Saturday, March 9, 2013

- Another Useless PHD

I wish "trading profits" were as easy to produce as this fool seems to think:

Join a business that has an established track record. Start small, building up a few solid years of making decent profits. Do this for six or seven years. It’s called “milking the franchise.” Soon you will have respect and, most of all, expanded limits on what you can trade.

Here's another idea. Join a small firm. Take a few years to build up it's business collecting an increasingly large compensation as it grows. This is called "growing with the business" and is the the basis for 100 years of outsized US economic growth. It's not illegal. It's not even immoral, but I'm sure there is some arrogant PHD someplace who will try to find a way to depict as being so.

Wall Street is littered with empty headed "know it all" PHD's who believe they're smarter than everyone else but can't actually turn a profit. I've met literally dozens. This guy is a perfect example. And instead of recommending that people make an honest effort to stay ahead of their competition by delivering value to their investors, he has three recommendations for making money on Wall Street. The first is illegal, the second unethical and the third one is simply stupid.

His first idea, engaging in fraud with a 'friend at another firm', has always been illegal. It's called conspiracy and has been around since way before 'too big to fail'. His second idea involves doing the right thing for years, and then throwing away your moral compass and defrauding your investors and employers as if the investment of years that you've made is worth nothing to you. If you're the kind of person who would do that there are easier ways to steal your way to the top than working on Wall street.

His third recommendation is a legal but completely foolhardy tactic known as "shorting volatility" - a practice I've railed against for a decade in my career. And now that I'm one of the risk managers who hires people to manage money I can tell you, you cannot get a job in institutional finance if that's all you do. At least you certainly can't get one from me.

And I just love this quote from the article:

"Were they doing anything illegal? Hard to say. They were doing what Wall Street incentivised them to do."

Actually it isn't "hard to say at all" you sanctimonious asshole, the answer is NO. They weren't doing anything illegal. They were doing something stupid, but as is evidenced by your article, you don't have to be smart to work on Wall Street (or apparently to earn a PHD.) And thank goodness for you, being stupid isn't yet illegal.

Wanna hear the best part? I have a passing acquaintance with this guy. I haven't laid eyes on him in 15 years but back in the day he worked with my ex wife on the Salomon brothers emerging markets desk. He was an asshole then, and apparently still is now.

He's typical of the PHD's you saw on Wall Street in the 90's who believed that because they knew physics, they also knew finance. It wasn't true. In fact their misunderstandings were often responsible for the very catastrophe's of the financial markets that this bonehead is complaining about.

He's just another useless PHD who thinks he has proven how extraordinary he is and we should all bend our knee to him. It's not "smart to be reckless" on Wall street, it never has been. It's much harder to be right than this guy ever imagined, and you only get paid on Wall Street for being right.

The only place you get rewarded whether you're right or wrong is not wall street, it's in journalism. And this tool has found his way there like a duck will find it's way to water.


frithguild said...

Tom, we need to work on you being more direct with how you feel about things. It's not good to hold it all in.

Tom said...

I'm in a very unusual business in that there are an awful lot of people out there who believe they understand it but have never actually demonstrated that they do. They then make their way in the world implying that people like me are all corrupt, morally bankrupt, are breaking the law, or all of the above.

Anyone who thinks the kind of job he's talking about is easy to get is delusional. If you think you can lose money in this market and then expect to get another job managing money you're also delusional. the "lose big" paradigm has only applied to a dozen people in 20 years. all the rest who lost money are now bartenders or driving a cab.

But in the meantime this douchebag goes around implying that Wall Street is corrupt, and all about stealing. and the Luddites who think they understand wall street all buy that garbage hook line and sinker.

Screw him.

ikaika said...

i was tempted to link this on my twitter feed.
PhD in Arrogance.
Trading and finance are proven once again remote from the intelligentsia nuveaux as well as those that still believe Gordon Gecco is every wall st exec.
These are the ass-clowns that applaud liz warren when she breathes fire on the SEC but turns a blind eye when the most obvious example is Jon Corzine.
i had to read the comments under the article. idiocy

Anonymous said...

It's interesting--about that period you mention, I remember going to a dinner party and another guest there was a grad student in physics jockeying for a job on Wall Street. Me, I got common sense and reasonable intelligence. He and I argued over derivatives. In the long run, about fifteen years, I was right. Him, he probably had a hand in screwing things up. Because he was effing brill-yant.

ikaika said...

what's with the creepy blog photo?
guy looks like a panhandler.

Tom said...

I think that's to illustrate how 'authentic' he is now, and to demonstrate that he's no longer really a part of the evil corporate machinery of America.

The man is a leftist caricature, just like his ideas.

ikaika said...

Looks like he drove to some playground with a camera on a tripod and tooka timed-photo of himself. Either that or it's a creepy perspective shot of how an innocent child views this man encroaching the playground.