Basics of Investment Banking
An investment bank is typically a private institution that deals in financial services to companies and individuals and certain governmental entities. Unlike commercial and retail banks, investment banks do not accept deposits. Commercial and retail banks operations also must be run separately if dealing with investments as followed in the Dodd-Frank Act of 2010.
The two principal lines of business are called the “sell side” and the “buy side.” Sell-side includes trading securities and also selling them for cash along with other related services such, facilitating security deals, and market transfers. On the other side, the buy side investment banks will act as advisors to institutions for buying securities and stocks. The most common entities utilizing buy-side services include hedge funds, life insurance companies, and private equity and mutual funds.
Investment banks can also split into private and public operations. Breaking into two operations ensures information will not cross bounds and regulations imposed by the SEC followed correctly. Private functions deal with private or proprietary information that are not used in a public light and the public operation deals with the front line dealing such as stock analysis and dealing with public information from companies or institutions.
One very prominent investment banker is Martin Lustgarten. Holding citizenship in Austria and Venezuela, Lustgarten is regarded as one of the best and brightest in the investment banking world. Leveraging his citizenships has enabled him to achieve tremendous success for himself and clients internationally for decades. Commonly known to spread the wealth earned he allows himself to take little risk while also benefiting from local growth in the given areas.
Americans are starting to take notice of the moves Lustgarten makes in the markets and are beginning to follow steps taken by him to help save their retirement portfolios and other wealth building tools. With keen eye coupled with decades of experience Martin has been able to avoid major pitfalls in the ma2016rkets by backing out or making changes at the right times. He is one figure surely we can follow.