Jobs buying low and selling high?

July 22, 2009 6:30 PM

What careers mainly involve buying low and selling high by knowing a market in great detail, in part by making contacts and in part by combing through reams of information - and how does a college student get an entry level job in them? NOT interested in entrepreneurial suggestions, or things that require much theory or advanced mathematics (no i-banking/hedge funds) - more emphasis on information-gathering and shrewdness. What reasonably solid jobs might there be and what's the entry path (recommended academic background, internships, etc.)?
posted by shivohum to work & money (15 comments total)

Selling cars? Visit the dealership and wear a suit, ask for an application.
posted by jenkinsEar at 6:45 PM on July 22

Antiques
Art
Collectibles
posted by chrisalbon at 7:03 PM on July 22

Selling antiques, particularly jewellery. You make your own job, the entry path is of your own design. You can have as little as a basic education and your own personal flair; but sales experience, taking small business classes and becoming a graduate jeweller or gemmologist will help, for sure, though they're not necessary (you can always hire trusted experts). There's much to learn from books, more from handling, and the most from listening. http://www.jewelrycamp.org/Home.html">"Jewellery Camp" would be an excellent place to scope the field.
posted by peagood at 7:08 PM on July 22

Real estate development.

Note that this is distinct from real estate agents. The former are often good at valuing properties in a sophisticated manner; the latter are not.

Note, your aversion to i-banking and hedge funds may preclude this as an option.
posted by dfriedman at 7:11 PM on July 22

Unfortunately, the kind of "entrepreneurial suggestions" that you don't want are probably the best fit for what you're describing. Basically, what you're describing is a job where you connect people with money to other people with money. Consultants do some of this sort of work, but business promoters and brokers do most of it. Promoters tend to be almost entirely independent, and don't need to advertise their services because the people who need them already know who they are. Brokers tend to be part of firms, and there are generally licensing requirements.

Take, for example, Liam Casey. His "job", as it were? Connecting companies with Chinese factory outfits, one product at a time. He knows--or knew, anyways; the article is now almost two years old--the manufacturing center of Shenzen like the back of his hand.

That's about as entrepreneurial as it gets, and no, there are no entry level jobs like that. It sounds to me like you want to be a broker. Take any commercial real estate broker in the world. These are the people who find property for sale/lease, secure the rights to market it, and then pitch it to likely clients. On a limited scale, yeah, this is what your standard real estate agents do, the people you see on those signs in people's yards. But that's small potatoes compared to, say, NAI Global, the largest commercial real estate concern in the world.

But real estate is something of an odd duck, real property not being terribly fungible. The most traditional market that fits your description, and the one that's probably the easiest to break into, would be something like commodities trading. Talk about buy low/sell high. These are the sorts of firms that no one ever hears about, and almost never get any press coverage, because they're almost entirely wholesale. US Commodities deals in grains and livestock, but there's a brokerage that covers every single commodity you could possibly name, and plenty that you couldn't. Yeah, a lot of this is futures trading, and individual investors do speculate here. But that's a tiny fraction of what commodities trading is all about. Someone has to get out there and figure out where all this stuff is coming from and how to get it where it's going. A lot of someones, actually. Knock around the NFA website for a while. Also read this how-to on becoming a commodity broker.

You think General Mills wants to contract with every damn farmer in Iowa for corn? Hell no! They contact a commodity brokerage in Chicago and say "We want a million bushels of corn," and the brokerage says, "That'll be $300 million dollars. Too bad you didn't call last week; you'd have saved $10 million."* Likewise, you think every damn farmer in the Midwest wants to find a buyer for his crop? Hell no! They call the brokerage firm and say "I've got fifty thousand bushels of corn to sell this week," and the brokerage says "Okay, we can give you $200 a bushel" or whatever. That's a massive oversimplification, and there's probably at least two or three missing steps in there, but that's a rough idea of how commodities actually get sold.

So, how do you get into this business? Well, going to B-school might not be a bad idea, though you should consider getting a degree related to the industry for which you intend to broker. If that's agriculture, get an agricultural management degree. If that's mining, get a mining degree. If that's plastics, think petrochemicals. You get the idea. More to the point, those schools will probably have a solid network which you can use to connect to firms in your field. Then, start pounding the pavement. See who's hiring. You may wind up having to move to Chicago, as that's where a significant percentage of commodities in the US are traded, but it's not a bad town.

*This is why there are commodity futures. Companies don't want to be entirely at the whim of fluctuating commodity prices, so they lock in contacts three, six, nine, months in advance, etc., so they know what their costs are going to be. If prices go up, it saves them money; if prices go down, it costs them money. But the risk is worth the certainty of knowing what you're going to pay. Otherwise it becomes impossible to make any kind of workable projections.
posted by valkyryn at 7:22 PM on July 22 [3 favorites]

Oh, and one more thing: commodities trading is not much like i-banking or hedge funds. The latter deal in things so abstract that one wonders if they're connected to reality at all. October 2008 suggests that whatever connection does exist is problematic. No, commodities traders actually move around millions of tons of physical goods on a daily basis. Yeah, markets can get overheated, and yeah, futures trading can throw things out of whack, but we're not generally talking about inventing new and dangerous ways of leveraging ourselves up to our eyeballs. We're doing actual buying and actual selling, most of the time for clients who actually want to use the commodities in question.
posted by valkyryn at 7:25 PM on July 22

Just wanted to mention that entry-level I-banking analyst jobs typically do not requite a whole lot of mathematics or finance theory beyond very simple concepts.

But then again, most entry-level I-banking analyst jobs are not the kind of job you're looking for, unless endless days of Excel sheet tweaking and Powerpoint editing are your idea of "buy low, sell high."
posted by pravit at 7:34 PM on July 22

As stated by the problem, many things are ruled out. Commodities markets are specifically designed to clear the market and eliminate the profits people might find from intense market research, driving people to more advanced forms of research and analysis. But unless you like Black-Scholes, maybe this doesn't excite you.

Still, there's lots of stuff companies need that isn't run through a clearing house. Imagine you're a large electronics maker, and you need a crapload of surface mount resistors for a crapload of cell phones you're making. There are emerging clearing houses, but nothing definitive. This is where corporate procurement / corporate purchasing comes in. A corporate purchasing agent's job is to seek out suppliers and get them to engage in competitive pricing. Normally the stakes are so high here that standard operating procedures are defined and followed, although good places offer employees bonuses for getting good deals.

But it's a bit nebulous how a company goes from buying parts low and selling finished goods high. A more obvious position is retail purchasing negotiation. A retail purchaser's job is to find goods to buy and stock in stores. This may even involve going to tradeshows, but I'm guessing it's mainly for senior management. The biggest retailer in the US actually runs an insane purchasing operation out of their Bentonville HQ. Companies come to them and give their pitch, and they negotiate a price and quantity to purchase. In Wal-Mart's case, they can sell high just by adding a small margin to the goods. And they have enough data on sales and competing offers to buy low.
posted by pwnguin at 8:07 PM on July 22

I believe "secondary market" is the general classification of all things re-sold b2b, and it's absolutely HUGE. I had brief exposure to the worldwide secondary market for telephone systems and that in itself is huge.

Also, what about pawn shops and auto junk yards/scrap metal? (latter may have a large organized crime component if that bothers you).
posted by ZenMasterThis at 9:06 PM on July 22

I have a friend who is in the liquidating business. He buys inventory from going out of business companies or from overstocks and sells them to various dollar type stores. Need to know the market well. I also think the scrap metal business is a good one for what you are asking. Ticket broking also would work. Anything that is perishable or has time component to it will require shrewdness and an intricate knowledge of the market as well as the ability to anticipate trends. As for background, I would say an economics degree and a sports background (or any successful competitive endeavor) would be the best course. When I was hiring day traders, I looked for people who could recognize patterns and who would be competitive. Usually it was the guy at school who dealt bags of weed or provided some service for the lazy other students who would not do it themselves.
posted by JohnnyGunn at 10:42 PM on July 22

Usually it was the guy at school who dealt bags of weed or provided some service for the lazy other students who would not do it themselves.

You asked this at the job interview?
posted by delmoi at 11:38 PM on July 22

Re-insurance is another classic "buy low/sell high" activity that is hugely data and analysis driven. Not all the analysis is highly mathematical; indeed, a lot of re-insurance is based on simply knowing what valuations are being given in various markets to things like weather and crop forecasts.

A re-insurer is in the business of buying and selling primary insurer's risk, and thus backstopping the primary insurer from regional or smaller market disasters in the real world. A re-insurer operates partly by actually making a market in primary risk (i.e. maintaining a profitable spread in the buy/offer points for primary risk) and partly, by trading profitably in existing re-insurance contracts on the basis of improved knowledge about the insured risk, than what the primary insurer or original re-insurer could have had at the time insurance was written. AIG was once a textbook case in how to do this, and General Re is still. General Re career page offer some information on how a person gets into this business.
posted by paulsc at 2:09 AM on July 23 [1 favorite]

Coffee buyer? You can do site visits all over the world and get your caffeine fix for free.
posted by backseatpilot at 5:05 AM on July 23

You could just get a sales job. You don't have to worry about the buying low part, just the part about making connections and making sales. Most sales jobs involve many presentations and lots of personal interaction, travel and schmoozing, so that wouldn't be for you if you just want to buy low and sell high in some impersonal, commoditized way.
posted by lsemel at 4:46 PM on July 23

Delmoi, I sort of did actually ask in the interview. It starts with what jobs did you have in college. Then when they say odds and ends, you ask if they have any references. THat usually elicits a smile and a "I don't think so" answer. I said offhandedly, "Sounds like you were selling loose joints". He smiled and said, "Not pre-rolled." I hired the kid for many other reasons. Turned out to be a decent trader and a real good guy.
posted by JohnnyGunn at 7:23 AM on July 24