a set of core
Street's equity researchers have suffered some ofskills to use in the future," he said, adding that he
the highest casualties. The all-expense-paid summerwanted to burnish his writing, marketing and
training ritual is now largely reserved for investmentquantitative abilities, which he could then parlay into
banking and trading recruits. College-level researchmost any career.
hires must train on the job.In addition to immersion in online finance and
Take Tim Nguyen, 22, who joined Merrill Lynch lastcompliance training he is required to watch
month as a junior analyst with a research team inbest-practices lectures like "Accounting Issues
San Francisco that covers mortgage and credit cardRelated to Mergers and Acquisitions" and
stocks. It was one of the few equity research"Independent Research: What Is It? What Does It
openings at the firm. Merrill no longer has a summerMean?"
training program for its college research recruits,"You have to be careful of what you say, and make
steepening the learning curve for hires like Mr.sure you're not violating laws," he said. And, he
Nguyen.added, "You need to make sure that clients and
Still, Mr. Ngyuen, who graduated in May with an A-investors get good, unconflicted research. That's just
average from the undergraduate business program atthe bottom line."
the University of California, Berkeley, said he turnedEven if he did not have to walk a regulatory minefield
down multiple offers from hedge funds, consultingevery day, Mr. Nguyen's job would be demanding.
firms and other Wall Street divisions in favor of theHe arrives at the office every morning at 5 (Pacific
Merrill Lynch opportunity.time) to update models and help prepare research
"My family doesn't invest at all," he said. "But I enjoyupdates for Merrill's sales force and its clients.
tracking stocks and making buy and sellBetween listening to company conference calls and
recommendations." Mr. Nguyen's r?sum? notes thatconstantly tweaking his earnings models for American
he managed two stock portfolios for his collegeExpress, Fannie Mae and the other 26 companies he
investment club, "providing returns competitive withtracks, he updates PowerPoint marketing
the Standard & Poor's 500 index for the samepresentations for the three senior members of his
period," and that he led his team to a second-placeteam. Soon, he will be expected to hold his own in
showing at the National Equities Cup, an onlinethe face of irate calls from traders and clients and
stock-picking tournament.unforeseen earnings bombshells.
Mr. Nguyen also said that he wrote a 25-page term"A lot of it," he confessed, "is Excel. You start to see
paper his final semester, complete with discountedit in your sleep and dream about it. It's kind of scary."
cash flows and probability-weighted growthIf he's lucky, he says, he'll be out of the office at
estimates, which argued that Google shares were5:30 p.m. That gives him four and a half hours to buy
undervalued at 0 (they now trade at 3.50).groceries, eat dinner and study for his four coming
"It was something I put a lot of work into so I couldlicensing exams before his 10 p.m. bedtime. He aims
be able to mention it in my interviews," he said. "I'dto be up by 4 to do it all over again. "I used to have
say it was a positive return on my time investment."a hard time waking up for 8 o'clock classes," he said.
Equity research used to be a popular destination forAll told, Mr. Nguyen expects to average about 65
college graduates, who were drawn to the chance tohours a week - and as many as 75 hours during
master an industry sector under the tutelage of aearnings season - at his desk.
highly paid analyst who was richly rewarded come"I have the chance to contribute - not just be that
bonus time. But regulations now prohibit the use ofguy who crunches numbers in a cubicle," he said. "I
research to win investment-banking business, isolatingcan picture myself doing this in 5 or 10 years.