This may well be the reason for the latest, phenomenal market volatility. Anyway, got this great clip from someone. However, since I don’t remember who and I don’t know the name of the artist, I can’t really give credit to anyone at this time. Brilliant though?
I recently had a conversation with someone about the difference between buy-side and sell-side. To many who know about investment banking these terms are familiar; however, surprisingly few actually know what they mean. So, what do these terms mean and how do the two sides of the Street interact with one another?
Simply stated, the buy-side refers to the asset managers who represent individual and institutional investors. The buy-side purchases investment products with the goal of increasing its assets. The sell-side refers to the functions of an investment bank. Specifically, this includes investment bankers, traders and research analysts. Sell-side professionals issue, recommend, trade and “sell” securities for the investors on the buy-side to “buy.” The sell-side can be thought of primarily as a facilitator of buy-side investments–the sell-side makes money not through a growth in value of the investment, but through fees and commissions for these facilitating services.
Buy-side firms are structured in a far less formal manner than sell-side firms. Consequently, career paths are more flexible and job descriptions vary more from one firm to another. In general, buy-side firms have a three-segment professional staff consisting of portfolio managers, research analysts, and market and sales analysts.
Sell-side firms earn a trading fee every time a security (such as a bond or a stock) is bought or sold in a buy-side firm’s portfolio. Because portfolio trades can generate sizeable commissions, sell-side firms (investment banks) have quite an incentive to develop relationships with the asset managers. Through institutional salespeople, investment banks provide asset managers with services such as analyst recommendations and access to firm-sponsored IPOs and debt offerings. Additionally, the traders and salespeople who want asset managers’ business will often present them with gifts such as expensive dinners and tickets to sporting events.
Source: vault.com
