Friday, January 27, 2012

Buy-Side and Sell-Side Analysts - An Analysis

Recently, I had opportunity to attend an SVForum SIG meetup on "Cloud M&A: Buy-side and Sell-side Dynamics in 2012 and Beyond". I had to get clear on the two concepts of Buy-Side and Sell-Side before I went into listen to the panelists. This exercise in learning itself was an eye-opener on how phrases get into usage in natural languages.

To begin with, Buy-Side and Sell-Side are not exactly what they seem. Let us start with some definitions, from Investopedia:
The side of Wall Street comprising the investing institutions such as mutual funds, pension funds and insurance firms that tend to buy large portions of securities for money-management purposes.

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The retail brokers and research departments that sell securities and make recommendations for brokerage firms' customers.
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Buy-Side analysts seem to be really doing what the phrase seems to suggest: Analyze stocks and other instruments to help in potential, eventual, buying of the equities. The Sell-Side analysts, on the other hand, deal significantly with retail investors, and can enable or, influence, buy or sell decisions by the retail investors.

If both buy and sell decisions are enabled by these Sell-Side analysts, why call them only Sell-Side?

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