The Correct Way to Read the WSJ

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You know those lists of dumb interview questions?

Some seem really dumb. Some are perfectly reasonable. Most are just geared toward understanding your problem solving capabilities.

One of the questions on a list of so-called “dumb interview questions” was – and this isn’t a direct quote – In what order should you read the Wall Street Journal?

I believe it was Goldman Sachs who was responsible for this question. If not Goldman, then I’m about 99% sure it was a private equity firm. No matter – there is a fairly obvious way to answer this question regardless of whether we’re interviewing for an investment banking or private equity position.

Know Your Audience

The correct answer is….drumroll – Marketplace section first!

Why read the Marketplace section before any other?

1. The marketplace section covers mergers and acquisitions, IPOs, spin-offs, and other activities that relate directly to what any investment banking or private equity firm take part in. The WSJ’s “Marketplace” section is filled with the most actionable content for that day – what industries are hot, what industries (in the case of activist private equity) are not, and what companies Wall Street is overpaying for (and thus which industries the investment bank should seek to underwrite new issues.)
    
   This section is especially important for buyouts and acquisitions because the bank of knowledge you build by reading it helps you complete a comparable companies valuation. In some industries, you add, sales are a more important metric than EBITA, or EV. In others, FCF generation is the only valuation metric.

   Furthermore, companies on an acquisition spree are obviously interested in what your employer has written up in one of many pitch books laying around the office. If JB Hunt is buying a competitor to horizontally integrate their business, surely a vertical integration of the logistics company you have on deck would be a great step forward for that firm. You can’t play matchmaker if you don’t know what two potential lovers want in a mate, right?

2. Bonus Points! Financial Times, which you most certainly read because you are interested in finance, lacks severely in coverage of the American business environment. Thus, the Marketplace section is a go-to source for this vital information.
    
   Alternatively, future investment banking analysts can note that they would read ONLY the Marketplace section and nothing more. Given that this particular section is rarely longer than 8 pages, front and back, it is the only section short enough to read on your commute from your crappy apartment to the office. You know how valuable time is, of course, because you’ll have none of it when you go to work as an IB analyst. How much reading can you really squeeze between the time you leave the office at 2AM and 6AM, the time at which you arrive back at the office to fix up a business analysis to fit an associates’ recommendations?

Do I actually know that these are the correct answers? Nope. But this is finance, baby, and we’re all about “winging it.” The rule of the game is, after all, “good enough” not “perfect at any price.”

Round Up

• 10 ways to make sure no one reads your blog by Andrea at SoOverDebt. I’m making sure I do all these 10 things like a BOSS.
• Darwin spent a week in India and tells all about his on-the-ground education. Very cool. Read about it in a Week in India.
• Fitting the theme of this post, KrantCents says Employers Test for Skill and Personality.
• Jeffrey asks whether it’s better to work for commissions rather than a consistent income. I say, YES! You always get paid exactly what you’re worth.
• Sam says Credit Card Usage is on Fire. Hmm, #bullish?
• Pkamp3 says he doesn’t give a flying you-know-what about who’s who in the top 1 percent.
• LaTisha listed rappers with college degrees. Man, I feel lame knowing entertainers have better educational credentials than I do.
• Nelson wants to know why women refuse to marry down. I also want an answer to this question.

Photo by: infrogmation

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