What is the Difference Between Buy Side and Sell Side?

By Derek On September 7, 2011 Under Uncategorized

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” George Soros

What is the “Buy” side?

Easy: the guys who are buying the stocks, in other words, the clients! A person who works on the buy side may be a portfolio manager, an analyst or a trader. Either way, they are hugely important to the “Sell” side. Without them we don’t exist.

What is the “Sell” side?

Easy: the guys who are trying to “sell” ideas to the clients. I am a sell side guy and so are my sales traders and analysts.

If you meet someone who is a “trader” or an “analyst,” they could be either on the buy side or the sell side. Ask them, “Are you on the buy side?” The buy side carries more respect and more prestige. Why? Because they are the ones with the money!

Working on the sell side is almost totally devoid of prestige. You need thick skin. Why would anyone do it? Generally, the pay is better. Unless you are running a big fund or have your own small hedge fund, on the buy side you could be making less money than your sell side counterpart.

Buy Side Perks

Working on the buy side you can be a total asshole and people will still talk to you. They have to. For any of those people reading this now I’ll let you in on a secret: YOU NEVER GET THE FIRST CALL. I don’t care how big a client you may be, if you are a prick, you won’t hear the biggest news first. Sometimes this matters.

Most people on the buy side are consummate professionals. Professional or not, they are constantly wined and dined by brokers who are angling for their business. They never ever have to buy drinks, or dinner, or scrounge for tickets to a concert or a game. This type of lavish attention does tend to warp your reality after a while and has been known sometimes to turn the nicest people into jerks. 99% of the clients are great and all the clients I speak to are pretty nice.

How to Remember It

The difference between being on the buy side and the sell side comes down to this:

On the buy side, you say, “Fuck you!” and hang up the phone.

On the sell side, you hang up the phone and say, “Fuck you!”

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