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Buy Side vs Sell Side | Top 7 Differences | Compensation - YouTube
Channel: WallStreetMojo
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hey there folks welcome to Wallstreetmojo Investment Banking tutorial and
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today stop against sell side vs buy
side now sell side vs buy side is a
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very general topic
alright now sell side people or sell
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side firms are the ones which are trying
to pitch some idea to the buy side
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so typically in an investment banking
setup if you see JP Morgan or Citibank
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or Goldman Sachs or Morgan Stanley you
know these are the kind of firms which
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would be pushing their ideas to the
hedge fund managers or or a portfolio
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manager of an education fund or a
pension fund you know so in this kind of
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setup all of the people who are buying
the idea are or the firms who are buying
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the idea are the buy-side firms and the
firms which are selling the idea are the
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sell-side firms so if you look at the
example here so what is it
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so sell-side is associated with the
entities which facilitate the
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decision-making of the buy-side entities
and the buy-side is associated with the
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entities that are involved in the making
of investments so buy side are the ones
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which are putting in the money as you
can understand it this way the buy side
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of the ones were putting in the buck who
have got deep pockets who are deep
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pocketed investors who are setting on
the sunny side of the table and
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sell-side people are the poor ones who are just
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you know pitching their idea to the buy
side you know who were just pushing the
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stocks were just pushing their research
reports to the people who are buying
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them right so these are the poor chap who work in the
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investment banks you know day in and day out they did do all the research and
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they come up with the reports they make
them look jazzy you know that people buy
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them and as a result you know they just
get bought so
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these are the overall differences you know it's with a
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high-level perspective all right now let
us also look at the institution's
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involved so in a sell side typically
we've got investment banking then
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commercial banks stock brokers and then
the market makers so basically all the
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entities who wants to just push their
products
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who wants someone to buy something all
right
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and on the other hand in the buy side
the entities involved are hedge funds
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like I've already mentioned asset
managers institutional investors and
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retail investing so these are the folks
who are putting in the buck who will be
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you know investing in the idea who will
be making you know investing decisions
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so to speak all right now let us look
also the goals that is look the goals of
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all the or off the buy side and the sell
side so sell side firms are firms
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looking to pitch and sell assets or
opportunities while on the other hand
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the buy-side firms are the firm's with
capital
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they have deep pockets and looking to
buy assets or opportunities so sell-side
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are given the opportunities and buy-side
firms are you know grabbing the
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opportunities with their money now the
structure well on the on the sell side
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we've got analyst associate
vice-president and managing director
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from a hierarchical a point of view and
on
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on the buy side we've got portfolio
manager then researcher and marketing
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person so it is a little leaner in the
buy side as compared to the sell side
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now the lifestyle as you can see here on
the screen the sell side guys are the
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ones who are you know burning the
midnight oil
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so working more hours so you know
typically in an investment banking setup
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someone you know a person who would be
putting in a lot of lot of time and
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research and they would be putting up
all this in a report so that they can
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sell it to the buy side people while on
the other hand if you look at the buy
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side their life is a bit easier you know
they just have to ascertain where the
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money has to go or where the investment
has to be made you know so they just
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have to be smart enough to understand
the investment investments okay so their
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life is easy and let's look at the the
work of the analysts so in Empire in a
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in a sell side in a sell side you know
they give buy sell recommendations and
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the reports are available to the public
domain to the public you know and they
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can access it and depending upon what is
given in the report they can make a
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decision to invest or not to invest
alright while on the other hand for buy
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side analysts they use the report like I
was like I've said created by the sell
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side analysts and carry out their own
analysis further so if they they want to
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analyze it further they can very well go
ahead and do that but then they also use
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the material which is prepared by sell
side folks and lastly the compensation
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so the sell side folks who are putting
in more efforts who are working really
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hard for making the making things
together they're you know got paid less
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and I know you're thinking that you know
that's not fair but
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that's a fair game in the investment
banking sector while on the other hand
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if you look at the buy side folks you
know they are they are making more money
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and that's because of their smartness
you know to understand where the money
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needs to go you know that needs a
certain acumen and and the buy-side
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folks have that so that's why they are
paid more anyways oh I hope you've had
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fun and bye for now
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