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My Time at Lehman

nickchirls.com

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Re: My Time at Lehman

#21

Post by motoprog »

pekk wrote: post #11
danielna wrote: post #5

I have a strange sense of sadness for my friends who are "stuck" on Wall Street. Strange because it's weird to feel sad for someone making $250k+ per year, but I've heard their first hand accounts of how much they hate their jobs. If you're the type of person who can step back from the ego-driven culture of investment banking I feel like everyone reaches the same meta-conclusions that Nick did. It's just unbelievably…

Step back from the ego-driven culture of investment banking, into the ego-driven culture of startups. Hmm...

ding!

Re: My Time at Lehman

#22

Post by rayiner »

samstave wrote: post #19
rayiner wrote: post #9

"Which, it turns out, is a trader’s field day. What this meant, in its simplest form, is that these traders (or salespeople) could buy bonds at the "market" price from intelligent hedge fund managers in NYC and sell this same crap at much higher levels to unsophisticated (but legally considered "sophisticated") pension funds and insurance companies in middle America. What I discovered, quite starkly, is that the part…

> "We like the idea of letting everyone transact freely, but we are uncomfortable with the "winner take all" implication of that policy." I don't agree with this fully. Your statement implies that "Freely" means "with complete abandon to any sort of soundly regulated and protected system designed to prevent fraud, corruption, exploitation... " -- Also, acquiescing to the "well the system is fucked by design, why are…

But it's not just fraud, corruption, and exploitation. It's probably not even mostly that. It's about being able to just run the numbers a little bit better, aggregated over millions of repeat transactions.

That's part of the narrative I'm talking about. We tell ourselves: "It's only because of fraud, corruption, and exploitation" that all this money is flowing from main street to wall street.

Re: My Time at Lehman

#23

Post by pc86 »

nilkn wrote: post #20
jwb119 wrote: post #8

I worked at Lehman from 2004-2008 in investment banking and on the bond trading floor and I think I have a little more balanced view. Yes, there are people on wall street that hate their jobs. Yes, there are people obsessed with money. That's easy to point out. But there are also some people that are there because they like working with their friends and making big bets, and getting proven wrong or right. It's actual…

> wouldn't you feel shorted if you made the company 10x that in profit on your trades That guy didn't make the company all that money entirely on his own. Lehman supplied the capital, they get the bulk of the profit. That's how it works. If he wants the truly big bucks (as if a million isn't), then he should trade his OWN money. But of course he probably didn't have anywhere close to enough to do so.

What likely happened is the guy in question pissed off a Senior VP and he and all his friends made the first ~$10-15 million. His friends get $2 million and he gets half.

I'd be mad, too. Just because it's a lot of money doesn't mean he should be happy with getting a less proportionate amount.

Re: My Time at Lehman

#24

Post by crazygringo »

rayiner wrote: post #9

"Which, it turns out, is a trader’s field day. What this meant, in its simplest form, is that these traders (or salespeople) could buy bonds at the "market" price from intelligent hedge fund managers in NYC and sell this same crap at much higher levels to unsophisticated (but legally considered "sophisticated") pension funds and insurance companies in middle America. What I discovered, quite starkly, is that the part…

> simply transferring wealth from the less sophisticated investors often teachers’ pension funds and factory workers’ retirement accounts, to the more sophisticated investors...

Exactly. Wall street and investment have wonderful effects -- funneling money towards companies that can use it in amazingly productive ways. It provides an incredibly valuable service.

But the flip side is exactly this, that pension funds, ordinary investors, etc. wind up getting screwed.

I, for one, don't realy see the problem with Wall St. in itself, but rather -- who on earth is allowing the managers of pension funds to "gamble" with their money like this? Why should retirement accounts get invested in anything but government bonds and index funds? Employees get duped because they "trust" their company to take care of their pension, or "trust" their financial advisor to give them good advice.

At heart, I think it boils down to a fundamental misguided notion, prevalent in America at least, that investment is good, that you can grow your money, that you can outwit the stock market -- when the reality is, that for 99% of people, investment is just playing the lottery, and over the long run, Goldman etc. is going to win, because they're smarter than you. Just like, in the long run, the lottery always wins.

Re: My Time at Lehman

#25

Post by nilkn »

pc86 wrote: post #23
nilkn wrote: post #20

Earlier quoted context omitted.

> wouldn't you feel shorted if you made the company 10x that in profit on your trades That guy didn't make the company all that money entirely on his own. Lehman supplied the capital, they get the bulk of the profit. That's how it works. If he wants the truly big bucks (as if a million isn't), then he should trade his OWN money. But of course he probably didn't have anywhere close to enough to do so.

What likely happened is the guy in question pissed off a Senior VP and he and all his friends made the first ~$10-15 million. His friends get $2 million and he gets half. I'd be mad, too. Just because it's a lot of money doesn't mean he should be happy with getting a less proportionate amount.

Then maybe he shouldn't have pissed off a Senior VP? Sounds pretty simple to me.

Re: My Time at Lehman

#26

Post by harryh »

nilkn wrote: post #20
jwb119 wrote: post #8

I worked at Lehman from 2004-2008 in investment banking and on the bond trading floor and I think I have a little more balanced view. Yes, there are people on wall street that hate their jobs. Yes, there are people obsessed with money. That's easy to point out. But there are also some people that are there because they like working with their friends and making big bets, and getting proven wrong or right. It's actual…

> wouldn't you feel shorted if you made the company 10x that in profit on your trades That guy didn't make the company all that money entirely on his own. Lehman supplied the capital, they get the bulk of the profit. That's how it works. If he wants the truly big bucks (as if a million isn't), then he should trade his OWN money. But of course he probably didn't have anywhere close to enough to do so.

You conveniently ignored "and all your friends at other firms that made 10x got a bigger check than you." People compare themselves to their peers. That's how it works.

Re: My Time at Lehman

#27

Post by neilk »

rayiner wrote: post #9

"Which, it turns out, is a trader’s field day. What this meant, in its simplest form, is that these traders (or salespeople) could buy bonds at the "market" price from intelligent hedge fund managers in NYC and sell this same crap at much higher levels to unsophisticated (but legally considered "sophisticated") pension funds and insurance companies in middle America. What I discovered, quite starkly, is that the part…

Free-market believers assume there must be somebody in the system with the incentives to help those less sophisticated investors. Or that the market will eliminate con artists, because their investments must be weak.

That's how you get Alan Greenspan, thought by some to be a sophisticated thinker, flabbergasted that the events of 2006-2008 were even possible.

Re: My Time at Lehman

#28

Post by np422 »

edw519 wrote: post #14
ig1 wrote: post #12

Earlier quoted context omitted.

This. "Caveat emptor" applies heavily in b2b transactions be they financial or otherwise. If you're buying a product then you need to spend money to hire sophisticated buyers, because if your buyers are dumber than the sales-people you're buying from they're going to be fleeced. This is true if your buying a financial asset, a car or an enterprise software licence. Just because Oracle sells into companies that could…

Just because Oracle sells into companies that could just as well have used postgres that doesn't mean that Oracle aren't producing anything of value,.. Oracle doesn't sell software. They sell risk reduction. Someone to sue or blame. Once you understand that, you see how brilliantly they've achieved product/market fit in a way many people here can only dream of.

Have you ever read an eula? Have you ever heard of someone winning a lawsuit against a software vendor? Have you even heard of someone getting any kind of monetary compensation for mishaps caused by software bugs?

The suing part is purely fictional.

Re: My Time at Lehman

#29

Post by ap22213 »

rayiner wrote: post #9

"Which, it turns out, is a trader’s field day. What this meant, in its simplest form, is that these traders (or salespeople) could buy bonds at the "market" price from intelligent hedge fund managers in NYC and sell this same crap at much higher levels to unsophisticated (but legally considered "sophisticated") pension funds and insurance companies in middle America. What I discovered, quite starkly, is that the part…

I know several people who make a lot of money in trading, and I hear the liquidity argument constantly as the justification for their behavior. They describe the millions that they make as payment for all the 'value' that they've given to everyone; But, as an ignorant, I can't see how those millions could have come from anywhere than other (less informed) peoples' pockets.

To me, the worst part (again, as an ignorant), is that the argument seems practically untestable. They say that if we prevent or regulate these complex trading instruments and schemes, then the sky will fall. But, to me, it just smells of religion.

Re: My Time at Lehman

#30

Post by harryh »

crazygringo wrote: post #24
rayiner wrote: post #9

"Which, it turns out, is a trader’s field day. What this meant, in its simplest form, is that these traders (or salespeople) could buy bonds at the "market" price from intelligent hedge fund managers in NYC and sell this same crap at much higher levels to unsophisticated (but legally considered "sophisticated") pension funds and insurance companies in middle America. What I discovered, quite starkly, is that the part…

> simply transferring wealth from the less sophisticated investors often teachers’ pension funds and factory workers’ retirement accounts, to the more sophisticated investors... Exactly. Wall street and investment have wonderful effects -- funneling money towards companies that can use it in amazingly productive ways. It provides an incredibly valuable service. But the flip side is exactly this, that pension funds, o…

If you're investing over the long term and can afford to ride out the shocks then historically speaking stocks have always out performed bonds. That's not gambling.

It's not a zero sum game between you & Goldman. In a growing economy everyone can win by investing.

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