erbmicha

A few weeks ago, a buddy of mine asked me to explain what exactly happened on Wall Street. Not a lot of people know that in a former life, I was a bond trader. It was only for a couple of years and to be perfectly honest, I couldn’t take it. The environment was so shockingly void of morality and integrity that one day I came home from work, sat down in front of my computer to catch up on some email and immediately had a breakdown. My body had finally manifested all the awful feelings that were swirling around in my head and it scared the shit out of me. There’s nothing more terrifying than not being in control of a bad situation and when it’s your own body you can’t control, it’s just that much worse. Needless to say, I never went back.

A little background. I received my first degree in Finance, specializing in securities and portfolio theory. I really enjoyed it because it was close to the science that I was used to studying (I changed my major from Physics to Finance my junior year mainly because I didn’t want to be a TA the rest of my life.)

At first, my job was analyzing portfolios for banks, credit unions, municipalities, etc. so that we could “make sure that they were taking advantage of every opportunity in the market to maximize their portfolio’s potential.” Sounds great but really what my analysis did was provide my employer with ammunition to create a doomsday scenario sales pitch for the client so they would take positions that my employer was long in so they could profit by selling their inventory of securities. Of course I didn’t find out about the sales pitch until I started working with clients directly. 

Money is a funny thing. It’s so ever-present in our lives but for some reason it’s kind of taboo to talk about. Try asking someone at a party about how much money they make or what their investments are and you’ll likely get a blank stare and an abrupt end to the conversation. The weird thing is, people that managed these portfolios acted the same way. They wouldn’t come out with all their information until they felt like you were friends. I didn’t understand this behavior because a) it wasn’t their money and b) they were clients! We were there to help them! I figured they’d want us to know everything so we could be the most help to them.

Well, it turns out they were right to not be very trusting. I remember very well the day that the veil was ripped off. My boss took me aside and told me to sell a bond to one of my clients…my favorite client. I looked at it and told him that it didn’t make any sense for their portfolio and that I shouldn’t do it. He exploded for a half hour about how I didn’t know what the market was going to do so how could I say whether or not this is good for them and I was too young and inexperienced to make that call, etc, etc. I was pretty young, and after getting barraged with this for 30 minutes, I gave in. Figured he was right, that I didn’t have enough experience to be able to make the call (not compared to his 30 years anyway), convinced myself that it could work out and called my client. 

I said before that this was my favorite client. She rocked. She was in her late 20s and already running a credit union. She’d worked there all her life and probably will retire there. A blue-collar kid from a small town who worked her butt off at her job and community college to be able to make a career for herself. She trusted me implicitly. After all, I was the expert and it was my job to steer her in the right direction and I’d never given her a reason not to trust me…until now.

She never hesitated. I might as well of asked her for a stick of gum. And when it went bad, she never blamed me. Chalk it up to a volatile market. No one can predict these things, can they?

That was really the heart of the problem for me. How could these people tell between a market shift and getting screwed? They couldn’t. My dishonor haunted me for the next few months until the breakdown.

It was a few months later that I read Michael Lewis’ Liar’s Poker: Rising Through the Wreckage on Wall Street. It really threw me for a loop seeing how prevalent the attitude was on the big stage in New York. I’d wished I’d read it before I took the job. Would’ve saved me a lot of heartache. 

Well Lewis is at it again with a great article on the latest Wall Street crisis. I can’t wait to see his next article after the personal credit markets crash in a couple years and destroy all that banks that we just bailed out…

The aforementioned Michael Lewis article on portfolio.com