This page has been archived and commenting is disabled.
You’ve Been in This Business Too Long If...
Via ConvergEx's Nick Colas,
Today we offer up a (hopefully) humorous note about the perils of a career in finance. It’s not really the day to day chores that take a toll, after all – it is how this business pervades the rest of your life. Over the years, your personal and professional decision making and communication skill sets merge into one, and it is the cold rationality of the latter that usually swallows the former. And then lets out a large burp. So if you’ve ever wondered what the stop-loss should be on a romantic relationship gone bad, or considered your emotions in terms of personal beta, this note is for you. What follows is a top 10 list of challenges only people who have tied their personal fates to Wall Street will probably understand. And for those of you who’ve managed to avoid these pitfalls, read on to see what you’ve been missing. And pat yourself on the back.
After 30 years in and around Wall Street, I feel like damaged goods. That’s not necessarily a complaint, but rather a simple and factual observation. An example to illustrate the problem: I have mental stop losses for just about everything in my life. If I have a bad meal at a restaurant, I never go back. If a personal relationship goes south, I “Take it off my screen”. Very few things have a second chance with me. If it doesn’t work out, well, one and done…
That’s just one example of how my professional life has somehow subsumed the personal. Any decent trader will tell you that you must decide on a stop loss level before initiating any position. After all, the market knows more than you do. You might have it right, or you might not. The asset’s price action will let you know soon enough either way. And when it does, you should listen. Setting that stop takes away any emotional attachment you might have and leaves you free to go find something else that might work better. At the same time, I know that treating people and relationships like positions on a trading pad is somehow… wrong.
My only solace is that I know I am not alone. After thousands of conversations with colleagues and friends in the business over those three decades, I am pretty sure that I am simply average. A career on Wall Street may be the only profession where the actual “Product” is efficient decision-making and communication. Since those two processes are also what you use to navigate life, it is only natural that you would try to leverage them into your personal relationships and general existence. But we do so at our peril, as I will now illustrate.
Consider this “Top 10” list of other examples:
#1 – You start personal conversations with “I have three points to make today.” Aside from business consultants, most people do not think in Powerpoint or outline form. But after a decade or so in finance, you somehow decide that anything worth saying must have three supporting points. For stock analysts it always comes back to “Industry dynamics, company strategy/financials, and valuation.” For traders, it is “Market direction, sector moves, and company trading dynamics”. Three things, always… No one else thinks or talks this way, as my wife often quietly – but firmly – reminds me.
#2 - Emotions are life’s “beta”. The concept that a stock moves with either more or less volatility than the market seems a neat analog for life. Sometimes you are the windshield, sometimes you’re the bug. We’ve all had beta 3 days, both for good or for bad. But no one except a finance person would try to quantify that with a number. “How was your day, honey?” Answer: “Oh, a gap up open when I got a new customer to trade with me, but a lousy close when the market went nuts after the Fed meeting. Definitely a beta 2 day. Hopefully tomorrow will be calmer.”
#3 – You ponder the time series correlation between your spouse’s/significant other’s emotional state and your own. In business school a professor told my class that he would never buy a house in the neighborhood near the school. “Bad diversification” was his logic – property values were too closely tied to the success of the university. By the same logic, you might look for a romantic partner whose emotional state moves out of sync with your own. That would be “Good” diversification and get you closer to some efficient frontier of household happiness. Again, no one outside of Wall Street thinks this way and any worthwhile partner will tell you to get lost if you try to explain it.
#4 – A fight with your spouse/SO is like a management call after a big earnings miss. “How could you miss the quarter after you presented at the Goldman/Morgan/CS conference not a month ago and said everything was fine?” Happiness is all about beating expectations to anyone who spends their lives analyzing companies and markets. And when the people around us “Miss the number” we have a lot of trouble remembering that they aren’t a losing position in an otherwise perfectly fine portfolio of relationships.
#5 – Momentum drives life. Ask a clever young MBA what moves asset prices and you’ll likely hear something like “The second derivative of key fundamentals”. Things get better or worse at an accelerating or declining rate, and the resulting change moves price. As a result, the Wall Street trained mind will always look for that pattern – are things getting better or worse, and how fast? That’s not the way the world works all the time. There are plenty of days where nothing actually happens and you’ll go nuts looking for inflection points that don’t exist.
#6 – You try to look for comps in everything. The most popular way to value any security is by looking at similar investments and deciding if the asset in question is cheap/expensive to the alternative choices. A good approach in the office, but a horrible one anywhere else. On any given day someone else’s child will seem better mannered or another person’s spouse kinder to their partner. And it doesn’t actually matter.
#7 – You are openly jealous when you watch “House Hunters” and realize not every house in the United States lists at $2.0 million for a tear down on a quarter acre. New York is to finance what Silicon Valley is to venture capital and Paris is to haute cuisine – the physical location where professionals congregate and create powerful network effects within a specific industry. That creates a lot of groupthink, however, since the most convenient conversation is with someone who probably looks and sounds a lot like you. Seeing that the rest of the world is very different is an important touchstone to maintain any sense of balance.
#8 - You mark your whole life to market every day. In the 1980s, mutual fund managers had an often-repeated way of explaining the humbling nature of their jobs: “They print your IQ in the paper every day.” Yes, before the Internet most people had to wait until the next morning to track their investments. Now, any investor can track their entire financial net worth tick by tick, on their smartphone while grocery shopping. Most, wisely, do not. However, the whole concept of mark-to-market is a pervasive one if you work in the business. For financial assets, that’s fine. But when you start to do that with the rest of your life the intraday volatility may be more than you want to handle.
#9 – “Reversion to the mean” should work for everything, right? Every asset class has a long term historical rate of return and a standard deviation around that mean. One approach to investing is to find the underperformers just as they are about to cycle back to their average long run potential. Works well in investing, but in life you are often better off staying with the best in class rather than bottom feeding for the reversion trade.
#10 – You can make more money; you can’t make more time. The wealthiest guy I ever worked for told me that one day, and I have never forgotten it. Those of us fortunate enough to work in this business have many options and are paid well to work with clever people. It is a privilege. Time is the scarce resource in the equation, and spending it wisely is the real challenge. Family, friends and colleagues are the real assets in our lives. Just don’t use your day-job skills to keep them close to you.
»
- 16952 reads
- Printer-friendly version
- Send to friend
- advertisements -
Just Jump!
Mac Daddy make you Jummp.. Jumpp..
Criss Cross to make you ..
https://www.youtube.com/watch?v=010KyIQjkTk
Nick, baby. You need to take a vacation. Long vacation.
Or get into a recovery program.
Just don't do the one with Steve Liesamn. You don't want him hugging and crying on you. Trade that one to Marla.
They forgot #11, you've developed a phobia of nail guns and open windows.
#10 was the most important on this list.
I have lots of time, but I waste so much of it due to a lack of money .... err, and due to my ZH addiction.
When I was a factory slave I had no time AND no money. If I'm gonna have no time then I would at least like to be rich in return.
Never worked in finance but I can relate to this guy. When I first learnt calculus I saw it EVERYWHERE, including in places like human emotions and relationships. 20 years in the workforce has sorta normalized me. But I kinda miss those days.
I'm not sure which has a more fucked up ethos, lawyers or brokers...
"careful you don't cut your own throat shaving", was mine, but I like yours too.
Someone around here once said "Don't try to shave with a nail gun", which sounds like pretty good advice.
My suggestion would be to shave with a circular saw.
Haven't seen that one in the news yet.
Yeah been in biz too long if you have a deviated Septum.
http://hedgeaccordingly.com/2014/11/theres-a-disturbance-in-chicagos-pol...
...if you've bought more politicians than you've voted for.
I think the Crack and Hooker version from Wolf of Wall Street was more interesting.
But he's right time is the precious commodity.
Your only real friend is a dog
And the dog hedges its bets on you.
::You're a member of the First Wife's Club
Tell me about it WB7.
Just look at my handle.
You refer to your clients as "muppets"
The headline on CNN ... 'Al-Quidea saying ISIS going to far..'
I have crossed into an alternative universe of acid tripped bad jokes.
Let me check outside see if the trees are starting to float away..
You have a mirror in every room
WB7: Nice... very lol-ish comment. My prostrate and pancreas thank you! I'm still laughing!
::You're married to a jewish woman.
"You have a mirror in every room" yet you still have no reflection.
Thank gawd, I don't live in New Yawk.
You throw your own shit against the mirror, when you see your reflection.
Nick Colas:
""My only solace is that I know I am not alone. After thousands of conversations with colleagues and friends in the business over those three decades, I am pretty sure that I am simply average. ""
You are not simply average. You are one a of a few thousand and distinctly different from the rest of humanity.
I am constantly amazed at the abject stupidity and myopia of the well off and highly educated in the USA.
That you cannot grasp the basic self-selection bias of your position speaks volumes.
Bravo
Education makes you stupid, it corralates and builds a common understanding of correct answers to the wrong questions.
Learning is about undertanding the questions, then asking your own. The most difficult thing to teach, are the right questions to ask.
@bbq Excellent, outstanding, and concise.
Listen.
When I read shit like this I'm not surprised the Muslims want to kill you all.
Stop, look, and listen.
They're not the only ones.
Tiny Dick, you actually said something funny. I might actually like you maybe a little bit.
Unfortunately they want to kill you to though.
You avoid hardware stores because you break out in a cold sweat and stammer incoherently at the sight of a nail gun.
Stooge: I prefer showing banksters gold or silver. That makes them shit their pants first before applying NailGun Technology to their lifestyle.
For fun among males at a social occassion just drop the words "heart attack" in conversation. Its a riot they all start squirming.
The characterization reminds me of the rational competitive mindset--definitely not limited to wall st. Clearly stated and quite illuminating though.
I think having an outside hobby can make all the difference. For me, torturing small animals helps a lot in "maintaining an even strain."
Someday you can work up to drinking fresh human baby blood, like Dimon and Blankfein.
I prefer the tranquility of my basement ammo factory.
oy
"Working" on Wall Street today is no different than "working" at a shithole Indian casino upstate. At least the casino provides free drinks and maybe a buffet. Learn how to do something useful before it's too late.
I retired early because of #10.
"If Tartars were to invade Europe nowadays, it would be extremely difficult task to explain to them what and who is the being whom we call a financier".
Quote by 17th Century French Philosopher as a footnote in Capital book #2.
Don't trust anyone unless they are damaged goods.
Nothing like failure to test a person. I swear I don't trust anyone unless they've signed bankruptcy documents. Not submitted them. Just signed them.
You learn practically nothing from successes. You learn practically everything from failures.
I've learned to welcome failures.
Yep, it's called experience, and the best definition I know is:
When you don't get what you thought you would get, you get experience.
Dup.
letting go of the unseen hand that holds you down.
try flushing the toilet with your non-dominant hand... that is zen, and turning the lights off to take a shit...
shitting in the dark and staying focused will expand your mind and allow you to reach zen
... when you love the golden shiny stuff so much you cover your body with it to be as close to it as possible, all the time.
Come on banksters, you know you want to. Just do it.
Sometimes you're the statue.
Sometimes you're the pigeon.
you are damaged goods mate.
you piss your life away for a bag of silver.
probably screwed up other peoples lives along the way.
enjoy it, you bought it.
lmao
unusually I did not screw other peoples lives and not remebered that way from what I can tell. Damaged goods? Perhaps. But any one is that ends one life and starts another later in life. Drunks reformed a sick person healed they all pick up where they left off in these cases the only reward at the end is being reformed or not dying. I'd say a certain wisdom from experience can redeem the experience. And in some way one cannot learn to be kind without having experienced and lived among the very cruel. Who isn't damaged goods in our culture? Remember Clint in The Unforgiven? ( I believe) when he displays all those bullet hole scars on his chest?- don't think he thought himself a martyr either. One is indeed less "having bought it" (if not necessarily stronger-that cliche) but depending on who you are you may also be more than you were having bought it. --Whatev "dude." I still think everything is funny even some of the blackest things. And I'd rather be me than the many self content lobotomies running around. Suppose it turns out really well for a few. Turns out a grind for those that survive. Know its the life blood for a couple heads of companies. And know traders come and go and that can be "young man's" work. Was interesting for sure and better to work where people want their jobs and strive to keep their jobs than most places where it seems to be do as little as possible is the objective...and on and on. Outa here for now. Hope you enjoyed regardless.
I do understand my "pilots license" was stripped when I left and understand your point of view an it is right from your perspective. That's ok cause I don't give a shit about your perspective anymore if you follow me, mate.
Don't think most people reflect much about what they are doing because they do it, are too busy doing it so a lot of what were "choices" just happened to be what you wound up doing and looking back and regretting is just silly because that implies you had some control over life you just don't have. Wanting money is fairly practical and a no brainer depends why you give up in exchange as it winds up turning out. Most don't get enough ever. Having time and choosing what to do with it is the best and working at what you enjoy the most is also best but it is hard to control achieving these ideal outcomes. Blah bla and then you die. Enjoy it while you can.
Overall its been funny and fun somehow in the face of anything. Don't mind at all the ups and downs when I look back. I am a riot in the cath lab when being treated for a heart attack I am told. :) Hopefully humorous as was the stated intend of the article cause it is.
nth You leave your career over, you are poor, it was a waste, starting a new life isn't so easy in the 40's or whenever, but, you feel better.
You don't think about bringing a barrel of rope to escape from your 41st floor office out the window - just in case.
You don't have to walk through large public buildings or take the underground in London either of which is occassionally hazardous.
You get to see sunlight instead of living under flourescent lamps your waking hours. The filthy air filters in office buildings no longer concern you.
You never get confused about "friends" as you may have had to remind yourself at work and in business no one is really your friend.
Watching your back for the scum that have nothing better to do than politically screw with people to advance is not as necessary.
You don't have to wonder that all the Republicans and Catholics you work with believe we went to Iraq because of Bin Laden or that these hypocrites get ash on their forehead ash wednesday and similar things.
You miss only your unlimited limos, you don't miss the expense account that takes you anywhere and to anything you and your clients might dream of...you did it was fun no need to persist. Similar vein strip clubs have lost their young man appeal.
Drinking for work isn't necessary anymore.
As a once broker you are no longer amused by all your clients thinking they are the smartest trader in the world when only one was smarter and luck usually dominates such contests.
If you choose to you could have a relationship without work always superceding it.
Constant stress the pound of flesh that's taken for your high salary is no longer relevant. (except as it may have caused physical issues you are monitoring)
All the weird things and events and outrageous behavior are just stories now you tell less and less frequently.
You still feel different from all the "civilians" because you were in the center of inter-bank 100,000,000 and multiple derivatives trades hedged by half that amount or so in bonds so you understand the gears of finance.
You realize much of the evil was just amorality and motivated only by acquiring money and lots of it - or not.
You still know some people are evil and managers looking the other way is complicity.
You know in some venues drug tests are just something management holds in reserve in case they want to fire you.
You still know the Fed is useless.
You can still be amazed at repo trades cash for bonds done at a couple billion in real cash and bonds in a trade some of those mornings.
You still hear in multiple loud voices at the same time than most when you want to...
You could do the same things but you don't want to cause it takes too much energy.
Offshore trades in Eurodollars with no USA underlying is still not in the jurisdiction of the NASD even though it doesn't work that way.
The sec or whatever can destroy a persons life (not mine) without any involvement of the legal system and no recourse.
You just don't miss it.
You really don't miss anyone.
On with another show feels better than that old former life and persona.
You wonder if there is ever a real market again how electronic trading will hold up without backup voice brokers to step in when the "systems" break.
You remember it all as an experience you are satisfied you had that was still really bad living through and living after.
You remember being warned by your personal Mephistopheles "doing this will destroy your personal life" not caring, finding out he was right and still not caring enough to regret it.
You hold no grudges. No one is making stories up about you. Fifteen minutes of fame wasn't so great. Money is nice but not without time to enjoy it or enough to be able to save it.
You still prefer fine cotton twill shirts and loose fitting gaberdine suits because they are comfortable but no need to impress clients so you don't need them except the old one yo have for funerals and such.
You learned if you are agressive and an asshole you advance and get promoted if you are politically correct you are just exploited and unrewarded - in a politically correct world this is the Catch 22...
Takes all kinds.
Shit happens.