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- No BS. Just Bullish.
No BS. Just Bullish.
Grades | Inflation
The Wall Street Skinny
August 15, 2024
This Week on The Floor
Jen and Kristen here! Are you gearing up to start your full time job, heading back to school, or framing the next big step in your career?
We are answering some of your most commonly asked questions about RESUME optimization….specifically, what to do about your GPA?
We get asked the time: “How high does my GPA need to be to get a job in finance?” and “What if I don’t have great grades?”
After years of reviewing resumes for summer analyst and full time candidates, we’re giving you the inside info on what people in the industry are thinking when they see your GPA on your resume…
…and how to get the job without the best grades.
Inflation data: If it’s not about the stuff I buy every day, why do I care?
How much do grades matter on my job application?
Resume boosters to offset low GPAs
Markets Recap / Deal News
Interviewing this week? Here’s some content for your conversation.
Yesterday we had arguably the second most important economic data release that we get each month: CPI, which stands for the Consumer Price Index.
CPI (specifically, Core CPI) is one of The Federal Reserve’s favorite measures of inflation.
What is inflation? It's how quickly prices are rising.
CPI is a basket of some 200 different types of goods or services that Americans pay for. It measures how much those prices are going up (or down, in the case of deflation).
The market was expecting +0.2% m-o-m, and the number came in at +0.2% (+0.17 unrounded; BLS rounds to the nearest tenth)
Latest numbers affirm softening in key inflation measures
Here’s the funny thing about Core CPI though: it strips out food and energy prices, because they can be quite volatile. And the “supercore” gauge strips out rent, which was UP!
I don’t know about you, but the majority of my monthly costs are housing, food, and transportation related. So, why should I care about this number that has nothing to do with the things I spend my money on?
You care because the Federal Reserve (the central bank of the United States) cares.
The Fed has a dual mandate:
Price stability (aka, keeping inflation in check), and
Maximizing employment
So based on yesterday’s CPI data, the market is interpreting a higher chance that the Fed will cut rates at its September meeting.
But the Fed isn’t omnipotent. They have limited tools at their disposal. And their primary tool — setting the Fed Funds Rate — has a limited transmission mechanism.
Meaning, if the Fed cuts rates today, it has an impact on short term borrowing and lending and on expectations of future monetary policy.
If you’re a finance professional, you care about Fed path because you care about how much interest investors earn on short term investments, or how easy it is for companies to borrow money to fund growth and acquisition.
But it’s not going to mean a darn thing for the price of eggs tomorrow.
“If inflation is moderating, why are these cookies so damn expensive?”
Thoughtful questions to ask an interviewer:
“Given this latest CPI print, how does that impact your clients’ [business model if corporations, positioning if institutional investors]?”
If a markets-based role: “Which data do you think the market is reacting more strongly to these days, leading indicators for growth or inflation?
“For clients who are sensitive to inflation, what tools can they use to hedge their risk?”
For a 30 minute explanation of how to calculate what the market is pricing in for the expected path of the Fed Funds rate, listen here.
How much do grades matter on my job application?
The answer might surprise you.
Let’s just be clear: you should be striving to get the best possible grades you can, period.
If you’re thinking of applying for a hyper competitive Wall Street job but wondering if you can just snooze through your classes, you’re probably not the right fit for the job.
Sounds harsh? I say this with love and compassion because I was guilty of this myself.
As our beloved podcast guest Keri Findley (CEO and founder of Tacora Capital) said of her own college experience, I spent college “looking for the next punch bowl”.
My bare minimum effort got me a 3.4 GPA majoring in…English Literature.
When I interviewed for my first jobs on Wall Street, I was asked multiple times “why is your GPA so low in an easy subject?”
And because it’s my personality, I told the truth and said “because I spent more time focused on partying than on my classes”. This worked in 2005.
Today, when you have 315,000 applicants applying for 3,000 summer internships at Goldman Sachs, you won’t get the chance to come up with a witty response. You may not even get the interview in the first place.
That’s me, 3rd from the right!
Why?
Grades on your resume are a signal just like anything else.
Good grades WON’T get you the job.
But bad grades MIGHT lose you the job.
They can be a screening mechanism to weed out applicants when culling from a large group.
With crappy grades in a major that’s perceived as “easier” (like mine, English), you’re less likely to get an interview than a comparable candidate with crappy grades in a major that’s perceived as harder (like Chemical Engineering).
Perhaps worst of all is having crappy grades in a major that’s directly related to finance. That signals (unfairly, I’d argue) that you’ve already been tested in relevant subject matter and been found lacking 😩.
However…
These firms could fill their analyst classes multiple times over with 4.0 GPA Finance majors from the best universities in the world, yet choose not to.
Why?
Because grades are only one small piece of the puzzle in terms of who you are as an overall candidate.
We have plenty of stories from podcast guests like Chris Newhouse who had a 2.9 GPA and never got asked for it during his interviews. He landed early internships that established him as an expert in the new world of Decentralized Finance and Cryptocurrencies, and his grades were never part of the conversation.
Maybe that’s you, and maybe you get lucky.
MOST firms will not only ask for your GPA, but they will also likely pull your transcript before you start on the job, so don’t even think about fudging the numbers.
“How’d you break into Wall Street without a 4.0 GPA?”
The Bottom Line…
Since grades are such a small piece of who you are as a candidate, work hard and do everything you can to ensure they aren’t standing between you and the job you want. But also…
Knowing that there’s no specific minimum GPA requirement should be empowering. There are many other ways to stand out!
Resume Boosters
Your extracurriculars and life experiences can do a lot of heavy lifting for you.
So if you don’t have the best grades, make sure you find other ways to bolster your resume.
Items that will weigh heavily in your favor:
Join Investing, Finance, and Business-related clubs
Seek leadership positions at your school and within your community
Get as many internships under your belt as possible, even if they are only obliquely related to finance
Pursue interests unique to you that stand out and make someone take a second look at your resume
Two Truths and a Lie
Test Your Wall Street Knowledge
The Fed’s long-term inflation target is 2%
2023 saw the highest recorded CPI inflation year-over-year in the US
Core PCE is actually the Fed’s preferred measure of inflation over CPI, though they monitor both closely