Capital markets is one of the most sought after spaces for MBA job seekers, especially those passionate about finance and economics. Naturally, because of such huge demand, getting a job in capital markets is difficult.
I have completed almost two successful years in fixed income capital markets and often my friends, colleagues and students from my alma mater ask me how to be successful in the industry, and how to prepare oneself to be a part of it.
I have learned a lot from two years of experience in US markets and I am still learning. Every day, the economy and market behavior teach you something new, something intuitive, and something to think over. In these two years, I have gained insights about what knowledge and qualities one should have to be a successful player in the industry.
Here’s seven skills MBA students need for careers in capital markets.
1. Mathematical Knowledge
Capital markets is completely mathematical. It always follows a logic, and almost every situation in the markets can be mathematically or economically explained. Yes, there can be a series of drivers to explain a change or event, but remember one thing, it hardly has a grey area. So, if you cannot find a logical explanation to back your analysis, probably you are doing something wrong. It is almost always ‘black and white.’
2. Knowledge on Economics
To successfully explain a change in the markets it is imperative for you to understand and analyze the drivers of the change. The drivers of the economy can be politics, inflation, deflation, stagflation, risks, etcetera. You must have a strong understanding as to what effect these drivers can have on the economy, and how can you best prepare yourself to make the most out of the situation.
3. Bottom-Up Analytical skills
To explain a change in the market it is important to analyze each aspect that could have driven the change. It can be price, factor, rate, size, differential, behavior – anything quantitative or qualitative, everything needs to be properly placed mathematically to come up with the right reason.
4. Top-Down Inferential skills
Sometimes bottom-up analysis can project more than one reason behind the change. At that time, your top-down inferential skills should find the logical explanation. Your inference should be from the bigger picture narrowed down logically to the smaller bits that make the whole analysis strong.
5. Programming Knowledge
Capital markets is all about data, patterns, and trends. Market analysis involves a series of repetitive actions that you need to carry out to clean and prepare the data to understand, reason, project and forecast trends. Programming knowledge significantly helps you for the same. You can build your own models, algorithms and some easy macros to help you analyze your data. This not only reduces time, but also helps you reduce errors, and increase efficiency.
6. Communication Skills
It is important to have good analytical skills, but to explain your results you should have a great communication skill set. You would often talk to clients and counterparties, discuss results, strategies, and markets patterns. If you can’t explain what you think, it will be a hard job for you. You must be concise and effective.
Working in capital markets can be very hectic, and stressful. You have to go through high volumes of data and information on a daily basis. One must follow a rigorous routine to stay fit, healthy and competitive.