Matthew Krantz - Investment Banking For Dummies

Investment Banking For Dummies, 2nd Edition

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Copyright 2020 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

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Library of Congress Control Number: 2020934912

ISBN 978-1-119-65859-7 (pbk); ISBN 978-1-119-74871-7 (ebk); ISBN 978-1-119-74872-4 (ebk)

1. Chapter 1
2. Chapter 2
3. Chapter 3
4. Chapter 7
5. Chapter 8
6. Chapter 9
7. Chapter 10
8. Chapter 11
9. Chapter 12
10. Chapter 14
11. Chapter 16
12. Chapter 18
13. Chapter 19

1. Chapter 3
2. Chapter 6
3. Chapter 11

Investment banking is the fuel of capitalism.

Human progress takes money and ideas. But more times than not, the people with the money arent the same ones with the ideas. Having a mound of cash and no creative ideas only creates a mound of money. Meanwhile, an entrepreneur with all kinds of dreams cant even break ground if theres no cash to break ground with.

Enter investment banking. Investment banking has been mankinds solution to pairing up the people with money and the people with ideas. The combination of money, or capital, and entrepreneurship is a dynamic marriage thats behind some of mankinds greatest accomplishments. Investment banking has financed round-the-world trade expeditions and built railroads and bridges.

Given the great role investment banking plays in the financial system, it has taken on a larger-than-life mystique with the masses. Many people suspect that investment banks are pulling the strings of the economy, but they may not know enough to realize exactly what investment banks do.

Get ready to take a peek into the private and important world of investment banking. This book could just have easily been called Wall Street For Dummies, because its your guide into the complex but pivotal world that Wall Street plays in making the financial system work.

We wrote this book not only to help you understand whats done on Wall Street, but also to show you how to use some of the financial tools that help measure financial performance. After reading this book, youll know how Wall Street works, and how to put its secrets to work for you.

Believe it or not, investment banking affects you.

You may not live in Manhattan, under the shadow of the giant skyscrapers of Goldman Sachs and Morgan Stanley. You may not even be involved in the financial industry your only dealings with a bank may be when you stop to take money out of the ATM.

But investment banking is so much a part of the financial system that, whether you realize it or not, you fall into its shadow. The fact of the matter is, if youre like most people, managing your money is falling increasingly on your shoulders. Gone are the days when you could work at a company for 40 years and expect to have a fat pension waiting for you in retirement.

Today, managing your money and making sure you have enough to pay for lifes biggest investments including homes, cars, college, and retirement is up to you. You cant do it alone, though. Stuffing your money into a box and burying it in the backyard definitely wont cut it. If the termites dont eat up your lifes savings, inflation will. Each year, prices for goods and services rise, eroding the power of your savings.

The only way to keep up with the ravages of inflation is to invest your money. And thats where Main Street usually becomes acquainted with Wall Street. Main Street has money in search of returns, and Wall Street is busy cooking up financial investments that it says will deliver those returns.

Typically, investment banking is a pretty heady topic thats discussed in MBA classes or in important-sounding books with long and intimidating titles. But in Investment Banking For Dummies, we break down the topic into understandable pieces.

Keep in mind that this book, like all the books in the For Dummies series, doesnt have to be read cover-to-cover (although well be flattered if you read it all). Each of the topics is broken down into easy-to-digest parts and chapters. Feel free to skip around the book to areas that interest you most, and save the parts that seem irrelevant until youre curious about them later.