Note these are scripts for the Podcast and are not meant to be a final product so please excuse any typos etc
What Makes Sammy Run? [ref.]
Around 2005 my crew really started hitting our stride on Wall Street.
Said differently, the whole lot of us were finally making proper money.
Money may not be the most important thing in the world. Sometimes it comes with its own problems. There may be diminishing returns to happiness once you have enough in your pocket to live well. But a million little nightmares, that might otherwise trip you up, simply disappear when you earn your first six-figures.
This was the frame of mind that I found myself in, when the outside phone rang. It was a little unusual for our personal lines to ring on the trading desk. After all I had a turret, which is a telephone system with direct lines to 60 or so outside brokerages. And there was a separate method for portfolio managers who wanted me to fix something for them or to trade. Why would I want to take an outside phone call? That’s stupid.
I banged off a couple of orders, finished up an instant message, picked up the line, and heard the voice of someone who was to become a fixture of my life over the next ten years. Let’s call him Sammy.
There’s an avalanche of certitude through the receiver.
“Hey! About time you picked up, I was just about to hang up on you and then you would’ve missed a real opportunity. I’m calling from Berstein, we’re a buyer of Motorola on the desk and I saw your sales coverage is on the phone and I didn’t know if he was calling you or not, but I know you’re interested in the name and we have it to buy in size, like a major-account, we have a motivated-buyer we could take you out of your position because I saw your 13F and we’ll trade half of it on the offer; why don’t you check around internally and ask if they want to sell the whole thing? I’m right here, I'll wait, go ahead and make the call…
Sammy had just broken about 5oo rules on Wall Street. You didn’t just call up a client like us and talk to a trader that way. I am in awe at the magnitude of his bluster.
I gather myself together. Say to him, ‘you like your job Sammy? Because you’re not going to have it very long - tell your boss to call me.
And then I hung up the phone. I wasn’t actually going to rat him out, I just don’t have time for cold calls. I get stock indications or "IOI's" over Autex and Bloomberg. Showing in order flow was just a waste of everyone’s time.
Half a second later the phone rings again,
“Hey it’s Sammy… sounds like we got disconnected. But you asked me a question and the answer is; I do like the job. This year. But if I have it next year, it’ll stink.”
He sounded so tense and serious I almost laughed in his face. I liked him. As a rule, the trouble with Wall Street is that too many people who won’t leave are ashamed to be there. I didn’t get that feeling from Sammy at all. I say to him, ‘I’ll keep my ear to the ground for you kid, maybe in a couple of years you’ll have a chance to back up my account’
That was the first time he ever scared me. Here I was going out of my way to be nice to him and he answered me with a tone that was almost contemptuous.
“Thanks” he said, “but don’t do me any favors. I know this Wall Street racket. Couple of years as an assistant sales trader? So I make fifty grand. Then a stretch covering hedge funds? One-fifty. And finally you’re a big shot sales trader and get three hundred for the rest of your life. No, thanks”
I just held the phone limply, staggered. Then…
“Hey boy! Over here, on the hop!” And he just dashed off, didn’t even bother to hang the phone up on me.
Well, I guess he knew what he was doing. The world was a race to Sammy. He was running against time.
Sammy could be composed in the manner of all fictional characters, out of a writer’s recognition of similar and overlapping traits in various individuals who have passed within his circle of observation. But he’s real. He’s as real as you and me right now. Even if we went months without speaking, I could hear him crowing around Wall Street like a bantam cock.
The second time Sammy and I spoke was in person. He turned up at a big event known as Robin Hood. Robin Hood's mission is to fight poverty in New York City, but no one there gave a shit about that, because the evenings were loaded with celebrities, all mixing with the biggest names on Wall Street - John Griffin’s laughing along with Jon Stewart. Ainslee talking up the Giants defense to Tom Brady. David Einhorn trading healthcare picks with Martha Stewart. Alan Schwartz and Robbins yucking it up alongside Aerosmith. Ken Langone drinking bourbon with folk rock legend Graham Nash... A fundraiser on a boat may well be more fun, but there was nothing like the Robin Hood events and there never will be again. I’d have bought a ticket to just stand there watching people watch each other.
Sammy swaggers in, meets my eye and blurts out, ‘Hey shake hands with God’s gift to Wall Street’ while grabbing my hand before I had a chance to pull it away. He immediately launched into one joke or another and I laughed my ass off the rest of the night.
Finally someone in finance who didn’t see dark clouds behind every silver lining.
Just one thing rankled me about Sammy. Whenever he saw someone more important than us, which was often, he’d just break off mid-sentence and go introduce himself to them. At the time I shrugged it off as America; all the glory and the opportunity, the push and the speed, the grinding of gears and the crap.
Besides, no one else seemed to mind; Sammy always had the ability to do everything just well enough not to break his stride. He had a colossal lack of perspective. In 2007 this was a valuable gift, because perspective doesn’t always pay, it mostly slows you down and makes you unhappy. And there was money to be made after all.
As we left Robin Hood for a new afterhours place called The Box, I looked back and saw Sammy entertaining a group of the most important people in New York. He’d made his way into the center of the room, the focus of attention at a table where you can’t even buy a seat; strictly invite-only. He finishes his story with a dramatic two-handed jerking-off gesture at eye level, while gaping with his mouth open like an amateur porn star. Then he and Lauer dissolve into laughter with their arms around each other.
The third time we met was at The Campbell. The Campbell was a beautiful bar in Grand Central Station. When you walked in you felt like you had been transported to an upscale speakeasy in the 1920’s. Even though I didn’t commute, it’s wonderful what that scene and few fingers of scotch will do on an empty brain.
Sammy had called me up on my outside line again and wanted to meet. When we did, he wore a new expression that I disliked even more than the last one
Back then you made your reputation on Wall Street by how much money you could publicly throw away. And good god, could Sammy throw it away. This was in the middle of the financial crisis, so even though he wasn’t the salesperson on our account, we must’ve talked about business. I remember people were afraid to trade through Morgan Stanley that Friday, thinking there was a run on them and their trades would not clear. I think the stock was at $8 at the time. It was dramatic stuff and Sammy was making the case that Bernstein was a solid alternative to Morgan, being backed by the asset management business and parent company Alliance. I could hardly disagree, but the night was a complete bender and can’t say what else I may have conceded that evening.
A week later my sales trader at Bernstein calls me up and says that he appreciated the opportunity to cover my account and that while he understood why I wanted Sammy to take over, he hoped we could stay friends.
Sammy had spent his time wisely since Robin Hood; he made a plan, decided what accounts he wanted to get paid off and then made a move on all of them. While knifing his fellow man in the back he performed with such gusto and brilliance that it fascinated me as a tour de force. He was so conscientious about being unscrupulous that you almost had to admire him.
But I could read him like the top line of an optometrist’s chart and I wasn’t having any of it. I tell my sales guy he’s still on the account, I’m not changing coverage, and to put his boss on.
Now I feel like I’ve used my position on Wall Street fairly responsibly. I’ve rarely gone out of my way to hurt someone, but this situation called for all the sensitivity of a slaughterhouse worker slitting a steer’s throat.
Sammy had to be stopped. Someone had to draw the line.
Bernstein’s then-head of sales calls me back and I launch into him. How dare he just swap out my sales coverage without talking to me first, I decided who was covering my account, not him and certainly not that little twerp Sammy. Todd’s a little taken aback - he says Sammy told him we’d discussed the matter over drinks. He knew Sammy was one of my best friends and everyone figured it’d mean more business for the firm if he covered the account.
I recovered a modicum of tact, realized I can’t recall much of the night out last week or whenever it was. Bernstein had a reputation as the good guys on the Street. Perhaps I was overreacting.
I was under pressure at work and when you’re down the most trivial slight becomes persecution.
But then I catch myself; if Sammy really believed we were friends he shouldn’t be leveraging that friendship at work.
Sammy is taken off the account.
His scheming becomes more transparent.
It’s a setback for him with the senior executives.
The other sales traders are more wary.
However Sammy was built like a boomerang; the harder you throw him out the faster he comes back.
I didn’t hear much from Sammy for a while after that. And fair enough. Through the grapevine I gathered his career continued its meteoric rise. True to his word, he soon left the trading desk. Moved into sales. Then investment banking, M&A. The rewards for someone in Murders and Executions (sic) were unlimited, perfect for someone who believes going through life with a conscience is like driving a car with the hand brake on.
I’d often find my gaze wandering to my outside line though. Wondering when he was going to call again.
Skip forward a couple more years and I was still riding high. My fund had navigated the financial crisis admirably and I was blissfully unaware I had a target on my back.
The Street was constantly trying to get me out to dinners and entertainment, but I was starting a family and had become more discerning who I spent time with. Certainly where I spent my time.
That said, one sure way to get me out was for the opening of a new restaurant. And that’s how I found myself at the opening of The Dutch down on Sullivan.
It’s one of the hottest tickets in town. I walk in and Sammy is there, holding court. He’s the same guy, all smiles and confidence and enthusiasm. Perhaps he’s put on a little weight, but that’s mostly offset by the cut of an expensive suit. There was something savage and tense about the group with him. They’re sharks. Ruthless. Predators at the top of the financial food chain.
But I seem to notice a momentary crack in his demeanor when he sees me. He extended his hand like he expected me to crack it with a ruler. I could feel the perspiration in his palm. As if he’d swallowed his pride but it stuck in his throat like a fish bone.
But it’s just that - a moment. In no time he recovers. Regains his composure, tells me he doesn’t care a whit about sales trading or a second tier firm like Bernstein. Nor me for that matter - he has more important people to hate. I tell him I’m married now and he says I’m on a fool’s errand; that if you chase after women you will run out of money but if you chase after money, you will never run out of women.
Everyone laughs and just like that he’s back on top. Like a whistle sounded, the signal for him to forget about my previous slight and go about his business again.
The Dutch was a great restaurant, but with Sammy there it had all the intimacy of Madison Square Garden. Something has changed for the better with us though - we knew where the other stood now. I took him for what he was, not what I expected him to be. For his part, he just wasn’t that interested in business with my hedge fund. Our antipathy towards each other became a bond. As our colleagues departed, we found ourselves sitting together again and recalling our evening out during the financial crisis. He told me how nervous he was to cold call me a second time, how he misjudged our conversation and how bad he felt about it afterwards. There was a vulnerability that comes from seeing yourself in someone else.
Around 2am, the two of us are nursing drinks while the staff cleans up around us. We’d been drinking all night but somehow felt sharp and sober, reflecting the give and take of a meaningful conversation. As we say our goodbyes, we make heartfelt promises that have no chance of being fulfilled.
A year later I found myself dismissed from my position on the trading desk and rightly so, the job had changed and I refused to change with it. My firm was gracious enough to allow me to work out the rest of the year at my station. You couldn’t ask for more than that. I put my head down at the office and took every meeting I could outside of it.
If you find yourself suddenly unemployed, it’s useful to know that every meeting is an interview anyway. So just get the meeting, the rest will take care of itself. The easiest way to do that is simply to ask people for advice; 99% of people will be flattered by that approach and the other 1% weren’t going to help you anyway - screw those guys.
Unconsciously I had already made a career out of meeting with anyone, no matter how unimportant, so this part of my job search came easily. But inevitably, I found my eyes drawn to the outside line. Surely Sammy had heard I had been fired? I’d spoken to other people at his firm. They must’ve told him. He was so switched on and plugged into Wall Street. Why didn’t he call?
Looking for a new job is like being on a desert island to some extent - waiting for a message in a bottle. Nowadays I don’t take it personally, if you’re out of sight you’re out of mind. It’s just business.
It’s almost Christmas when Sammy finally contacts me. We’d been playing a game of chicken and he’d waited until my last week in the office before reaching out.
I marvel at how different the call is from the first time we spoke. For a start his assistant connects us, then after an arguably inappropriate length of time on hold, he launches into the conversation with a patrician’s air. Says he had just heard I had decided to move on to greener pastures and he’d be interested in hearing my plans. And of course, perhaps he could be of assistance. He was going to be out east. He’s sure I would be out there soon as well, after all no one spent New Years in the City anymore. Why don’t I drop by and see him? His assistant would follow up with his address and a time that worked.
And in the new year, that’s where I found myself. I plugged his address into my Garmin and made the pilgrimage out to Lily Pond Lane, Amagansett.
I drive through the gates towards his house and Sammy meets me at the top step.
He has that old twinkle in his eye. Says, ‘Well? You finally came to kiss the ring?’
And thank God I already have a job offer in hand. Because that day would’ve been unbearable otherwise. Yes, Sammy would’ve helped me. A man in his position can move mountains. But you would pay. Pay one way or another. A week prior, I would have had to climb a mountain of broken glass to get to him; barefoot, uphill both ways.
Instead I casually inform him I have moved to a family office. That yes, I’m a partner now. I begin to tell him some more details, but he’s not interested; his quarry escaped him.
But then we fall back into our previous friendship. Recall the good times at trading conferences in Savannah, golf outings at Winged Foot, fundraisers at the Intrepid, restaurant openings in Midtown. For an hour we reminisce, the sort of animated conversation where you forget to refill your drinks, interrupt each other with minute details, and enrich the stories meaningfully in so many other ways.
Eventually, we fall back into a contented silence. But it doesn’t last; Sammy being Sammy, he tries to break it with a joke. He had every material possession but didn’t seem to know what to do with himself when he wasn’t talking to someone.
Perhaps life is a choice between being a nice guy and a flop, or the way he is now. But I don’t think he even had that choice. The world decided it for him.
As I drove off I saw him standing outside on his palatial steps, under the giant American oaks, looking out over his hundreds of yards of landscaping that terraced down to the wall that surrounded his property. He was a lonely figure in the shadow of millions, the terrible little conqueror, the poor little guy, staring after my car as it drove out the main gates, waiting for the next guest to kiss the ring or perhaps bring some laughter.
I drove back slowly, heavy with the exhaustion I always felt after being with Sammy too long. I thought of him wandering alone through all his brightly lit rooms. Not only tonight but all the nights of his life. And I looked ahead to the warm comfort of my family and my rented apartment.
I recently found myself near Grand Central Station and it reminded me that Public House on 41st had closed. Imagine that, a fixture of New York nightlife and over 10,000 square foot of real estate dedicated to socializing the most optimistic people in the city... Just shut down after 15 years. Marvelling at our political classes’ ability to repeatedly shoot themselves in the head, I recalled many an evening there. I have to admit almost shedding a tear. But you shouldn't regret something is over, just be happy that it happened.
And I’m happy to have met so many people at Public House.
I was on my way to meet one of them now in fact. Let’s call him... Brother Jimmy.
Jimmy used to do this thing called "5 before 5". Meet him at a bar right after the closing bell and you could watch him take down five martinis before 5pm. Didn't hold the stem mind you, instead he held them like a mug in his big hands. Sometimes he'd pinch the rim of the glass and swill it like a bowl of soup.
Outside of my immediate group of friends, known as the Circus, more of my podcasts are about Jimmy than any other person. He is the most absurd man I have ever met... yet one of the most successful in the game of life we find ourselves competing in and I’ve never known him not to be gainfully employed. It’s difficult to wrap your head around. The moment you stop taking him seriously or begin to roll your eyes, he’ll pull a rabbit out of the hat that ties a conversation together perfectly or he’ll hit you with an unexpected punchline that’d make you spit out your beer.
Jimmy strolls confidently through the hesitant New York crowd and takes a seat opposite me. He immediately points out how sad it was that Public House closed with a whisper rather than a thud, or some sort of explosion. Perhaps it’d have been better to be like Mac’s on Staten Island - to go out fighting with a whisky in one hand and a claymore in the other?
Public House had a champagne problem though - they’d been so successful, that their investors had been de-risked through dividends. They were all playing with the house's money, there was no one left to fight for them at the end.
My interview technique is pretty refined by now. The first thing I do is take out a notebook and my embassy pen, then I place them on the table where everyone can see them. Jimmy raises an eyebrow at being on the record and as he does so, I ask him the same question I’ve been asking everyone recently; what was your favorite New York bar? One that has since closed? I write down the answer, then put down the pen and see where the conversation takes us.
He says that by far his favorite place was Martell’s.
And this is why.
Jimmy grew up poor, but even from an early age by God he knew he wasn’t going to die poor.
One of the most acute problems with poverty comes down to the lower margin of error. It’s just easier to fall into a positive feedback loop - which is when things spin off the rails so badly that it’s impossible to pull yourself up from your boot straps.
This is something that conservatives don’t seem to understand well enough: There is a point where the odds are so stacked against you early in life, that you can never get your head properly above water. This ties into the concept of “thrownness”; to some extent your future is simply determined for you - where you are born, physical and mental characteristics, whether your parents stick around, who helps you… and who doesn’t.
The question isn’t whether life is unfair - it is. The question is what to do about it.
Well Jimmy was determined to get out of Bensonhurst.
At an early age he looked around to see where the money was. His father had some money, but he was a criminal. In and out of prison his whole life. That didn’t seem like an attractive career path whatsoever. Surely there was a middle way - a place to seek your fortune tiptoeing up to a bunch of lines, while never quite crossing them.
Jimmy noted that people had money at bars and they were all around his neighborhood - get a job at one of those, that was the near challenge. And people most definitely had money on Wall Street - get a job there, that was the far challenge.
Jimmy begins working at a wide variety of bars across New York. He asks every patron what he or she does for a living and if they’re in finance he pleads with them to sit down and explain what they do. Just to give him advice. He figured every meeting is an interview anyway, the main thing is just get the meeting.
This sort of thing works surprisingly well.
He soon has an internship at Salomon Smith Barney. This is a generation after Liar's Poker, but he suspects there was still plenty of untoward behaviour to get in on. Sure enough, one day he was running mail past the trading desk and was invited to gamble on the 1997 Super Bowl. Fortuitously, the Packers beat the Patriots and he won two thousand dollars. This is more money than he’s ever had in his life and incidentally leads to a lifelong passion for watching Boston choke.
He takes the money straight to Clet’s Gun Shop in Staten Island to buy a .38 Special, then goes to the bank to open up a safe deposit box. Leaves the gun and the cash there, but keeps enough in his pocket to take some chances with.
Then he heads off to Smith & Wollenskys. Becomes a Friday night local.
It’s there at the bar, he meets Tarzan for the first time.
If you’re new to the podcast it doesn’t matter, Tarzan is exactly the person you’re thinking of.
Jimmy and Tarzan go on an absolute bender. Somehow they find themselves up by Highbridge buying giant foam Yankees fingers and duct tape. Tarzan uses the tape to tie one of the Yankees fingers to his arm, then they flag down a yellow cab and drive up to Boston.
Late Friday night in Massachusetts with a giant foam Yankees finger is obviously an interesting storyline in itself, but in the interests of time let’s put a pin in it for now. The two of them wake up in a Courtyard somewhere and decide to go check out Fenway Park. They buy a couple of tickets from a bemused scalper outside and they’re good seats, right up the front. This is back before corporates took down that sort of real estate and only die-hard Bostonian families sat there. Three generations of Red Sox fans that had only known the Curse of the Bambino.
Jimmy and Tarzan roll in there with the arrogance of youth - the only time in your life when you’re allowed to do impossible things.
The Red Sox fans tolerate Jimmy cheering for the other team and Tarzan’s Yankees paraphernalia for a while. Just out of sheer morbid curiosity they allow the freakshow to continue until the Red Sox start losing badly. Then the mood turns. One punter in particular decides to take it on himself to clear Jimmy da hell outta there
The Red Sox fan yells, “Hey, why don’t you sit down!”
Jimmy retorts, “Hey, why don’t you shut the fuck up?”
In a fury, the fan jumps out of his seat and makes his way down to Jimmy in a hurry, knocking a kid’s ice cream out of his hand.
Jimmy stands up to meet him.
Takes out $20.
Explains he won this betting against the Patriots in the Super Bowl and the Red Sox fan should use it to buy the kid another ice cream. [short pause] And himself a new haircut.
Everyone laughs at this, but a security guard is soon called and then the police after that.
The cops tell Jimmy he has to leave. Quite reasonably, Jimmy points out that no, he spent good money on these tickets, he’s with a client, he’s not the one who left his seat to start shit, he’s just standing his ground, an American tradition.
The police are insistent. But so is Jimmy.
Eventually he sees no way out, but refuses to walk out himself. Instead of fighting with the police like a normal Masshole, he goes completely boneless and it takes four of them to carry him out and up the stairs, while Tarzan leads the crowd in a chant insulting the cops and waving the giant Yankees finger around like a conductor.
When they get back to New York, Jimmy goes to his safety deposit box, pushes the gun aside and takes out enough money for two plane tickets to San Diego for the 1998 Super Bowl.
For the purposes of the story the rest of the year is uneventful. Half of the money is left in the safety deposit box, his life savings, and it calls to him to be spent. A week before the next Super Bowl he takes it to Martells and puts it in their box pool.
Let’s take a minute to explain this, because I don’t personally gamble or have much interest in sports - I needed it explained to me. A box pool consists of a grid of boxes with corresponding numbers—one matching the column the box is in and one matching the row. One football team is assigned the row numbers and the other team is assigned the column numbers. If the last digit of each team's score matches those two digits, the person who bought that box is a winner. For example, if the final score is 31-24, the person who has 1 and 4 for the correct teams is the winner.
The Martell Box is $1,000 a square. 100 squares. Winner take all.
Jimmy heads off to San Diego with another fixture of New York City, let’s call him Elvis.
They hit the bars, the bars hit them back twice as hard, and by midnight they had gathered a remarkable crew around them. A couple of correspondents from the New York Post and some of the biggest names in ice hockey like Messier and Brian Leach were there.
Elvis points to another group at the bar and says some of them look like members of the Eagles. Jimmy is dismissive, says the Philadelphia Eagles suck. He’s already lining up bets they’ll have the worst season in franchise history in the coming NFL season.
Elvis snorts at him, do those guys look like football players to you? No, that’s the rock band the Eagles. Don Henley, Glenn Frey, Timmy Schmit.
Jimmy rolls over there with the confidence of the new kid in town and it turns out the Eagles are some of the nicest people in the music business. Totally without artifice or attitude… and they live life in the fast lane.
Back then every bar in San Diego closed at 1pm, Super Bowl weekend or not. Jimmy and his extensive entourage are ushered out into the parking lot when Elvis is struck by a brilliant idea.
San Diego bars are shut, but Tijuana? Those are open. They pack themselves into cars, skip over the border and end up in a bar with witchy women and all the windows blacked out. Every time a whistle goes off in this place, you lean back and tequila gets poured down your throat.
Eventually, Jimmy wanders outside to find a payphone and the sun is blazing down from overhead.
He stands there and thinks about this for a long time.
Wonders if he needs to be somewhere.
If it’s midday in Mexico, what time is it in California?
Then it dawns on him, everyone inside is going to miss the Super Bowl.
There’s an unquestionably comical scene that follows where they have to get across the border while the Eagles drunkenly sing lurid songs and the NY Post correspondents piss their pants about getting fired. But the details are lost to time, obscured by middle-aged memory and Elway’s helicopter run.
After the game and yet another night of drinking like a bunch of filthy animals Jimmy and Elvis stumble into LAX for the redeye home. They’re sitting at the bar, resembling a couple of zombies, when Jimmy’s pager lights up. He barely notices it at first and then ignores it until the tenth or eleventh alert. Finally he walks over to a payphone and the Irish lass who worked the bar at Martells answers. She’s so excited and her brogue is so thick he can barely understand her.
She’s like, “Wahoo! Wahoo!! Jimmae yae did it, yae won the box, yae won the box!”
Now Jody’s underground Staten Island NCAA pool ran close to a million dollars back then, but Martell’s Box was still a hundred grand. In a world without itemized receipts.
What did Jimmy do with the money?
Well that’s between me, him, and the rest of us who hate the IRS
A couple of months ago, in the middle of the New York restaurant restrictions, I decided to moonlight as a bartender. I don’t need the extra income or anything like that, I just prefer to drink inside when it’s cold. This was the easiest way for me to do so, while keeping my social skills as honed as possible given the pandemic and endless lockdown lunacy.
The owner of the restaurant is a friend of mine and indeed I’m also an investor, although I’ve long since written the money off. While I was sitting behind the bar, pretending to work and drinking myself into a stupor, a woman walked in and asked to use the bathroom. I don’t even really work here so I said of course and she disappeared in there for an usually long time, eventually emerging with a spring in her step and a little white powder left under her nose. Seemingly forgetting there’s no indoor dining, she hustled up to the bar and asked for a drink, so I accommodated and we got to talking. She tells me she’s a dancer.
I’m like oh, how is that during a pandemic?
She sighs at that; ah you know… it’s a career.
But all the theaters must be closed right?
And she says, no I dance outside on the corner. We don’t get poles out there. No high heels neither no more.
Ahhhhhh… She's a hooker.
We soon went our separate ways. But just like that, a memory of the oldest profession was jogged. And the rest of the episode came together far too soon; a miscarriage perhaps.
First, a disclaimer. I’ve been sitting on this story a while, deferring to the interests of discretion and good taste. But now it’s like a ferret scratching to get out. It needs to be told.
Still there? Well, don’t say you weren’t warned.
Around 2005 our friend Ryan worked for a white shoe brokerage firm called Ladenburg Thalmann. It was a sleepy sort of place; a high integrity operation but equally slow moving. Meantime Wall Street was on the up and up - America had looked past the disaster in Iraq and re-elected a Republican president who promised to prioritize the economy and personal freedom. Outdated regulations were being discarded, taxes were low, and the housing market was thriving.
Ryan decides to fish in faster waters. Interviews at a new brokerage operation called Avian Securities founded by a trader from Galleon and some Spear Leeds guys who had already been paid out when Goldman bought them. Ryan is the 11th guy added to the trading desk and when they hire him they emphasize it’s a 10% increase to their personnel. One of the traders he meets is particularly emphatic about that - he’d better fit in.
And Ryan wants to fit in.
He keeps his head down and spends the week observing the desk. Things are certainly raucous but collegial for the most part. The trader from Galleon, let’s call him Larry, is constantly talking about his “girlfriend in Oregon”. No one has met her. No one has seen her. She never calls. Ryan figures Larry’s a virgin.
Anyway, during the second week on the desk Ryan is invited to a party in a hotel room. This strikes him as weird but he dutifully turns up to see three women with too much makeup tottering around on heels like inebriated pandas, while the traders drink Johnny Red and take turns doing lines of cocaine off a table. Ryan had heard about this sort of thing on Wall Street but never seen it.
He watches nervously as one of his colleagues disappears into a bedroom with two of the hookers. It’s really uncomfortable. Eventually one of the girls propositions him.
He asks her, well how much?
Ryan doesn’t have two-fifty. Even if he owned a credit card, there’s no stripe or paypal back then.
He searches his pockets, suggests 68 dollars, and she looks at him like he’s a box of nitroglycerin.
Ryan needs to leave. He walks out of there humiliated but also all fired up. Horny as a teenager. This is unsurprising; he was one just a few years ago.
As he’s waiting for the elevator Larry comes bustling out of the hotel room to join him. Says yeah those girls weren’t that hot, not like his girlfriend in Oregon.
Besides, Larry points out, we can get hookers cheaper in the Village Voice.
Larry and Ryan buy a copy of the magazine off the homeless guy by the A Train, head to a payphone and then they’re in a Lower East Side walk up, talking to a couple of roommates. One of them claims to have met Ryan at a local dive bar called Common Ground on 12th and Avenue A. There were friendly awesome cool pretty girls behind the bar at that place. He can’t place her but she says they definitely met before. Let’s call her Stephanie.
Stephanie and Ryan get on surprisingly well. They laugh at the hotel scene as he describes it and she says she has only ever slept with one john before. He should just leave whatever spare cash he has on the counter to help them make rent and the four of them can hang out and see where the night takes them.
He warns her he’s not as good in bed as he once was, but he’s as good once as he ever was.
She giggles at that and they hook up.
Afterwards, they’re lying next to each other staring at the ceiling. He reaches out to take her hand and then she’s telling him how she escaped her domineering father who was a doctor in a small Nebraska town to come to New York with a friend. It’s a touching scene; immediately interrupted by a brisk knock on the door.
It’s Larry and he wants to know if Ryan wants a threesome.
Jeezus dude. Fuck off.
Larry laughs and ducks back, so Ryan prompts Stephanie to continue her story. She’s pretty emotional but says, anyway her father was a very domineering preacher in a small town in Nevada [sic] and she escaped to New York where she met her friend.
Ryan tells Stephanie she should be in sales. She should leave hooking to join Wall Street. And then he falls asleep.
Over brunch the next morning they are still an item. She likes talking and Ryan likes keeping quiet. He doesn’t have a lot of experience with relationships, but assumes this is what it means when it’s said people are compatible.
Back at work the following week, Larry tells Ryan they have an important client meeting in Philadelphia. It’s one of the two big Pennsylvania pension funds, an important opportunity; the firm needs to really wine and dine them. He needs backup. Normally he’d bring his girlfriend to this sort of thing, but she’s in Oregon right now. Ryan is coming with him.
Ryan and Larry take a limo from New York to Philly to do a quick dinner at Barclay Prime and then treat the pension fund traders to a Jay Z concert.
The clients are proper adults so afterwards they go home.
Larry and Ryan are driving around South Street in the limo when Larry suggests a game called Cocaine Slap Boxing. He pulls out a bag of coke, does a line, gets on his knees and asks Ryan to slap him. Ryan’s not going to turn down a free shot at a senior executive so he obliges and they both crack up afterwards. Then it’s Ryan’s turn; he gets on his knees, does a line of coke and Larry wallops him right across the cheek. Ryan’s still bellowing with laughter as Larry does another line. This goes on for 30 minutes or maybe an hour or even longer, until they can no longer make it hurt and there’s an uncomfortable silence as they figure out what to do next.
They hit a couple of bars but somehow it’s already 2am and neither of them know Philly well enough to go anywhere good at that time. Larry thinks the hotel might have internet, maybe they go on Craig’s List and grab a couple of hookers? Ryan says sure, but honestly just wants to go to a room and stare at the ceiling by himself.
When they get to the Marriott, Larry suggests he should come up and get the hot tub ready for the hookers. It’s kind of awkward. Finally Ryan is like, okay.
Larry opens the door, turns around and Ryan can see a one-person bathtub over his shoulder.
Some sort of pornography is playing on a loop on the TV.
Larry is looking at him meaningfully.
Ryan says, “That’s a bathtub. Goodnight Larry.”
As Ryan walks out the front door, Larry trails out after him despondently.
Says, c’mon let’s just hangout.
Ryan you knew there was no hottub up there.
It’s a Marriott Courtyard for god’s sake.
This actually stops Ryan in his tracks.
He turns around and Larry kisses him right on the mouth.
His breath is hot and rancid. Garlic, a bitterness that reminds him of bad amphetamines, and the remainder of some flammable liquid assails his tonsils. For some reason all he can think about is the chipped yellow front tooth Larry has, then his tongue slips into Ryan’s mouth like a giant slug.
As Ryan stumbles back Larry tries to steady him but Ryan bats his hand away in panic, slips on the Courtyard top step and hurdles backwards down the stairs, breaking his arm in two places. When he wakes up a couple of minutes later, he turns his head and a broken clavicle stabs him in the side of the cheek.
Eventually he gets out of hospital and back to New York and figures the last thing he needs is a hooker girlfriend.
He calls Stephanie to break up with her and she wants to come around. Says it’s important. Gets to the apartment and declares that she’s pregnant. That it’s Ryan’s child and she refuses to contribute to the survival of his genetic makeup. He needs to get rid of the boy.
How is he supposed to do that? She produces a Plan B pill and says he has to insert the pill up her vag.
Ryan is pretty sure that’s not how these things work but what does he know. Even through the haze of his painkillers, he really just wants her to go away. But he does it and as soon as he pushes the pill up there, she starts convulsing all over the floor, screaming for him to call an ambulance. Finally he’s had enough and refuses, so she says; well, maybe I can take some of your vicodin?
Then she gets on a fake call with her fake doctor who gives fake advice that it’s okay to do something like that. Takes the vicodin and falls asleep in his bathroom.
Anyway, Ryan worked at Avian for another five years, but his first month there was a total abortion.
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Episode 1: The Pelican
It’s August, 2002.
To set your mindframe, here’s a little context:
Tom Brady won his first Super Bowl.
Taylor Swift sang the National Anthem in front of the Philly’s.
George W Bush declared Iraq, Iran and North Korea compose an “axis of evil”.
Halle Berry became the first black woman to win an Oscar for best actress.
Michael Jackson hung his son Prince over a hotel balcony.
A Colorado manufacturer acquired the design for Crocs from Canada.
Smoking was banned in NYC bars.
But what was really interesting to me? Suddenly there’s a rumor sweeping the trading desks on Wall Street. There’s real money behind it. Traders are hitting up every source they have. The group chats of the time are offering increasing amounts of money for any proof. More specifically, buyside desks are offering million-share orders to get their hands on the evidence.
And remember, this is back when the standard commission rate for trading was 6 cents per share. So if you traded a million-share block, $60k was paid to the bank and a trader would take home around $15,000 of that, on a bad day.
Sure, eventually the Paris Hilton porn video went public… but we had been sitting around at work watching it for weeks.
The wonders of the free market.
But here’s where we shift gears, because this is very different kind of blow job story.
In 2002 I worked for a single-digit billion-dollar hedge fund. A member of what we called the “three comma club”.
I’m meeting one of my sales traders at a fancy restaurant.
Weird as this sounds, even though you were the client, your job on a hedge fund trading desk was more like being a clerk, while the person on the other side of the phone made 10 or 20 times what you did.
So this broker from Herzog and I were eating and drinking at the Four Seasons and I look up and there’s this hot girl from TV at the top of the stairs. She’s joined by 3 or 4 of her friends.
And they’re hot as well.
They sort of pause for effect and look down on the dining room, knowing all eyes are on them because not only are they smokes but their friend, let’s call her Mary, is on television every morning.
No sooner than I look back down to grab my beer, one of Mary’s friends falls off the stairs and has a full-on coke fit. Or maybe an epileptic one, but the effect is much the same. There's screaming and all sorts of chaos and confusion until an ambulance comes. We continue drinking throughout, bemused but completely uninvolved. The rest of the night is unremarkable and the broker and I go our separate ways.
The next morning, I go into work and tell the story. No one believes me but then Mary turns up early as usual on television... and no amount of makeup can make her look like she hasn’t been hit by a freight train. Her mascara is blotched, her hair is all stuck up in the back, her eyes are still as big as saucers.
So my head trader, who always says there’s no situation that can’t be made worse, says - “get me Bear Sterns on the phone”
A senior trader calls up a desk analyst there, puts our guy on the phone, and the head trader says he knows the Bear analyst will be speaking on television at 10am and he’ll need to say the word “Pelican” three times to Mary if he still wants to do business with our firm.
The analyst is clearly uncomfortable and they go back and forth in low tones for a few seconds. Quickly out of patience my head trader states: “Look just do this and a river of commissions are coming your way”. Then he slams down the phone with a wry little grin.
Everyone else at our firm, even the assistants, get on their phones and spread the word you need to be watching at 10am in anticipation of what would transpire. Remember back then there was no electronic trading or quants in the market, so literally all of Wall Street stops trading to watch this. To this day I remember the New York Stock Exchange floor as being eerily quiet as the minutes tick down.
The analyst comes on TV and Mary, still looking like she’s been ridden hard and put away wet, asks him what he thinks of the market.
Remember, it’s August 2002 - the Nasdaq is down 80% from its peak. Enron has just been found guilty of obstructing justice and this is back when people thought that was a bad thing. Worldcom recently became the largest accounting fraud in American history. We’re in a recession. Unemployment is at an 8-year high. People are scared.
But the analyst sets his shoulders, looks into the camera, and replies,
“We think the Nasdaq is forming a Pelican-formation”
She’s like, “What?”
“Pelican. A Pelican formation. It’s a technical buy signal. Investors need to swoop down and gobble up stock for a U-shaped recovery here.”
And he’s done it! Turns out the whole reason for the gag, and trading desks all over New York are laughing themselves silly - is that they call Mary “The Pelican”... because she can take a full cock and balls in her mouth.
Episode 2: 10-5-W
There’s a scene in the book Liar’s Poker by Michael Lewis where he is recalling where he was when the Space Shuttle Challenger exploded. Everyone is standing around in shock and the phone rings.
He picks up the phone and it’s one of his brokers. The guy goes,
“Hey, you know what NASA stands for? Need Another Seven Astronauts.” and just hangs up.
Think about that for a minute.
What this should tell you is bond traders are 10/10 disagreeable people. I’m about to describe to you how disagreeable they can get.
It’s 2001, just 2 months after 9/11 and there’s still smoke rising from downtown. But it’s New York on a Thursday, so I’m at a client dinner with a brokerage firm called DLJ. Before I tell you this, you need to remember that, even after that bunch of Middle Eastern fanatics attacked us, no one in America really knows anything about Islam.
Months later it’s reported that George W. Bush expressed surprise when told there are two types of Muslims in Iraq. Now, if I was president I would’ve made it my business to know such a thing, but I’d bet 9/10 of people in the country had no idea either.
Anyway, I sit down with these bond sales traders, four of whom I’ve never seen before in my life. And they start telling Muslim jokes.
There's five guys and they tell five jokes. Which one of these five is the least funny? Well, you let me know…
So President Bush and Dick Cheney are sitting in a bar. A guy walks in and asks the barman, 'Isn't that Bush and Cheney sitting over there?' The bartender says, 'Yep, that's them.' So the guy walks over and says, 'Wow, this is a real honor! What are you guys doing in here?' Bush says, 'We're planning WW 3.' The guy says, 'Really? What's going to happen?' Cheney says, 'Well, we're going to get a million Muslims killed and one blonde with big tits.' The guy exclaimed, 'A blonde with big tits? Why kill a blonde with big tits?' Cheney turns to Bush and says, 'See, I told you, no one gives a shit about a million Muslims.
On to the next bond salesman:
This guy was walking through a street in New York and saw there was an "Islamic Bookstore". He wonders exactly what was in a store like that, so he goes in. As he wanders around a clerk stops him and asks if he could help. The guy goes, "Do you have a copy of George Bush’s book on his immigration policy towards conservative Muslims?" The clerk said, "Fuck off! Get out and stay out!" The guy goes, "That's the one. Do you have it in paperback?"
The next guy:
A nun is sitting on a train opposite a Muslim man wearing a turban, who was eating fresh shrimp. Everytime he ate one, he looks her in the eye and then spits the tail in her direction. Eventually, she had enough and pulled the emergency cord. The Muslim looked at her and said, "You'll get fined $250 for doing that, you stupid Catholic bitch." She laughs and says, "When I cry out rape and they smell your fingers, you'll get 10 years, you towel-headed camel-fucker."
Boom, next one:
Mohammed goes into his classroom on the first day of school. "What's your name?" asked the teacher. “Mohammed," he replies. "You're in America now," says the teacher, "So from now on you will be known as Kevin." Mohammed goes home and his mother asks, "How was your day, Mohammed?" “My name is not Mohammed. I'm in America and now my name is Kevin." he says. "Are you ashamed of your name? Are you trying to dishonor your parents, your heritage, your religion? Shame on you!" And his mother starts to beat the shit out of him. Then she called his father, who beat the shit out of him all over again. Later his uncle comes by and kicks his ass as well. The next day Mohammed goes back to school. The teacher sees all these bruises and asks. "What happened to you, Kevin?". Kevin says, "Well ma'am, shortly after becoming an American, I was attacked by a bunch of fucking Arabs".
An 18-year-old suicide bomber blew himself up and appeared before Allah. He said, “Oh, Allah, I did your bidding, but I have a request. Since I’m only 18 and spent all my time reading the Koran, I don’t know how to be with a woman. So, instead of 72 virgins, can I have 72 whores?” Allah regarded him for a moment, then replies, “Actually, the 72 virgins are here in heaven because assholes like you murdered them before they could experience the pleasure of sex. So you’re here to service them. Since they’re virgins, they’re actually quite sexually ravenous; and, frankly, you’ll be on constant, exhausting duty.” The bomber replies, “Well, I guess I can live with that. How hard can it be to keep 72 women satisfied for all eternity?” Allah goes, “Who said they were women?”
So it’s my turn. I’m the client so I may appear quietly confident, but I’m also fairly new to the business and it’s not clear how to proceed. They’ve clearly used up all the jokes about Islam, so I tell the only religious joke I know.
“Two friends, a Catholic priest and a rabbi, are walking along a street. The priest looks up and there’s a school. All these kids are running out of the school. The priest elbows the Rabbi and says, “we should go fuck those kids”. Because he’s a degenerate catholic priest right? And the Rabbi says in response, “out of what?”
I tell one Jewish joke and all hell breaks loose.
“this is the largest Jewish city in the world”. “You can’t say that sort of stuff”. “You’re anti-Semite”.
All the usual horseshit. And this coming from a bunch of Irish guys from Long Island to boot.
But here’s the rub; I’m not taking any shit from these guys. And this is why,
I know, for a fact, that their firm, DLJ, employs the most anti-Semitic people on the planet. Within a couple of years, most of them work for a Swiss bank for Christ's sake. These guys will fit right in there banking former Nazi gold.
And if that isn’t enough, here is how I specifically know this. At DLJ, when an order comes into a trading desk, the bank supposedly protects client identities with account numbers and letters. That way you don’t know for instance that Soros or another big client is buying Cisco bonds right?
They refer to their biggest Jewish clients as “10 5 W’s”
That’s the 10th letter in the alphabet, the fifth letter in the alphabet, and the letter “W”
You’re on the DLJ trading desk and you hear that client 10-5-W… the biggest whale on the Street!... is buying something? Well, you go buy some of that for yourself don’t you? And you get on the phone and tell your non-105W clients to buy some as well. Quickly.
So here’s me, describing larceny and antisemitism on a grand scale to the actual people perpetrating it, but the closest douchebag doesn’t miss a beat. He just laughs and says,
“Yeah, we also call them 5 39’s.”
If you need some help with that take a look at the keypad on your telephone.
Episode 3: The non-#MeToo moment.
Why has there been no MeToo movement on Wall Street?
It’s an interesting question. After all, the guy/girl ratio on Wall Street is about as skewed towards men as the oil rig space. We’re not exactly talking about sensitive new age guys either for that matter. My suspicion is it’s a combination of the following two factors.
Number one, there’s just so much money floating around the business that the attitude is “we’ll buy you and make you go away”. Worked for Trump right? He got to be president!
The second reason is because many of the women who work on Wall Street are like my friend Laura. She deserves her own podcast series, but a quick digression. Laura’s an equity sales trader. It’s 2004.
Remember 2004? Let me jog your memory,
* Saddam Hussein was captured
* "The Apprentice,” debuted.
*191 innocent people were killed in the Madrid train bombings
* Janet Jackson shows her boob off during the Super Bowl
* Abu Ghraib abuse pictures leak to the media
* Facebook launches, for Harvard students only
* Massachusetts became the first state to legalize gay marriage but eleven other states reject gay marriage in referendums
* Tsunamis kill tens of thousands of people in Asia
* The US Marines assaulted Fallujah
* The last episode of the show Friends aired
So Laura and I are at a local midtown bar called SNAFU. It was Situation Normal All Fucked Up. These three traders from a big New Jersey mutual fund walk in, no doubt after a long dinner of getting their ass kissed by some some 2nd tier New York banker who secretly detests them. Long-only funds are ascendant right now and hedge funds are the redheaded stepchild of the stock market. Anyway, these guys are as cocky as you can imagine. And within 30 seconds one of them drops a C-Bomb right in front of Laura.
Laura’s almost six foot and hot, but she’s all Philadelphia… hard as nails and people misjudge her all the time. She lines up on the guy, and says “what did you just say?”
The trader just looks her in the eye and replies, “Cunt”.
Laura headbutts him right above the nose and drops him to a knee. Then for good measure she headbutts the junior trader standing next to him who hadn’t even said anything since entering the bar. I walk into the bathroom 5 minutes later and the first trader is looking at himself in the mirror and holding his forehead together with wads of bloody tissues and the guy goes,
“I just got headbutted by a beer-drinking Irish broad from Philly. I think I’m in love”
So 15 minutes later it seems like we’re all friends again, standing around at the bar in SNAFU. But Laura’s not done with this guy.
It’s almost midnight, so she suggests we go to a strip club. Everyone’s terrified of her now of course, but is stoked with this seeming change into a more conventional broker attitude. We walk in there, start throwing money around and in no time everyone including Laura has two strippers sitting on their laps. Laura looks over at the guy she dropped earlier in the night and says,
“So, you having a good night Sparky?”
He nods his head, suddenly wary at her tone.
But it’s too late and she leans over, grabs him by the collar, puts a finger inside his shirt and rips it downwards, taking every button off it and sending them flying all over the strip club.
It takes a minute to dawn on him, but then he realizes he has to go home to his wife with a bleeding forehead, covered in glitter, with no shirt, and smelling smelling like a stripper.
We never see that guy again.
But like I said, I digress. This podcast is actually about the first reason #metoo hasn’t hit Wall Street. The “we’ll buy you and make you go away” reason.
We’re still in 2004, I’m dating an assistant trader from a Fortune 500 bank. She’s from Boston and the Red Sox just won their first title in 86 years. You can picture her - in her mid-twenties and loves everything besides rules.
I’m one of their clients and she arranges a dinner with me and four or five sales traders from the bank, as well as one of their managing partners. This guy is what Wall Street refers to as a “BSD”, a Big Swinging Dick. He’s a senior guy. His name’s on the door.
Now no one knows I’m dating the junior trader right? The dinner is uneventful, but we’re sneaking each other little smiles and giving up surreptitious glances.
If this story didn’t end in tears, it’d be cute.
So dinner comes to a close, we’re waiting on what must be a $10,000 check, and the “Big Swinging Dick with His Name on the Door” says,
“We’re going to the Lido Room”
All of a sudden, you can physically feel the anticipation build at the table, a couple of the guys are even doing fist bumps, but my girlfriend and I are confused as to why. It’s 11pm, and sure, the stock market is rallying, the city is full of opportunity and excitement… but what is it that can get these guys so worked up?
The BSD leads us out the door and straight up the stairs past two thugs to what I always assumed was a members room or a nightclub. We walk into a beautifully decorated room and there are women everywhere. I mean there’s 200 people in this bar and 95% of them are stunning, beautiful women. It’s one of those nights where you walk into a club, the wind is at your back, and anything seems possible.
But I’m with my girlfriend right? So we find a place in the corner and I head to the bar to get us a drink. On the way there girls are looking me in the eye, touching my arm… I get to the bar and the women on either side grab my ass! This place is incredible. But wait. Then it dawns on me.
There’s 10 or 12 Wall Street guys in this club, and 190 hookers.
I head back to my girlfriend in a hurry, shaking off a series of aggressive female advances, and she’s understandably uncomfortable watching her colleagues at this den of degeneracy. So we finish our drinks and head out the door. As we’re leaving the managing director of the eponymous bank is walking out too.
And he has four girls with him.
I say to him, “Listen thanks for dinner, but I have to ask, why four girls?”
“Well I set them up in a 69 and one licks my ass”
Well, um, okay then. But what’s the fourth girl for?
“She’s here to hold my beer”
The next morning, my girlfriend walks into human resources and tells this story word for word. Says she wants benefits until she’s 65.
We never see her again.
So there you have it. The reason there’s no #metoo movement on Wall Street is the girls who work on it either get a golden handshake - or they give out a Philly one.
Episode 4: Paddy Nailz
Wall Street traders are just like anyone else, only more so. But how high do you turn up the intensity until it backfires on you?
We’re going to explore this question today, by looking at the career of a legend on Wall Street, Paddy Nailz.
Paddy’s a bartender in Brooklyn now but he was once one of the most powerful people on Wall Street.
This is because Paddy ran what’s called a “Delta One Book” at a big investment bank.
A Delta One book is supposed to even out the bank’s exposure as they take risk on trades.“Delta” is Wall Street douchebag-speak for the word “difference”. I’ll take a minute to explain this with a simple example, because it’s important context for future podcasts that deal with the financial crisis:
Let’s say a Wall Street client wants to sell a million shares of a stock we all know about like Apple. The bank will buy those shares from them at a certain price and Paddy will sell a corresponding number of shares in something like Nasdaq or an ETF so that the “net” or “notional” exposure to the bank is zero. This is known as a “hedge”. If the bank can simultaneously buy back the hedge and sell the Apple shares at a profit, the Delta One account can make a lot of money and so can Paddy, the Delta One trader. During moments of financial stress like the credit crisis, a good Delta One trader is the difference between success and oblivion.
But Paddy, as a senior guy at an important pillar of the financial community, was also responsible for taking staff out for drinks on Friday when they had a good week. Before we continue, let’s set context,
* 3 million Americans are going to lose their jobs over the year and the US unemployment rate will peak above 10%
* "Sully" Sullenberger lands US Airways jet on the Hudson
* Obama is inaugurated
* Navy Seals rescue Richard Phillips from Somali pirates
* 13 soldiers are killed in the Texas Fort Hood terror attack.
* The first block of Bitcoin, called the Genesis block, is established
* Swine Flu becomes a pandemic
* Tiger Woods is caught cheating
* Greenspan admits there is no alternative to heightened federal regulations for banks
* The New York Fire Department has canceled their cadet classes.
* Obama is on 60 minutes telling bankers - as the most government-subsidized business in American history - they’re getting zero bonuses.
None of this bothers Paddy. This guy drives around in a Hummer. And not the LA version; this one looks like it just refueled in Anbar Province.
So like I said, one of Paddy’s jobs is to entertain the staff on Fridays after the close. It’s one of those Fridays. And remember, back then Wall Street was being run by a bunch of farm animals with phones.
Paddy takes 60 traders out at 5pm. At 8pm there’s 20 of them left. At 10pm we’re down to 8. By 11 there’s 5 of them. No one remembers what happens after midnight.
And on Monday there’s no sign of him right? Paddy’s a big drinker and a senior guy, so everyone just expects he’ll turn up every hour until it’s 4pm and by then the market closes. Security looks for him after that but he doesn’t answer his phone. Tuesday morning they start calling again. No answer.
They start calling his friends, no one knows where he is. Assistants around the bank are calling local hospitals and even the city morgue, that’s how important this guy is during a time of heightened market and even regulatory scrutiny.
Finally someone calls his home number for the hundredth time and Paddy picks up the line. Picture the scene:
Paddy is in a huge penthouse apartment. Everything around him has been destroyed. Paddy gets up, scratches his balls, and saunters over to a landline that’s been ringing off the hook for 2 days now.
Paddy picks up the phone: “Yeah?”
The assistant explains to him that the market is down another 5% and he’s needed in at work right now.
Paddy snorts, “Right, like I’m coming into work on a Sunday”
Let’s skip forward a day. It’s now Wednesday and Paddy’s finally back in the office. It’s also the most important day of the year for traders. It’s Christmas bonus day. The sad secret on Wall Street is that, despite massive salaries, most traders are in deficit for the year on about January 10th. Their standard annual remuneration is eaten up by mortgage payments, school tuition, holidays, and their drinking budgets. They make their money each year on bonuses. Bonuses are important.
The day after Paddy’s 4-day bender, he’s first in the CEO’s office to get his Christmas bonus. Rumors are swirling around Wall Street that traders are in line for “a donut” - Wall Street speak for zero. Paddy is the canary in the coalmine. If Paddy loses his cool, everyone on the trading floor, an area the size of a football field, knows they’re fucked.
The trading floor is totally silent. Everyone has an eye on the conference room door, waiting for Paddy to reappear. The sound of muffled shouting can be heard. Eventually the door swings open, revealing several shocked faces sitting at a conference room table. Paddy stomps back to his trading desk, gets up on his desk, squats over his keyboard and starts taking a huge shit. He then wipes his ass with a pile of trading tickets, pulls up his pants, grabs his bag and begins walking out of the bank for the last time.
As he walks out, he’s saying something to various traders he’s worked alongside over the years,
[Paddy to Trader Fifteen]: Get fucked.
[To Trader Fourteen]: Go fuck yourself.
[to 13]: Your girlfriend is a whore.
 Everyone here knows you rub one out in the bathroom in the afternoons. Degenerate.
 : Douchebag.
 : Bitch.
 : Asshole
[7:]: You’re a real fart-sniffer you know that? You’ve been a pain in my dick since I met you. If I ever see you again I’m going to break that stupid face of yours.
[5:] You look like a ferret who gave up on itself six months ago.
 You should be working at a GameStop
 Kiss my ass
 Kiss his ass.
 Kiss your ass
[Paddy to Final Trader:] Happy Hanukkah
Episode 5: Wall Street’s worst kept secret
It’s September 2001.
Because this is a story about rub and tugs, context is important.
Are you ready? Let’s go.
* In 2001 the FTC approved the AOL and Time Warner merger
* There was a recession, anthrax attacks, Wikipedia is launched
* FBI agent Robert Hanssen is arrested and charged with spying for Russia for 25 years.
* U.S. Senator Jim Jeffords leaves the GOP in disgust, handing majority control of the Senate to the Democratic Party
* Alabama Supreme Court Chief Justice Roy Moore has his Ten Commandments monument installed in the judiciary building
* The PATRIOT Act becomes law with a 98-1 vote in the Senate
* Enron files for bankruptcy protection
* The Danny Almonte Little-League Baseball Scandal
* Lastly, any broker or hedge fund client who worked on Wall Street in 2001 who says he didn’t go to massage parlors is lying to you.
That’s just the simple truth. It’s not up for debate. There’s even a Rub & Tug Zagats you can look at online. Google it now, I’ll wait.
But here’s the thing, I never liked them. I know that sounds like bullshit, but it’s not - this podcast is about why.
We had a big night out in 2001 with a bunch of Cantor Fitzgerald guys who I used to talk to on the phone but never met in person. I’m still the new guy on a trading desk right? So mostly I’m taking my cues from the two legacy traders who are close with the brokers. We go to an old Irish pub called the Ginger Man or something and I’m totally in my element; Endless pints and conversation at a high school level.
All of a sudden the two Cantor guys are like, “Shit it’s 6.30, we need to go downstairs for our reservation.”
So we head out the door and there’s this basement establishment with Japanese decor that looks so legit I thought it was a sushi restaurant, even though we’re downtown on Beaver Street or something.
We walk in and 20 beautiful little Asian women approach us with little steps and kimonos and slippers and perfect makeup and hair chopsticks and they’re all giggling quietly to each other and pointing at my crotch, and I’m instantly on full alert.
But then the madam walks in, takes one look at 26-year-old me, and says, [deep voice] “This one is mine”.
She’s like 60, named JoJo, and just exactly how you’re imagining a madam would look like. Fat hands like a plumber and no fingernails. She even has sandals made out of wood. She’s the Mister Miyagi of massage parlors.
I don’t know what to do, so I just follow her into a room down a long corridor and there’s bars on the ceiling, which I think is strange until she strips me naked and walks all over my back with her feet. Then she flips me over and gives me a really efficient two-handed, pepper-grinder handjob. Cleans everything up with a towel, I shower and I’m back to my beer upstairs before it’s even warm.
The next morning I’m on the phone with one of the Cantor guys who has called us, following up, and is obviously asking for business right?
A standard sales technique is take your client out for a good time and then call first thing to see if there are any new orders on the desk they need help with. No one on our firm even remembers anything after 8pm and we’re all still hammered from the night before. He could be talking about anyone or anywhere as far as I’m concerned.
The line goes dead.
You’ve since forgotten this podcast is about September 2001… because that was a lifetime ago to you, and I get that.
But I haven’t forgotten.
Because when American Airlines Flight 11 hit the Trade Center, no one at Cantor Fitzgerald gets out. The plane hits a lower level than them and everyone above that floor is doomed. That’s just the way it is at Cantor in 2001. No one gets a say.
And that’s why I was the only person on Wall Street who didn’t go to rub and tugs… and why this is a shorter episode than you expected.
Episode 6: Same Day, Same Way.
People say I’m xenophobic. I’m not. I just think America is the best country and other countries aren’t very good.
However productive this attitude might be, I will however admit it leads to moments of hubris. This podcast is about one of those moments. It’s a story about Amazon, about tip-toeing up to a bunch of laws, and how hedge funds were originally set up to trade.
It’s February 2000.
As we like to do in this podcast series, let’s set context for the year, if not the exact month:
* The Yankees beat the Mets in the 5th game of the World Series to win the 1st "Subway Series" since 1956
* A disputed election in Florida makes George Bush the first president in a century to be elected with fewer popular votes than his opponent
* Concorde Flight 4590 crashes into a hotel while taking off from Paris
* The Playstation 2 was released
* Conservatives are outraged when an illegal immigrant, Elian Gonzalez, is sent back to where he came from
* Milosevic resigns as Serbian president
* The first resident crew enters the International Space Station.
* The Nasdaq peaks and ends a 17-year bull market
Specifically we’re going to talk about how business was done in front of the 2000 market crash.
No one can see a bubble, that’s what makes it a bubble. And when you think about the runup and final months of the 1990’s Internet boom, the best analogy is probably a herd of clowns running through a minefield.
It’s not a particularly useful analogy though, so I’m going to give you a more specific incident.
Before I continue, you need to know that hedge funds are set up in the following way: One person sits up top as the Chief Investment Officer or “CIO” and keeps most of the money.
He employs people called Portfolio Managers or “PMs”, their job is to make investments wherever they can make money and they get to keep a portion of those profits, sometimes up to 20% of them.
The PMs talk to the hedge fund traders for their ideas. In an earlier podcast I referred to traders as “farm animals with telephones” - so why on earth would they do this? This is why; traders generate all the ideas, because they talk directly to the banks, first thing in the morning.
It’s early on one of these mornings, in a period where the market is still screaming higher. Now I don’t like morning people, or mornings, or people. But 6am is when the real business is done on Wall Street; first person in gets the best deal. Remember that.
My head trader calls into a prominent analyst on Wall Street, let’s call him Henry.
Henry says he likes a stock, let’s call it Amazon.
The head traders asks Henry if Amazon is still a good business. And okay, if it’s such a good business, why doesn’t Henry have a zillion-dollar target on the stock.
My head trader gets off the phone and buys a lot of Amazon.
For his personal account. Not for the hedge fund.
The smart traders in the fund have been listening and they go buy Amazon in their personal accounts too.
Then the head trader calls the CIO and tells him Henry the Amazon analyst will be putting a zillion-dollar target on the stock and the CIO should buy Amazon in size.
CIO starts buying millions of shares of Amazon. Price goes up.
The other traders call PMs at the fund to tell them to buy Amazon. Price goes up.
The traders and PMs now hit their phones and a rumor starts circulating around Wall Street, “10 5 W is buying Amazon”. Price goes up.
The head trader calls up a fixer on Wall Street. We’ll revisit fixers in a later podcast, but for the moment, let’s assume the conversation goes like this:
“Buzzy, I hear Henry will be on CNBC putting a zillion-dollar target on this Amazon any minute. Tell your clients. You can thank me later”
“Oh, and after you make your calls, sell 10,000 shares of Amazon for my personal account”
It’s 10am. We’ve been at work for only four hours and my head trader just gets up and leaves for the day to go look at the new McLaren F1.
Now memories and bonds should never be bought at face value. But I don’t recall this being an isolated incident.
This would happen every day.
But here’s the crazy thing. In the situation I just described, no one did anything wrong.
The CIO we talked about earlier? He also employs a compliance officer to watch over this circus. Remember the movie “Boiler Room”, with the guy eating the banana and picking his nose? Not far off.
The only rule compliance had to enforce was known as “Same Day, Same Way”. You couldn’t buy a stock in your personal account after the fund had just bought it, but you could sell it that same day.
No one really used email back then. Everything else we just discussed?
Locker room talk.
Episode 7: Up to my ass in alligators.
This Podcast is going to fly a little close to the sun by talking about what the Securities and Exchange Commission, the SEC, was doing during the financial crisis. For the uninitiated, think of the SEC as the policemen of Wall Street.
In doing so, we’re going to skip ahead to the aftermath, back in 2010. The SEC have fucked up by allowing the financial crisis in the first place, and they are angry.
First, let’s set context.
*An earthquake in Haiti kills over 300,000 people
* Canada hosts the Winter Olympics
*Median US household incomes drops to a 14-year low
* The president of Poland is killed in a plane crash
* For the first time a greater percentage of women than men graduate from high school
* The Deepwater Horizon drilling platform explodes, spilling oil into the Gulf of Mexico for months afterwards
* The Supreme Court allows corporations unlimited political spending and an unprecedented $4 billion is subsequently spent in congressional elections that year
* Greece gets a bailout alongside an austerity program that it is still recovering from now
* Julia Gillard becomes the first female Prime Minister of Australia
* Bin Laden is assassinated by Navy Seals in Pakistan
* The Dodd-Frank Wall Street reform act and Obamacare are signed into law
What was the SEC doing? In 2010, the SEC are trying to figure out how the most notorious hedge fund in the world, known as SAC, made $276 million in profit on a single trade, while the rest of the world was losing their shirts. [note: “SAC” is pronounced “S.A.C.” when the lawyers say it, but “sack” when traders say it]
This is the scene. One of the most powerful sales traders on Wall Street, let’s call him Don, has been called into a meeting with no less than five SEC lawyers.
Don is sitting down staring at one of his shoes, frowning.
Don’s lawyer is sitting next to him, also staring at Don’s shoes.
Across from them are 4 men and a young woman in gray suits looking serious. They are sitting down with their briefcases in front of them. Don and his lawyer look up. Don is smiling and his lawyer is frowning.
SEC Agent number one starts off: “So how do you know SAC?” [use one voice]
Don says: “No one knows them very well.” [second voice, deeper]
[SEC Agent]: “We have well over 14 hundred Instant Message conversations with you and a trader there named Tim. So, you seem to know them better than, say, the average man on the street correct? [pause] Isn’t that what you call yourselves? “The Street”?” [sneeringly]
Don’s lawyer interjects here and tries to call an end to the interview. The reason Don’s lawyer is scared, is because no one knew back then that your AOL instant messages didn’t just evaporate after you closed down the program. It sounds ridiculous now, I know. But it just didn’t occur to us.
It shows you how stupid New York congressmen are that in 2018 they’re still sending insider trading emails, on the White House lawn no less, and getting caught thinking they’re not discoverable! And that’s email. AOL IMs seemed infinitely more ephemeral back then.
But they weren't. Instant Messages were just as discoverable as email. And this is where Don finds himself.
The SEC agent continues: “Why don’t we start all over again then. Show you a little good faith okay? How well do you know SAC?”
Don says: “I know a guy there named Tim.”
[SEC Agent patronizingly]: “That’s better. Would you say he’s a friend of yours?”
Don says, “I’ve got three friends on the street, none of them work for SAC [“sack”]. Let’s get to the point shall we?”
Don’s lawyer looks petrified just now, because there’s been no discovery and this is where the rubber meets the road.
The SEC turns to the lawyer and says, “We’ve reviewed three years of Don’s AOL instant messages - and your colleague has been talking in some sort of code to SAC. [pause] Perhaps you could tell us what some of the codes mean sir? They don’t appear to be stock symbols. In at least thirty conversations in 2008 you used the letters “LMA”. I count 106 uses of “GFY”. 120 of “SMD”. 50 uses of “TTFN”
Don just starts laughing. “It’s pretty clear to you me that you guys are like traffic cops, getting paid to punch tickets and justify your budget…. Well LMA stands for Lick My Ass. Why don’t you figure out what the other three codes are stupid.”
Bear in mind, it’s 2010, no one even really texts in this country yet. The SEC thought guys like Don - who are just thugs in expensive suits - were smart.
Imagine the SEC spending 3 years going spastic, trying to figure out a conspiracy over what “GFY” meant, when it meant “Go Fuck Yourself”
Episode 8, “The Red Rope Treatment”, will be out soon. Please subscribe to listen.
Episode 8: The Red Rope Treatment
The thing to know about Wall Street in 2003 is that there was a crackdown on the worst behavior, because of regulators like Eliot Spitzer but also the sudden declines in the market pushed out a lot of the most poisonous people. But Wall Street’s one percent? The 1% of the 1%? The behaviour got worse, simply because the people left behind had more power. Bad things were happening even faster than we could lower our standards.
If you were a trader for a billion-dollar hedge fund and you wanted to go heli skiing in the weekend? You just had to pay for your plane ticket, everything else was fine.
And if you wanted something entirely more nefarious than heli skiing? [pause] Well, you could have that too. This episode touches on what exactly that sort of thing might be.
Quick 2003 context… after all, it was 15 years ago. Some of you listening to this might be 15. Although I hope not.
* The Space Shuttle Columbia exploded
* Colin Powell gives a 3-and-a-half-hour speech to the UN, falsely claiming Saddam Hussein had WMD and was allied with Al Qaeda. The mainstream media media praise it uncritically
* A viral respiratory illness known as SARS sweeps Asia
* Kobe Bryant is caught cheating
* US forces seize Baghdad in short order and George W. Bush dresses up as Top Gun and prematurely declares Mission Accomplished
* Arnold Schwarzenegger was elected governor of California
* Supreme Court Justice Kennedy overturns state laws criminalizing homosexual activity
Meantime, there’s a new kid on Wall Street. Kind of dim, but he’s good on a website we’ve only vaguely heard about called Craigslist. This guy was trouble waiting for a place to happen.
It turns out you can get whatever you want on Craigslist back then… and what hedge fund clients want is people to stub cigarettes out on their balls.
I know what you’re thinking - that that’s not a thing.
It’s a thing. I won’t name names just yet, [pause] just kidding, unless you’re part of the public record, we don’t do names here. But back in 2003, we’re talking 4 or 5 of the biggest head traders on Wall Street wearing dog collars and having chicks pee in their mouths.
On Craigslist, this new kid, let’s call him Don Junior, can order 400lb black chicks to play with clients like they weren’t middle aged men but teenage girls. One time I was at a Wall Street function and he had to leave it to drop off some coke and girls to his client; The girls met him at the curb… four of these women couldn’t fit in a single cab.
As a sales trader in 2003, if you can figure out that client-facing algorithm? Well that’s better than an ivy league education.
Now, my understanding of this underground Wall Street world is only cursory, but this Podcast is what I know about it. It goes from dark as the full sadomasochist stuff on one end, to the red rope treatment on the other.
What’s the “Red Rope Treatment”?
Well, I’m glad you asked. I’ll save the sadomasochism for another podcast and you won’t have to throw up on your shoes today.
Anyway, Don Jr. gets a reputation within months of being a guy who can get anything done. Soon he gets a call from from this buyside trader - a serious person, think partner at a $10 billion hedge fund, and he’s like,
“Hey Donald, you made the list, meet me at Tenjune at 9pm”.
Well the bar at Tenjune doesn’t even open until 10pm so he’s sitting there at 9pm looking like dipshit with a bunch of first-year interns who are holding their bosses’ places in line.
An hour later, the buyside trader walks over to him and just says,
“You got upgraded. Follow me.”
They head into this parking garage around the corner, start walking down those creepy steps that every garage in NYC has, until they’re in the basement. Remember it’s 10pm in the meatpacking district back in 2003 - it’s not safe to be on the streets, let alone 8 floors underground.
They walk up to a big reinforced steel door with an eye slit. There’s some yabbering away in a foreign language between the doorman and the Asian analyst the hedge fund guy brought with him.
The doorman won’t let them in for less than $500 which Don has to pay for of course.
Don still hasn’t even given the buyside trader the cocaine that’s bulging out of his pockets, but he totally forgets about it because he just walked into a massive room with Lazy-Boy chairs and cigars in ashtrays and there’s a parade of hookers on the stage with numbers walking in what turns out to be a giant circle that runs backstage. Every woman has a number tacked to their underwear. Turns out, number 1 costs like 2 thousand, down to number 99 for $100 or whatever the dock worker at the front can afford.
Numbers 1 through 10 are indicated in red ink. You pay for a top 10 and you get the “Red Rope Treatment”. Chances are she’s studied Japanese rope bondage for at least 2 years. This podcast doesn’t do detail on sexual degeneracy anymore than we have to, but I’ll describe it as quickly and briefly as I can.
All the usual massage parlor stuff goes on, but at the end of it the woman ties a long red rope to the bars on the ceiling. She wraps this around herself as she dances above the client, tighter and tighter, while she massages his back with her feet. Finally she flips him over, swings herself upside down, puts his dick in her mouth, and releases the rope, unwinding and spinning around like an insane version of circ de soleil . [pause]
And that... was the classiest thing that happened all night.
Episode 9: “My Inner Communist”, will be out soon. Please subscribe to listen.
Episode 9: Bringing out my inner communist.
It’s 2008. Let’s set context before we discuss what this Podcast is going to address,
* Spotify is launched in Sweden
* 87,000 people are killed by an earthquake in Sichuan, China
* The Summer Olympics take place in Beijing and Michael Phelps wins his 8th gold medal by one-hundredth of a second
* Russia thumps Georgia in a war over a breakaway province
* Sarah Palin's gives a disastrous interview with Katie Couric
* The remains of Tsar Nicholas II of Russia are identified using DNA analysis
* Spitzer gets caught up in a call girl scandal
* Home values plummet across the nation, as do mortgages in the form of worthless derivatives held by the big banks. [pause]
I had a front row seat during the Global Financial Crisis and it’s such a big subject that it needs a podcast or television series all its own.
Since Netflix hasn’t bought my script yet, instead of taking a single scene from that year, this Podcast will take three of them. It’s such a meaningful period that I could do 3o or 300 stories, but everyone on Wall Street has a short attention span, a casualty of employment. We like to keep these podcasts brief as a consequence.
By 2008 I’m working at a big mutual fund and I go to the Lehman Brothers office, ostensibly to catch up a friend but really to see how bad things are there. I’m sitting on the trading desk drinking coffee and who should come by but their CEO, Dick Fucking Fulds. He grabs this portable phone from the head trader and you can hear his voice right throughout the firm on the hoot and main speakers. He’s like,
“I know what people are saying, but it’s not true. We have capital lined up. We will get through this. [shouting after this point] We have the Koreans! We have the Chinese! We’re talking to the Bank of England! Warren Buffett! The Japanese!”
Half the people on the desk don’t even know what he’s going on about. So he continues with what he thinks is this inspirational speech right?
[shouted] “Let’s go! Let’s go get those naysayers, the shorts, those bastards!”.
He’s expecting applause and he’s greeted with collective silence and even a couple of loud groans. Remember his employees were forced to go buy Lehman stock when it was $60 in their 401Ks and even as he speaks CNBC is tallying every dollar it falls below $20.
Finally it’s obvious his big inspiration speech is going nowhere and he slinks back to wherever he came from.
The Lehman head trader takes his phone back from Foulds, thinking it’s been switched off, and says “We’re fucked” to the whole firm.
Unlike Foulds at this stage, the Lehman head trader is a standup guy. A respected and steadying presence at the firm. Lehman stock goes into full meltdown when he says this, and the financial system almost collapses right afterwards.
Like everything in this podcast, that is a true story. Wouldn’t believe it if I hadn't seen it with my own eyes.
Similar story, but I heard this second hand, one of the last days at Bear Sterns was when the JP Morgan CEO Jamie Dimon told the traders he was buying out their life savings for $2 a share. To his credit, he came in there and gave them the bad news to their faces.
He’s up on stage and there’s 400 senior people in attendance. You could’ve heard a pin drop in that conference room. This one mortgage trader, let’s call him Hank, can’t take it anymore, loses his shit, stands up, and starts screaming incoherently.
Jamie Dimon just stands there and waits him out, letting him hang himself, not saying a word. So Hank gets more and more wound up right? Starts yelling to the crowd,
“We’re not going to take this! We’re not going to take this!! Let’s protest! Let’s riot! Let’s riot!!”
In his blind anger he doesn’t realize not a single person is standing up, people aren’t even looking up from their shoes. Just think about that… like a bunch of entitled, ivy league brats in dockers and Nantucket Reds are going to cause a ruckus on NYC streets because they didn’t get their cookies out of the jar before they burned down the kitchen.
He runs out of the conference room, yelling and waving for people to follow him. Straight out the door like Will Ferrell streaking in Old School. The fucking St Paddy’s Day Parade was going on outside. The guy’s dead now obviously.
My final story involves a controversial name, someone who is constantly maligned with falsehoods. However, like the prior two scenes, I have it on good authority this is a true story.
During the financial crisis, George Soros made out like a bandit. Now, I’m not going to approach this guy like some narrow-minded conspiracy-theorist from the Right or a bitchy little whiney protester from the Left, so if you’re either of those you should keep your expectations low.
The reason that George Soros, or as he is known on Wall Street, The Palindrome, made so much money in 2008 was that he was short the banks. Or in layman’s terms, he bet that they were going to go down. Most people know that, in part because George desperately tried to warn anyone who would listen that the credit bubble was going to burst and we needed to prepare the country for it.
But George also made an enormous bet that gold would go up. He did this by buying up physical bars of the stuff, but also gold futures, and ETFs. Because an ETF is a stock, his fund had to list it in what is known as a 13F and his bet became public.
Try to picture the Soros trading desk during the financial crisis. All hell is breaking loose outside, but they’re making money on both sides of the trade - their shorts are going down and their long positions are dominated by gold bets.
In a panic, gold goes up. And in 2008 the markets are in a panic.
George is in Davos Switzerland for an annual event and, as someone who predicted the worst crisis since the 1930s, his words are highly anticipated. Maria Bartiromo is interviewing him on CNBC.
Maria asks, “George, we know you think gold is a safe haven during the crisis. We can see in your filings that you have bought a lot of gold. Where do you think gold can go from here?”
George says, “Well Mary [sic], I think gold is in a bubble.”
The rest of the interview is unremarkable, but the commodity markets take notice of this exchange and gold is down like 10%. George probably owns 4 billion worth of gold, so he just cost himself $400 million dollars.
George calls the trading desk soon after and speaks to the macro trader there, let’s call him Goose.
George says, “Hello Goose, Mary [sic] from CNBC knew we owned the gold. How does she know that? Where is the gold that we own? Where do we store it?”
Goose replies, “Well we don’t actually own the gold itself George, we mostly have contracts with the banks that require them to deliver the gold to us at a certain price.”
“But Goose, that is not good for us. The reason we want to own the gold is that all the banks are going to go away”
“I don’t know what to tell you George, even Fort Knox only owns like 100 billion dollars of physical gold.”
“hmm, okay let me think on this matter Goose. Where is the P&L trading right now?”
“George, we’re down 400 million dollars!”
“Goose, why is the P&L down?”
“George you were just on CNBC saying gold is in a bubble. Gold is down 10%!”
“Goose, I said it was in a bubble… but I did not say it was going to burst. [pause] Buy $1 billion worth of gold”
Think of it this way - one of the most famous investors in history could explain photosynthesis, but couldn't even tell you what a photo is.
Episode 10, “Glossary”, will be out soon. Please subscribe to listen.
Episode 10: An Urban Dictionary for Wall Street.
This episode is not a story-based podcast as such but a short interim glossary or index of random expressions that Wall Street traders use in social settings. If you haven’t listened to the first 9 episodes, I recommend you check these out before you continue.
In no particular order, these are terms I used to hear on Wall Street during the aughts:
As we discussed in Episode 2, Wall Street would refer to big Jewish clients as 10 5 W’s or 5 39’s, but there are other acronyms banks used to get away with front-running orders. For example “Rice” was the central bank of China; the Commies used to be the easiest clients to rape by far. They called the Bank of India “Chicken Tikka”.
“The Duke” was Stanley Druckenmiller.
“Crispy” was Louis Bacon from Moore Capital.
The Koreans were “Dogeaters”.
As discussed in Episode 9, George Soros was “Palindrome”
Hedgistan - the area between Manhattan and Westport CT on the I-95 corridor that includes Greenwich, the hedge fund capital of the world
“Dumbfuckistan” was an account package dealing with Midwestern mutual funds. Basically anywhere between the Upper West Side and Napa Valley.
Quant: an expert. Someone who knows more and more about less and less, until they know everything about nothing.
“Canadian Ballet” was a strip club
“Hit that bid” means go ahead and do something. Note that you hit a bid, but you take an offer on Wall Street.
“PA” - Personal Account. When you do something for your PA you are representing yourself rather than your client or any public good.
A “Traci Lords” was a barely-legal, market dominating, cock suckingly good idea.
“Dawg” - a trading assistant but also a 24/7 wingman who never says anything stupid to mess up your game.
Investor - anyone who owns a stock for more than one day.
Delta One trader - a socialist. Someone who is backed up by your tax dollars but keeps any profit.
“Stopped out” is an interesting expression meaning “this is your worst case scenario”. You might be stopped out selling a million shares of something down 10c from the bid or “stopped out” because a girl likes you at a bar while you’re still working on getting her friend.
“Putting it on the tape” - managing to pull off even the most rudimentary task.
“T&E” - your corporate expense account. Back in 2006 you could get in trouble for not spending enough T&E on T&A.
Oh and “hashtag me too”? Wall Street calls it “pound me too”. So if you see a woman discussing Me Too with a Wall Street guy, you can bet they’re thinking about totally different movements. (it’s a shame)
If you’re listening to all this and concluding that the fastest way to double your money on Wall Street is to fold it in half and put it back in your pocket… you’d be right.
And does all this reflect well on the guardians of our financial system?
Well no, but that’s Future America’s problem… I don’t envy that guy.
Episode 11 Altruism is selfish, will be out soon. Please subscribe to listen.
Episode 11: Altruism is selfish.
This is sort of a story about the credit bubble. At least it’s set in 2007, before the economy imploded, and centers around the kind of stupidity that you could get away with back then.
I used to know these four traders; they were dumb as a box of rocks and crazy as a sackful of ferrets.
But every dog has his day and they came up with a classic business idea that gripped Wall Street for over a decade. This is a podcast about that idea [pause] - and I’m telling you now, if you replicate it in any city outside of NYC, it will be a home run. It doesn’t matter how many people have listened to this already. It will still work for you. [short pause] Want to give it a shot? Sure you do. Here goes,
Step One: Ask a local restaurant that needs more business if you can bartend for an hour and donate your tips to a veterans’ charity. [pause] They will say yes.
Step Two: Invite all your friends to attend, even if you only have like five or ten. [short pause] They’ll say yes.
Step Three: Now go to your local strip club and give the girls there tickets for “the event”. This is the only expense for the idea, but don’t worry - you can buy custom plastic tickets online for like pennies. Tell the stippers to dress like civilians. Also tell them the event will end around 9pm and the patrons work in banking. [pause] Just because they’re strippers doesn’t mean they’re stupid - they will say yes.
Step Four: On the night, the strippers won’t know who works in the financial sector. And the restaurant patrons won’t know, at least at first, that the girls are working. [pause] It’ll be funny, trust me.
Step Five: Give your tips to the military charity. [pause] Yes, all of them. This is not a scam about money.
Step Six: Build an email list of attendees and ask your guests to suggest more people who want to help our military families.
Step Seven: Repeat.
These four traders, they had this business model down to a science in New York. They did random events at bars. Italian restaurants with shooting ranges. Taco-eating contests. You name it. One time they had 18 strippers teeing up golf balls at every hole in Winged Foot before management realized what was going out and kicked them all off the course. They hosted fundraisers at Cipriani [pause] Presidential candidates spoke at their events. They literally raised millions for military charities. You know who they are. [short pause] They’re the clowns running through a minefield.
Now before we continue, let’s set context. I know it’s annoying, but, as everyone finds out eventually, context is important.
* Nancy Pelosi becomes the first female Speaker of the House in U.S. history.
* Britney Spears shaves her head and begins attacking paparazzi with umbrellas
* The subprime mortgage crisis begins
* Apple CEO Steve Jobs introduces the iPhone at a conference in San Francisco
* Virginia Tech shootings become the worst mass shooting in history with a number of deaths, 32, that almost seems quaint now.
* Keeping Up with the Kardashians airs for the first time
*The Supreme Court upholds the ban on so-called partial birth abortion
*The WHO reports 80% of Iraqis lack access to sanitation and 70% to clean water
* The seventh Harry Potter book sells 8.3 million copies on its first day
* Don Imus describes Rutgers University women's basketball team players as "nappy-headed hoes"
* A record 72 percent of Americans think the country is “seriously off on the wrong track”
* The top 1% of Americans own half the nation’s stocks and a record $16 trillion in wealth, more than the bottom 90%
So anyway these four idiots were out recruiting strippers for one of their shitshows and who should they run into but a Delta One trader with around 30 of his guys. Let’s call this guy Mick. If you don’t know what a Delta One trader is, I strongly recommend you listen to Episode 4 before continuing. The story can wait. The time will pass anyway, trust me.
So these two groups of traders are at Scores; this is back when it was on the Upper East Side under the Queensboro bridge. When Mick realizes the other traders are giving inviting strippers to a Wall Street fundraiser in a couple of weeks, he insists on getting involved. But it’s all just a bit overwhelming for him - these guys have the local New York Fire Department there, a ton of military guys, and Mick just goes down the rabbit hole a bit.
When it’s time to move on to another club to add a bit of diversity to the event, Mick won’t leave. He’s like,
“I’m not leaving, this girl likes me!” [Irish accent]
There’s no arguing with Mick when he’s 10 beers in, so the rest of the traders just shrug and head off to Dirty Mike’s on Rector Street.
So a month later, I run into Mick at the military fundraiser and I ask him how he knows the four girls with him. He tells me he woke up at 3am in a Scores private room next to a naked Bangladeshi businessman. The four girls were in the room, watching TV, eating pizza and using the two of them as footstools.
And that’s how I found out that one of the biggest fundraisers on Wall Street was started by a bunch of traders who wanted to have something to talk to strippers about.
And trust me, if these clowns could pull it off, you can too.
Episode 12, Dumbed-down Billions will be out soon. Please subscribe to listen.
Episode 12: Dumbed-down Billions
Someone once asked me, why do you think all the people in your business are so strange?
And I told them it’s because mental illness is an asset on Wall Street, not a liability.
This podcast is about the worst job interview of 2005.
Remember 2005? This interview is about the only thing I can recall. So let’s jog our memories, shall we?
Countrywide CEO Angelo Mozilo had a tanning bed in his office and changed his suit three times a day
Bush was inaugurated for a second term
Martha Stewart is released from prison wearing clothes made for her by another inmate
For the first time over 50% of women live without a spouse, up from 35% in 1950
The first non-Italian pope in 455 years died
Tiger Woods won the Masters again
We saw the London subway bombings
Trump married his third wife
1,800 Americans died when Hurricane Katrina hit the Gulf
Brad Pitt hooked up with Angelina Jolie
Israel withdrew from the Gaza Strip
Chad Hurley and Steven Chen started YouTube [short pause]
In 2005, we mistook wanton money creation with omnipotence.
Markets may grind higher, but they crash lower. And don’t think you can keep snakes in your backyard and only expect them to bite your neighbors. What we started in 2005 ended up being a fuckup the size of France.
But I digress. In 2005 I had this great broker who rented a house in Nantucket for the whole season, and also booked a private plane to fly us there and back every weekend. Every time he finished work on Friday afternoon he’d say he’s going to meet us, but then he’d go out for “one drink”, do a bunch of cocaine and never make the flight, so we had the house and the plane to ourselves the whole summer.
The only time he made it out, he and his degenerate friends jumped in a yellow cab at 2am and had the poor guy drive 6 hours to a boat in Cape Cod. By the time he actually caught the ferry and found the location of the house it was 9pm - he walks in, falls asleep on the couch and was still sleeping when we took his private plane back to NYC. I honestly think that was the only time he used it the whole summer. Certainly I never even got to meet him in person, at least not while he was conscious. He could have slept on someone else’s couch and saved himself the 150k.
But you couldn’t help but be drawn to this sort of mindless conspicuous consumption and I thought I needed to get some of that. Being a client was flattering on a daily basis as people blew smoke up your ass, but hardly rewarding compared to the guy on the other side of the phone who could rent a million-dollar house and not even bother to visit it. So I decided to take a deep breath, say adios to the buyside and interview at his brokerage firm to become a sales trader.
To set up the interview I wanted to start off from a position of strength, so I set up a meeting with the Nantucket broker and his firm to discuss business. We’re sitting at Bond Street and I’m America’s Guest, running up a five thousand dollar tab. At the end of the dinner I tell him I’m thinking about a change of career and that I wanted to come in and interview with him to become a sales trader.
Now this put the broker - let’s call him “Bernie” going forward - in a difficult position. He has to say yes because a hedge fund customer is always right. But if he actually gives me a job, then he’s killing the goose that lays the golden egg. Who knows if the next buyside guy who takes my place will even bother to pay off the sushi dinner we just expensed, right? So I figure Bernie has to thread the needle a bit, but he says he’s interviewing sales traders the next morning anyway so I should come on in tomorrow.
I see that the night is rapidly getting out of control and I make my excuses to leave early and get some sleep to be sharp for my interview - as I leave, I see Bernie and the rest of the table drinking firebombs. One of his friends is doing lines of coke off the table.
I think nothing of it.
So the next day I make an excuse to be late to work and go into see Jay before the market opens. Now some context is in order - Yes, Bernie is a sales trader but he’s also the principal of a solid 2nd tier brokerage firm. The kind of firm that specialized in one sector, but suddenly found itself with more commissions than it knew what to do with in 2005, and was growing like crazy. With the benefit of hindsight, these sorts of champagne problems tend to inevitably lead to excess, but today I was excited to see how the leader of such a dynamic firm operated.
Bernie has a desk on the trading floor, but also an office where he’s conducting the interviews. I recognize another sales trader from the night before and he points me to where the office is. There’s five or six young guys sitting on fold-up chairs outside, obviously waiting to be interviewed. But I’m a buyside trader and an important client, so I pull a power move and stride right on past them and into Bernie’s office.
Bernie swings around to look at me and he’s like,
“I dig your confidence barging in here, but what makes you think you can be a sales trader?” [different voice, arrogant, slightly slurred]
That was sort of a strange thing to hear. We just talked about this last night right? We speak on the phone a couple of times a week.
I notice a little brown dot in the corner of his mouth. Oddly it seems to be expanding. I sort of stutter an answer how we had already talked about this last night, but I’m confused.
“That’s good to hear, so we have a bunch of mutual friends, maybe that de-risks my decision a bit. Or maybe it doesn’t.”
I forget how I responded to this, but whatever I said trailed off as I continue to stare at the brown spot bloom on his mouth.
Bernie moves on,
“So, do you think you can spend $200,000 a year on entertainment? Because what that’s what this job actually entails.”
I’m barely listening at this stage. A long trail of drool mixed with chewing tobacco is running out of Bernie’s mouth, streaming down his chin.
He doesn’t seem to notice it.
“Forget finance, who do you know that can get your client a table at the Four Seasons 8pm on a Thursday? That’s how business is done nowadays.”
I am transfixed. The chewing tobacco and drool are now dropping onto Bernie’s shirt without any apparent reaction from him. He keeps speaking,
“I was out entertaining some hedge fund dimwit last night in fact. Spent five thousand dollars on sushi if you can believe that. That was just the beginning of the night. We then hit XL and Provocateur. In fact I came straight to work from the Box.”
Now I remember all these stories about interviews at Bridgewater where the company tries to make you feel uncomfortable and sees how you react to weird situations. So this must be a test and part of the interview process, right? I finally decide I have to say something. I take a deep breath,
“Sure I can do all that. Listen, I don’t know if this is some kind of test or something to see whether I mention it, but you have spit and chewing tobacco running down your face.”
Bernie’s like, “What?”
I reply, “Look, it’s literally staining your shirt.”
Bernie doesn’t even look down but just fixes me with a stare. His pupils are so dilated, the whites of eyes have disappeared.
“What are you talking about? Get the fuck out of my office!!”
After this, I decided sales trading wasn’t for me and sure enough the firm imploded even before the financial crisis, [pause] but Bernie… he sure was an interesting bunch of guys
Episode 13 of Occupy A Job on Wall Street will be out soon. Please subscribe to listen.
Episode 13: The Numbers Game
We had a strong after-work crew in the aughts, but by 2010 we had all begun to hit our late 30s, which in NYC makes you over the hill socially, if not professionally. While all still working on Wall Street; various members of my social group began moving to the suburbs, getting married, having kids. The circus was being disbanded, one clown at a time.
As this inevitability approached, we did our best to stave it off. We even created t-shirts with our group motto – “DGM, DHK, DNR”… Don’t Get Married. Don’t Have Kids. Do Not Resuscitate.
It didn’t work - one at a time we fell down. But this one member of our group kept dodging the bullet until technology eventually made him bullet-proof.
This podcast is about that hero. Let’s set context.
Canada held the Winter Olympic
Wikileaks releases US military documents covering the conduct of the war in Afghanistan.
Haiti’s earthquake killed over three hundred thousand people and was still only the 10th deadliest on record.
A volcano in Iceland disrupted flights as far away as Europe
Spain won the World Cup
Israel became the 33rd member of the OECD.
The sequel to Wall Street comes out and it’s a massive disappointment.
Just to be clear, a guy like Shia Lebeouf wouldn’t last 2 minutes on a Wall Street trading floor. He’d spend his internship stuffed in a locker and the next year of his career complaining he has PTSD until someone got sick of his whining and fired him.
Back to the hero of this story. Let’s call him “Single Guy”. We’re all sitting around a Wall Street hangout called STK one night and I notice Single Guy is picking up his cellphone periodically, swiping his finger across and putting it down with barely a glance. Now remember, this is 2010 – people didn’t meet their friends for drinks and then spend the whole night glued to their iPhones like you do now. For one of us to be constantly on the phone back then, when you were already with your buddies, it was unusual.
So eventually I call him on it and it turns out he was beta-testing an app. It was a sort of aggregator for Match.com, J-Date, and every other dating platform you can imagine back then. I think there were like four of them.
Now I think you’ll agree a dating aggregator is clever just by itself, but Single Guy had taken it a step further. He had created a three-step auto text. It’d work like this,
Step One: His shortcut would message “Hi I like your profile” to everyone within a 3 miles.
Step Two: Anyone who responded he’d reply back “Ha ha ha, that’s really funny.” Now remember, it didn’t matter what the person had actually responded to the first message, he’d just worked out that this was an all-purpose line that would get you to…
Step Three: Anyone who made it this far would get an auto text that just said, “Oh wow, you’re trouble. Come meet me”.
Forty five minutes later the bar would be full of girls, a certain percentage of them bewildered or annoyed to be part of what he called “A Match.com Stew”, but at least a few who would be DTF regardless.
Of course this was all the way back in 2010, before the advent of dating on social media. Our hero is still not married – how could he be after he got access to Tinder and Bumble?... and his game now he’s in his 40’s? Well you’ll find out when we launch his reality show in 2019.
Episode 14 of Occupy A Job on Wall Street will be out soon. Please subscribe to listen.
Episode 14 - 12 Rules for Life on Wall Street.
This podcast is not a story as such, but, like Episode 10, an interim reference episode. Episode 10 was an urban dictionary for Wall Street. This is more of a general advice column for living in New York.
Rule Number 1: Always get on with the local homeless guy.
I used to live on the Lower East Side, it’s still pretty sketchy there, but in 2001 it was downright scary. I used to walk home past the Hells Angels clubhouse just because they wouldn’t let anyone else commit crimes around there that might draw attention to them. But back then trouble had a way of finding you anyway and eventually I got mugged at gunpoint near Avenue A. I’m no hero, so I’m staring at the ground, emptying my pockets and pleading with him to point the gun away in case it went off by accident. Out of nowhere this guy smashes the mugger in the head with a brick, drops him to the ground. I look up and it’s the local bum, eyes blazing like a zealot with a huge grin on his face. Now I didn’t know the homeless guy’s name, but I had always said hi to him if he caught my eye and occasionally gave him food and small change. He bent down and hit the mugger a few more times in the head with the brick and then took off with his gun. I never saw him again and the NYPD probably shot him later that night, but it’s a lesson I always live by. Always get on with the local homeless guy
Rule Number 2: Never be late.
If you’re ever late to a meeting you are telling that person that your time is more valuable than theirs. And time is a New Yorker’s most valuable commodity.
If you’re early you are on time, and if you’re on time you are late. Never be late.
Rule Number 3: Get a dog.
Think it’s hard to have a dog in NYC? I’d argue it’s hard not to have a dog. The worst thing you can do in this city is work 10-hour days and lock yourself in your little shitty apartment outside of those hours. Get outside and walk around. Talk to people. There are literally a million dogs in NYC, so there’s a million owners out there for you to meet. It’s the people in NYC that make it interesting, get out there and talk to them.
Also, dogs are better than women, fact… Don’t believe me? Lock your wife and your dog in the trunk of a car, leave them there for an hour... then see who licks your face when you let them out.
The later you get home, the more excited your dog is to see you! Dogs find you amusing when you’re drunk. Dogs don’t notice if you call them by another dog’s name. Dogs like it if you leave a lot of things on the floor. A dog will not wake you up in the middle of the night and ask, “If I died, would you get another dog?” If a dog smells another dog on you, they don’t get mad - they just think it’s interesting! If a dog leaves, it won’t take half of your stuff. If a dog has babies, you just put an ad in the paper and give them away. A dog is a gun you can pet.
[pause] And just to be clear, if your dog can fit in a microwave, it’s not a dog. To all those grown man walking shih tzu’s on the Upper West Side, you should know you look ridiculous and stop doing that.
Get a dog
Rule Number 4: Get a gun.
It’s surprisingly easy to get a pistol in NYC. Trust me, just look up the steps online. The difficulty is just the 6-month delay, but if you’re listening to this podcast you probably have long term designs on NYC, so that shouldn’t be a problem. Why get a pistol license? Well for a start it’s really fun to shoot firearms – there’s a range on 20th Street, try it. Secondly 95% of Manhattan gets outraged when you tell them you have a gun permit, so it’s fun to talk about. I’m having fun right now in fact. Lastly, a formative time of my life in the aughts was Hurricane Katrina… the lesson of Katrina to people my age was this - no one is coming to save you.
Also, like dogs, guns are better than women, fact. Don’t believe me? Let’s do this…
For a start, you can keep one gun at home and have another for when you're on the road. Number two, guns function normally every day of the month. They don’t take up a lot of closet space. A gun doesn't mind if you go to sleep after you use it. If you admire a friend's gun and tell him so, he’ll probably let you try it out a few times. Your primary gun doesn't mind if you keep another gun for a backup. [pause] Your gun will stay with you even if you run out of ammo. And lastly, you can buy a silencer for a gun. Get a gun.
Rule Number 5: Don’t buy a bar.
Everyone wants to own a bar in this town. I looked into it myself once and was lucky enough to speak to bar owner who set me straight. Let me tell you what he told me,
"So you want to buy a bar do you? I’ma give you advice like you’re one of my oldest friends. Let’s pretend we’ve known each other since high school okay? [pause] You are a fucking idiot! You’re going to lose all your money, you’ll end up hating your partners, people will steal from you, you’ll get divorced, an underage girl is going to get stabbed in your establishment and you’ll be in and out of court for years. [pause] Even in the unlikely event that you’re successful, you’ll drink all the profits and your liver will pack up.
In an upcoming episode I’ll tell you about a team of Wall Street traders who bought up bars in New York and how it ended up in fiasco. In the meantime, trust me, Don’t buy a bar.
Rule Number 6: Always smoke pot before arriving at the bar.
This one is a little odd but bear with me. Living in NYC involves constant negotiation and a million little trials a day. If you’re going to use cannabis - which I highly recommend - always smoke it around an hour before you hit your social scene. This is because doing rudimentary tasks builds confidence. If you didn’t die on the subway, congratulations! Now go talk to that girl by the jukebox. And if you’re on a citibike and get in an accident on the way? You were only going 5 miles an hour! Here’s your participation trophy, and now you have something to talk to your friends about over dinner.
Not convinced about this one? Well take it up with our mayor. With De Blasio’s endorsement... Always smoke pot before arriving at the bar.
This has gone on long enough so we’ll do the other 6 rules in a future episode. In the meantime have a good week.
Episode 15 - Everyone should have an Eddie
I always think of the aughts as the golden years of Wall Street, and part of the reason I wanted to write about them is to just put that feeling in a bottle before the memories escape me. Not coincidentally, they were also the golden years for restaurants. Tao, Abe & Arthurs, Catch, San Cubana, Brass Monkey… when these places first started firing it was a wild time in New York.
Back in those days I had a pretty close friend, let’s call him Eddie, who has long since left the business, so I can speak a little more freely about him.
So Eddie was a sale research guy at, let’s call it Stifel… because that’s not where he worked
He used to hit me up in summer and ask if he could come by with iced black coffees from Starbucks, which I obviously said yes to every time. (Snyde) Even Ackman likes Starbucks now, so don’t judge me… Anyway, it got to the point where Eddie would call the outside line, and if he was lucky and I picked up, I’d just yell out to the trading floor,
“Who wants a large black??!!”
[pause] But this is the funny part, on the way out of his office he’d grab a large FedEx envelope and stuff whatever drugs he had left over from the night before in it. He’d then seal it and bring it by my office with the ice coffees; we’d rap a little and then he’d leave the coffee and the drugs there. We were spoiled little shits back then - sometimes this envelope would sit on my desk for days afterwards until someone would realize it smelled too much like skunk and take it home.
Eventually someone got fired over it, but it wasn’t me ;)
But, while sober me thinks that’s interesting in retrospect, this is still not really the point of the story. So the weird thing is that this guy owned like 3 basis points of a club called Provocateur. He always used to invite me to go with him, but I doubt this place even opened the doors until a little before midnight and I’m a four-oh-five [4.05] drinker, so I never made it down there.
Eventually however, I put on my big boy pants and went to the club to hang out with him. Within five minutes at the bar I took off to the bathroom as an excuse to get out of a bizarre conversation with a stranger wearing a silver wig and chaps.
I walk into a toilet and all the urinals are taken, so instead I have to use the retard stall… the door was unlocked but it’s occupied by a middle aged man lying on the floor with no shirt on screaming,
“Pee on me! Pee on me!!”
You hear that sort of thing at 11.30 pm, that’s when you know you need to be home before seeing what happens after midnight. [pause]
So the other interesting thing about Eddie was he also had a driver, and this guy was also called Eddie. Eddie Number 2 was a Puerto Rican guy, with tattoos all the way up his arms and a handlebar moustache, who doubled as a bodyguard. Eddie (Number 2) and I used to get on well - if I knew he was in the neighborhood keeping an eye on his boss I’d have him swing by whatever dinner I was attending and we’d circle the block and smoke blunts.
So I leave Provocateur, literally running out the door, jump into Eddie’s car and ask him to take me home. We’re chatting away and I look down at my feet and there’s literally hundreds of pieces of cutlery and silverware strewn all over the floor of his massive SUV. I ask him why he has a whole kitchen back here and he tells me his boss and his crew never leave a restaurant without stealing every bit of cutlery they can get their hands on. So they’d hit three restaurants before going to Provocateur… in addition to the glasses, forks etc. there was a huge carving knife from Ben Benson’s, one of those giant stone inca pots still full of guacamole from Dos Caminos, and a four-foot long pepper grinder from Lavo.
And while there’s not necessarily a point to this story, I’ve just always wondered about that… how do you steal a 4-foot pepper grinder from a two-star restaurant???
If you can relate and know the answer hit me up. Otherwise I’ll see you next week
Episode 16: Sexism on Wall Street.
Before I get into this one, I’d like to do two things. Number one, encourage you to listen to Episode Three before you continue. And secondly, dispense with this commonly held idea that there’s some “great institutional bias”(mockingly) against women in the United States.
Don’t believe me?
Well of course you don’t. I didn’t believe it myself until I looked at the numbers.
If you adjust for hours worked, as well as for the presence of marriage and kids, women make 20% more than men in the United States. That’s right - women get paid one fifth more money, for doing the same job.
Women live around five years longer than men, a gap that cannot be explained by biology but has to be related to environmental factors.
Women started graduating college in greater numbers than men back in 1982. That was 36 years ago people. Almost 50% more women are graduating with college degrees than men right now - a gap that is projected to widen.
But if you’re a woman and listening to this, I want you to think about something - your son, husband or father is more likely to die from heart disease, cancer, lung disease, a stroke, diabetes, liver or kidney disease, Parkinson's, influenza, pneumonia, and is 400% more likely than a woman to commit suicide. In fact the only thing you’re more at risk from is Alzheimer's and well, breast cancer I guess.
But you have boobs! If I could sit around all weekend and play with my boobs, while avoiding fourteen out of the fifteen leading causes of death during the week?
Well, I’d like to think most men would be just fine with that.
Men are 200% more likely to die in accidents!
Accidents... How is that possibly fucking fair?
If there’s a sexism bias, it’s against men. Polls show men are almost twice as likely to prefer a daughter to a son. Mothers are only 24 percent more likely, but they still prefer daughters. Think about that for a bit.
Now before you think I’ve taken the red pill or joined some alt-right group, a little context is in order. I personally think Trump is a charlatan and a narcissist who cares about nothing but his own self-aggrandizement. Even his supporters seem to agree that he’s a degenerate and a liar and every day he’s president this country shrinks a little.
But it doesn’t change the fact that American men face more challenges and more institutional bias than women, and that’s just a fact.
But not on Wall Street.
Wall Street is the last bastion of male dominance in an area where there’s no reason women can’t be just as successful as men. Now how on earth did we pull this off?
I’ve been thinking about this a lot lately and it really does come down to a hostile workplace environment. Not just hostile for women mind you, but hostile for everyone.
Let me give you an example.
My first job on the Street, people just christened me “Stupid”. Not as an occasional adjective… someone on the desk decided it would be my actual name one day because I assumed the symbol for Intel’s stock was INTL when it was actually INTC. Boom. Your name is Stupid for the next twelve months. Imagine coming into work,
“Get the phone Stupid”
(Annoyed)“Pick up that ticket Stupid”
(Genuine)“What do you want for lunch, Stupid?”
“Pass that pen Stupid?”
“Hey Stupid, want to go grab coffees for us?”
“Call UBS for a look in Intel, Stupid”
“Market is closed Stupid”
(Smiley)“Have a good night Stupid”. [quickly. all in the same, different, voice]
Now I was stupid back then, my body flooded with testosterone - something I now refer to as “the dumb drug”. Testosterone is one of the reasons men face the plethora of problems I mentioned earlier and why women are outperforming us in just about every metric that matters in this country.
Of course there’s a good reason for hazing - it’s Wall Street’s way of training you to handle the criticism it takes to be successful in a high pressure job. But hazing means different things to the different sexes - hazing amongst men is a prerequisite for success and test of whether you can be trusted. Hazing amongst women is the opposite; it’s a way women exclude each other from a larger group.
The reality is that most women just wouldn’t put up with that sort of environment back during the aughts. And now that you can’t get away with even mild teasing on trading desks, you can bet women are coming for our jobs on Wall Street.
And they’re gonna get ‘em.
Episode 17: The robots are coming (wonky)
Around 2004 I met my first quantitative analyst, AKA a “quant”. At the time I ran a large trading desk that executed trades for a couple of portfolio managers, also known as PMs. My traders and I used to call ourselves “trigger pullers” because that was essentially our job - if someone who worked for our fund decided to buy or sell something, we’d make it happen. We also called ourselves “execution monkeys” for the same reason - we really only had one trick, but people were always strangely impressed that we could do this and drink beer all night.
It’s worth saying this stuff out loud, because trading jobs like this barely exist anymore and it’s because of quants that they don’t. But if you were a trader in the aughts you had one of the best seats in the world.
So anyway, my COO asks me to go meet this new quant who was going to run money for us. I’d done a 100 of these meetings, but all my prior PMs made money the old-fashioned way - which was either buying value stocks and then riding out volatility or buying momentum stocks and causing volatility.
I walk into the office and there’s a Ukrainian woman in her 40’s who tells me she was a professor at some college and had figured out a sure-fire way to make money and that her models never failed. All I’d have to do was enter 4,000 trades on the first of the month and reverse them 4 weeks later.
Now if this sounds like a problem, then you heard me right.
Remember it’s 2004 - we’re not that far from the days where we used white paper tickets for buy orders so we could tell them apart from sells. Getting carbon copies of the trade tickets was practically an innovation back then.
But I figured out the solution, which was to have our IT guys load all the trades up from Excel and then tell what’s known as a “program desk” at a bank to execute it.
Sure enough I come in on the first of the month, pull a trigger, the 4,000 trades go off.
So skip forward three months and the quant has lost money every month and she can’t figure out why. The models work, but the output is just different.
I go into her office to see if I can help and she explains why she should be making money and how it seems to be just disappearing somewhere. As I question her about her quarter, she answers almost every inquiry using the word “heuristic”.
I’d had a late night and I needed to get back to the desk, so I ask her;
“Okay, tell me what your assumptions are for the cost of commission, spread, volatility, and implementation shortfall?”
She’s like, “who?”
and she looks at me like I looked at her when she said the word “heuristic” - somewhat confused and as if she suddenly wanted the whole conversation to go away.
Now, if you’re still listening after that nightmare of words, let me run through all of them one at a time.
Cost of commission - this is the fee you pay a broker to execute a trade. Back then you could negotiate something like 1c per share for program trades, but that’s still 5 basis points on a $20 stock. We’ll come back to basis points shortly, just remember the number “five” for now.
Spread - this is the gap between the bid and the ask. When you buy something, you don’t get last sale, you get the offer. Likewise when you sell, you get the bid. If a spread is say 30 basis points, you might pay half of that to execute. So let’s say the spread was a 15-basis-point cost.
Five plus fifteen is twenty.
Volatility - stocks don’t stay in one place, they move. Murphy’s law also says they move against you. For further sake of simplicity, let’s just say the cost of volatility back then was 15 basis points.
Twenty plus fifteen is thirty five.
Implementation shortfall - bear with me on this one. Implementation shortfall is the cost of executing the size of your order. You may be able to buy 100 shares on the offer, but you can’t buy 10,000 shares there. You have to move up the book and each offer you take gives you a worse price. This can be expensive. Let’s call it 30 basis points.
So now you have sixty five basis points of costs that the local monkey knows you have to account for, but a tenured academic...had never heard about. [pause]
But I’m not done.
That’s only for entering the position. You have to pay all these costs again when you exit it. So 65 times 2 is 130…. 130 basis points is the same as 1.30%.
So now you’re losing 1.3%.
15% a year
This is why I refer to quants as people who know more and more about less and less until they know everything about nothing. The gigantic flaw in her Wall Street money making idea was Wall Street itself.
And I still don’t know what “heuristic” means... but I do know this - If someone ever uses that word, check your wallet is still in your pocket and get as far away from them as possible.
Episode 18: GQ’s Wingman of the Year.
In the late aughts my colleagues and I took a trip to a Spanish-speaking country to do some business and watch a football match. There were probably 20 of us heading there from New York and I flew in with five of them. We arrived around 10 AM and the hotel couldn’t let us into our rooms until midday. The staff in this country were nicer back then, so they store our bags and point us to where we should go.
We’re sitting around making fun of one of our friend’s bright red shorts and this hot girl in her 30s walks over and asks if we want to smoke a joint.
About half of us say yes, and after that she rolls a couple more joints.
After about an hour she starts a rap with our buddy with the red shorts, and they take off together somewhere.
This neighborhood is like being all the way out in Williamsburg back then, so I don’t think that much of it. We still have an hour to kill, so someone says we should go to the local Duane Reade.
We walk into the pharmacia and this one friend of ours who used to live in the city starts ordering in the local dialect. Fortunately I’m standing close to him so I can hear what’s going to happen for the rest of the weekend;
I can’t remember the rest but there was a lot more. He just throws some US cash on the counter and we walk out with bags of the stuff. As he’s walking out one of the girls who was hanging outside says “me gusta tu camisa roja” and he stops to talk with her.
We leave him there. Half of us walk east and the other half of us walk west. I don’t see the guys who walked east until the we arrive back at the airport terminal on Sunday.
The rest of the night is unmemorable, but those of us who manage to get up before midday go to some set brunch in a local square. When we sit down, I look over and a third colleague of ours comes rolling out of a fountain in his undies and strolls over. He sits down and starts eating all our food and asks if I like his red jockstrap. This is super weird but sure enough, some chick comes over and starts ordering coffees and mimosas and about an hour later the two of them take off and that’s a another person I didn’t see again for the rest of the weekend.
So we’ve been here a day or so and we figure we should buy some stuff for the hotel room because the fridges are too small. So we take off to the local market and we’re buying vegetables and stuff and one of our guys is advising a lady on what sort of food her son should be eating, and that’s the last we see of that guy.
Now there’s like 4 of us left and there’s another 36 hours on the trip including a real live football match in 5 hours, so I’m looking at the last few people around me and wondering how badly this story is going to end.
We head up to the rooftop to escape any random local gang activity and we’re sitting around with what we think are road sodas before the game and one of the girls swimming in the pool gets out and talks to the Aussi sitting next to me. I don’t think much of it until he ends up staying up there with her when we leave and it dawns on me that I’ve never seen anyone wear red billabongs before.
Game’s on in 2 hours... [weak] Yay football right?
Remember, this is a work trip, we’ve been here a day and we’re already running an 85% casualty rate.
A few of us decide we need to head to the local brewery near the stadium. We’re financial guys, so we go somewhere in the financial district, or whatever passed for it in this shithole country.
I look at the two of my companions. Now I didn’t fly in with either of them but one of these guys could annoy a stripper and the other smells of Binaca. What could go wrong?
They’re both wearing red.
Some girls at the bar are giggling and pointing their way.
So I ask one if them, are you wearing red because it seems like some sort of aphrodisiac to women in this country? Or is it just a coincidence that every one of my colleagues has hooked up with a girl wearing some sort of red clothing? I’m genuinely wondering about my sanity. But I’m insecure in other ways too - no woman has even looked at me sideways but everyone else seems to have hooked up with ease. One guy slept in a public fountain and managed to score an hour later!
This guy looks at me like I’m crazy and says,
“You didn’t know? [pause] If we’re in an unfamiliar city we arrange ahead of time for hookers to meet us and have them pretend to be civilians. At the arranged time, we wear red so they know how to find us.”
And that’s how I ended up in a football stadium by myself in a third world country, while my peers... were all on a completely different trip.
Episode 19 - So, you’re going to get fired.
Some final thoughts before I close out the season.
One thing I’ve learned over the years is that a short tenure is no liability on Wall Street. Hell, I’ve had 8 jobs in 15 years. Some places I was barely there for a cup of coffee. [arrogant, aggressive]
Any job you have on Wall Street involves, at least in some small way, dancing on the graves of the unemployed and dispossessed. So employers in my business don’t blink an eye if you’ve seen your share of pink slips.
This podcast details some of the most valuable advice anyone ever gave me while looking for a new job, and after that I’ll close out with my favorite Wall Street firing story. (Intriguing) [pause]
While I was working in my last trading seat it soon became clear I had a target on my back and was going to be kicked to the curb. Fortunately I had a friend in the business who used to fire people just to see the expressions change on their faces… He didn’t trade stocks….he traded people. [pause]
This is the advice he gave me, use it wisely.
1) Don’t tell anyone else at your firm what you’re thinking.
Remember, no one was ever betrayed by silence.
2) Use your time efficiently.
Open up a Google spreadsheet. Now look up your contacts, your LinkedIn connections etc and write down the names of everyone you know and rank each one of them.
You should use two measures to rank each person – Can They Help You or “Ability” and Will they Help You, or “Willingness”. Assign a value between one to five for each of these and - once you’ve thought seriously about every person you’ve met in prior years - sort the spreadsheet by value and systematically approach the 10’s, the 9’s etc all the way down to the 6’s.
3) When you approach people, ask them for advice not a job interview.
If you ask someone for advice, they will be flattered, they’re more likely to say yes to an in-person meeting, and remember - every meeting is an interview anyway.(nonchalant) Go with the path of least resistance.
To reiterate this point: If you want a job, ask for advice... if you want advice, ask for a job.
4) Figure out what you really want to do
As Jordan Peterson would say, pursue what is meaningful, not just what is expedient.
What I recommend here is to list every firm you can think of and then rank them.
Open up a second tab on your Google spreadsheet to keep your thoughts on this in one place. Start by ranking each firm by how much you’d like to work there. But also by as many criteria as you can think of - culture, business potential, core competency, management reputation. Sort the data and begin approaching people to get into their offices for a meeting, per step 3.
5) Be mindful of other people’s time.
As a general rule, you should contact people between Tuesday and Thursday and between 11am and 3pm. Why? Before 11 and on Monday’s they’re too busy. On Friday’s and after 3pm they’ll be in a hurry to get out of the office.
And for Christ’s sake don’t call people when the stock market is opening or on the closing bell. That may seem obvious but I get 10-year veterans doing that to this day… it’s insane.
It may be a cliche - you really do only get one chance to make a first impression.
6) Never, ever be late for a meeting.
I mention this in an earlier podcast, but it can’t be emphasized enough; Get to the building 20 minutes beforehand and just read a newspaper outside. But that said, don’t actually walk into a meeting 20 minutes early… you may think you’re showing enthusiasm but it’s just disruptive. Factor in security and elevator delays, then walk in a minute early, no more and no less.
7) Write down everything you do and always follow up with people.
Josh Marshall once said, “I write to know what I think”. It’s good advice.
Open up a third tab on your Google spreadsheet and track your progress on a daily basis. When you meet with someone, ask if you can take notes. And when you walk out of a meeting, go home and write down everything that was talked about.
Follow up every time you meet with someone. You should email the person the day after, not the same day. Then a week after that. Then 4 weeks after that. Always follow up with something you previously discussed, never email people just asking if they know about a job.
One of your goals when you follow up with someone should be to have that person make two introductions for you. Think about what your network will look like if you are successful in doing this.
It won’t look worse, just trust me on this one.
Be sure to ask people you meet to copy you into an email when they are introducing you. If they don’t copy you into an email, you can assume they didn’t do it.
Remember, the good thing about looking for a job is you only need to find one. Be optimistic and enthusiastic; you don’t have any choice… there’s only one path forward.
In any case, this Podcast has been waaaay too serious and it’s time to segway into my favorite firing story…
We used to work with an extraordinary person. Not only was she a working woman with two kids - and therefore almost unfireable - but she had Tourettes on top of that. She’s been out of the business long enough that I can use her last name - it was “White”.
Imagine this White woman with tourettes in a meeting with five African American clients dropping N-Bombs every two minutes. It seems inexplicable now that I recall it, but I swear...her clients loved her.
A million insane things happened to her while she worked on Wall Street, but we’ll talk about some of those in Season Two. I want to talk about one story in particular.
My understanding of what happened, is this - her house-husband came home one night and she had left her laptop on with her company credit card statement open in the browser. Being somewhat curious about what his admittedly eccentric wife was up to on her business trips, he checked some of the payment descriptions and there was a single $1,000 charge for an item from a store named “Doggie Style”.
Now they had a pet, but he didn’t ever recall his wife coming back from a Las Vegas trading convention with a $1,000 present for for their cat. [flat]
So he calls up the store with the item number and the clerk wants to know how he liked his double-ended magnum dildo with the diamond-studded two-handed grip.
[pause] That’s a mouthfill I know. [pause]
He was not amused and unfortunately for her, he also believed revenge was a dish best served cold.
So he spends the next two months gathering email, text, photo and even video evidence of what she was up to.
Remember not only was Ms. White a sexual predator, she had tourettes too. I’m not going to go into what the videos allegedly showed, but trust me we’re talking about world-class smut here.
So fast forward two months and the husband calls the trading desk and asks to speak to his wife. I tell him she’s off the desk and he says fine and I should tell her to check her email.
Now he’d got into her contact lists as well, both professional and personal, so two minutes later I get an email from this guy saying my colleague was a cheating bitch and he was divorcing her. But it wasn’t just me - this email went to the neighbors, her clients, everyone in the firm… god knows who else… before I deleted it I could see hundreds of other recipients. Attached to the email was the litany of evidence I referred to earlier.
I don’t hate anyone enough to destroy them like that... but hell hath no fury like a house husband scorned.
Season 2, which includes stories from the Spotted Pig, details how Iceland blew up the world economy, and includes many many Australian jokes, will be released soon.
Season Conclusion - The Pitch.
Season 2 Preview - The Dinner Party
There were twenty of us at The Gramercy.
It was a momentary friendship forged in the bursting of the Nasdaq bubble, the September 11th attacks, a recession, and the contemporary frictions of the Iraq War. There was a fraternity between us now that seems hard to imagine in today’s New York City, [short pause] which recently strikes me more like a Euro Disneyland, rather than city I knew back then.
This is the scene. [pause]
Taking his place at the head of the table is an equity trader from Goldman North who had come up with a pretty clever way of getting his non-Wall Street friends drunk. He’d arrange to have dinner with a couple of his hedge fund peers - for simplicity, let’s call them the Tudor’s and Diamondback’s of the world back then. He’d then figure out which brokers wanted to do more business with those funds and tell them to make a reservation at one of the hot new restaurants at the time. The brokers would be so grateful to be around these valued clients, there would be a rush at the end of dinner to put their credit cards down. The Goldman North guy was always coincidentally “deep in conversation” elsewhere when the bill arrived and would disavow any knowledge of it being multiples of the amount the SEC legally mandated you could spend on your clients. Of the twenty of us there, six or so would be just random friends or girlfriends of his, but you never knew which ones, so they just drank for free. He himself had the memory and attention span of a goldfish, so who knew what his real agenda on the night was.
Next to the Goldman North guy is a tall blond girl he introduces to the table as “Suka”. I recall a slightly eastern-European-looking man opposite wincing as he said it, although she herself looked unperturbed. She worked at a company called Sandler O’Neill at the time and despite that firm’s near extinction during the 9/11 terror attacks, decided to sue them on her way out the door to give a billionaire two male heirs and play tennis in the Hamptons. [pause]
Imagine if Anne Boleyn (Bow-LINN) had pulled that off… it would've changed world history. [pause]
To the Goldman North guy’s left is a tall woman with big hair and a perpetual smile on her face matching the ever-present cocktail in her hand. He introduces her as “Slapper” which means nothing to me until the British guy next to her gets all huffy about him calling her that and then with a start I realize I’ve met her before. Just a week ago she had rollerbladed into Pastis, drawing all the attention of the patrons in her lycra outfit, but never more than when she slipped over in front of all the clients she was trying to impress and knocked her front teeth out. [pause]
Her shiny new teeth smiled happily at me from across the table.
I introduce myself to the British man to divert him from getting in a fight with Goldman North over the name Slapper, which I gather must be analogous to the word Suka in Russian. He tells me he used to work at Fidelity, but decided to resign and try his hand at a bank, so now he worked at Nomura. In a couple of months I’ll find out he was actually fired from Fidelity and, while he does indeed work at Nomura…. it’s as a security guard. To this day, I still marvel at his ability to have dodged the immediate disinterest of Wall Street in anyone who drops out of their white collar ranks. My understanding is he pulled this trick off for the next 10 years before the bank compliance teams made brokers hand in detailed notes of the people attending their work dinners. [pause] God Bless.
I groan when I see who joins us next and sits next to the British fraud from Nomura. It’s a Dundee. Now, as I’ll get into in a future Podcast, Australians are a special class of people on Wall Street, equally as despised as they are oblivious to their role as outcasts. “Dundee” sits down and immediately posits to the banker sitting across from him that Italians aren’t real white people. Before he can turn his attention to me, the waitress mercifully approaches. He engages her, and after finding out she’s from Taiwan, expresses his appreciation for Thai food. [pause]
The more I see of Australians, the more I appreciate my dog.
Next to Dundee, instinctively avoiding him ever since she heard his accent, is a well put together woman in her late 50’s we call “The Rock”. She’s been on the Merrill trading desk since her 20’s and you won’t find anyone to say a bad word about her over that whole time, so we’ll move on to the next person.
Beside The Rock is a tall guy who looks almost exactly like an even-friendlier version of Will Ferrell. He works at Google but will soon transition to a brokerage firm called Bay Crest. Later I catch up with him at the bar drinking whisky shots and I discover he’s the sort of person who would give you the shirt off his own back. [pause] This is a moment I will remember vividly, long after he drinks himself to death in a New Orleans’ bar entertaining SAC clients some later.
The Italian guy that Dundee insulted seems like a stand up person and I later find out he is indeed a high-integrity person, but even that can’t save him when the worst people on Wall Street want a piece of you. A decade from now, he will attend a charity for Harlem kids who don’t have the necessary means for a necessary means for a higher education [see Big Lebowski scene for tone]. One of his subordinates was overheard saying something totally unacceptable at this fundraiser… and when it got back to a bunch of snowflakes, that was it for his job too. The fundraiser itself was in honor of a famous hedge fund founder, and when several of their executives asked his brokerage firm to deliver them a head… the firm came back with two. [pause] Collateral damage, Wall Street style.
Next to the Italian guy I recognize one of the biggest hedge fund guys on the Street. At a dinner like this it’s unusual to be joined by any serious executives, but this guy actually runs a fund - he doesn’t just pick through scraps like the rest of the pilot fish here. He’s remarkably relaxed and talkative - in his element amongst traders, which is great to see at the CEO level. His wife will join us later and I remember her being nice as well... which is odd since she is widely believed to have later spiked his dinner with ambien and they find him naked, head down in a pool he never used to swim in.
Someone takes a seat next to me and I ask her what she does on the Street. She says she’s in sales and her job is to make dumb guys like me feel smart.
Before I can reply, there’s a commotion at the head of the table and I look over to see a well-dressed guest with a serving fork sticking out of his forearm. He’s drinking a Maestro out of a pint glass, but he hasn’t spilled a drop of it and is laughing along with the person who stabbed him.
[Sigh or deep breath]. It’s going to be a long night.
Season 2, which includes stories from the Spotted Pig, details how Iceland blew up the world economy, and includes many more Australian jokes, will be released soon.
Episode 21: Welcome to Italian night at Au Bar.
Au Bar was what they used to call the downstairs club of Lavo on 58th Street.
As we talk about in Episode 17, our crew used to hang out at the restaurant above, but also steal lots of their cutlery and just about anything we could get our hands on.
We got so cocky we’d actually bring everything we stole from the restaurant downstairs to Au Bar with chasers. The doormen were good guys and they used to see the funny side of it. We used to bring whole lobsters down there and, as long as you were friendly about it, most of the time they’d let you get away with it.
Au Bar was nuts back then. Jam packed with Euro-trash - I didn’t even smoke and inhaled 3 packs a night when we went there.
So one night we walk in and the doorman waves us through as usual, but there’s some Italian guy in front of us who gets all pissed off about having to wait while we waltz right in. He kicks up a fuss and the doormen just tell him he isn’t coming in at all now.
Just another night in New York, right?
A couple of Thursdays later we’re there as usual and the guy comes back with 20 of his friends and confronts the doorman who rejected him.
He hands the guy a card and it says,
“Welcome to Italian night at Au Bar”
Then they beat the shit out of him.
After they’re done kicking him they walk downstairs and start systematically beating the security guards in the bar one after another. Now security at Lavo were all tough guys, ex-cops, jujitsu muscle and all. But there’s nothing they can do against two dozen guys that are used to fighting alongside each other. They put down anyone who gets in their way.
Once all the bouncers were taken care of and not getting up anytime soon, they get downstairs and herd all the bartenders and patrons including us into a back room. After all, we hadn’t done anything. We were just in the wrong place, at the wrong time.
When we’re out of the way they start smashing all the mirrors and cutting up the furniture with knives. They shatter every bottle and glass behind the bar, throwing most of them against the walls. They then go into the bathrooms, piss and shit all over the place and finally break the toilet bowls, letting water and sewage run all over the place. Lastly they take all the money out of the till but instead of keeping it they just leave it strewn all over the floor with their custom business cards they’d made up especially for the occasion. [long pause]
Anyway, if any of those Italian guys hear this and want to tell us how the rest of their night went… we’re all ears.
Episode 22 - Stories from the Floor.
I read somewhere that when guys like me talk about how New York “used to be better”, what we really mean is that we used to be younger.
There’s some truth to that. But without a doubt one of the great blows to New York in the aughts was the reduction of the New York Stock Exchange Floor to a shadow of its former self.
Now the Floor still exists of course, but it’s a sanitized version of what it once was. Sterile and without character or any sense of the excitement that used to jolt even the most cynical of us awake when we walked on there. The NYSE realizes this, which is why it sent a bunch of bureaucrats to pretend to be traders when they were pitching Evan Spiegel for the SnapChat IPO.
Now I could - and perhaps might - write an entire series about what used to go on down there, but I want to start off in an unexpected direction… with Old Man Willy.
Now I’m betraying my age by even knowing Old Man Willy’s name, but he must be long dead and gone because he was an 80-year-old black guy working on the floor back when you needed a ticker reader for oddlots.
[pause] Let’s unpack that last sentence a little.
Back in the old days a “block trade” was anything bigger than 10,000 shares and an “odd lot” was anything under 100. Computers make markets now, but back then people did it - a job known as a “specialist”. We’ll talk about specialists shortly but suffice to say there was no money in trading oddlots, so they’d just bang a price on them and literally create a physical ticket to record it. Someone had to add all those up by hand… and that someone was Old Man Willy.
Now Old Man Willy also wanted to be out of work by 4pm and this job wasn’t always compatible with that. The closer it got to 4, the more excited he would get if he was behind in counting up these tickets. Likewise if he was ahead of his game he used to get quite mellow and happy. Here’s something I used to hear him say when things went well:
[in deep south southern drawl]
“Well that there’s a double-handy with a rim job… Right hand upside down.”
But it’s when things went badly that the real action used to come out of Old Willy’s mouth and this podcast is about the time I saw him as angry as I ever saw anyone in my career.
Now one thing to remember about stocks back then was the average nominal value was about $20. In part, this was why Wall Street was such a lucrative business - you get paid 6c on a $20 stock that’s a 1.2% commission. Not bad. And that’s before spreads. Remember a spread is the difference between the bid and the ask. Not only that, markets were quoted in eighths and sometimes quarters. Taking an eighth on a trade meant you made 2.5% on the spread in a $20 stock.
Good business if you could get it. And if you worked on the New York Stock Exchange, you got it.
Nowadays we’re quite used to stocks with high nominal values, simply because great businesses like Google and Amazon never split their stocks. But think about this - Apple used to trade at $8 a share back in 2002, so an oddlot trade that Old Man Willy processed wasn’t ever going to be worth more than $800. Remember - an oddlot was under 100 shares.
But Warren Buffett’s company, Berkshire Hathaway Series A, traded at $55,000 a share. So an oddlot trade could be over $5 million.
This is why the only laptop on the New York Stock Exchange was dedicated to trading Berkshire stock. Because not even a specialist could keep up with the trades that moved in $55-thousand-dollar lots. But technology causes its own problems. Never more than when when an intern threw up her chicken wings all over the laptop in question and put it out of commission for a couple of hours.
This is a full blown emergency, so they bring Old Man Willy into the specialist booth to count up the 5-million-dollar paper tickets. Remember, he’s the odd-lot broker. But now he’s not dealing with hundreds of dollars, but millions.
He’s muttering to himself and counting them up and the phone rings. So he picks it up and it’s Cramer Berkowitz from Mad Money. Now this is back before Cramer had his own TV show and he’s just some hedge fund guy trading financial stocks - but even back then people knew who he was because he was notoriously volatile.
[pissed off] How did I sell Berkshire at quarter? It was half bid when I gave you the order? Did it even trade there?
Old Man Willy replies LXE thru the system hit the half bid - the spec opened the quote up and paid a quarter for your stock. Well look at that! Stock is now 7/8th last - that possum's on the stump! What do you want to do?
Cramer's like, “That’s fucking bullshit. You’re a bunch of criminals down there!”
[Old Man Willy]: Well don’t get your knickers in a knot, the computer’s down and I been running all over hell's half acre!
Cramer: “What the hell does that mean?! I’m coming down there and I’m going to fuck you up!”
So Old Man Willy hears this guy threatening him and says,
“Is that right? Well now, tell me if this sounds like I’m hanging up on you?”.
Then Old Man Willy puts down the phone.
Cramer is furious. And this guy was notorious for his bad moods back them. They used to keep spare phones and even computer monitors on the trading floor to switch them out when he threw them against the wall or smashed the receivers against his desk. He’s so mad he bounces out of his desk and runs all the way down to the New York Stock Exchange.
It’s unclear what really happened down there but the assumption is that there was no real confrontation, at least that I heard about, and Cramer was soon back at his desk yelling at someone else. In any case, neither of these guys could knock the top off a rice pudding, so we didn’t miss anything.
Now this would’ve been the end of the story if it wasn’t for the intervention of a third character. Let’s call him KB. Now KB was an interesting guy. He went all the way from being a prison guard to ending up as the head trader at one of the biggest hedge funds in the city.
And oh my, did he like to mess with people…
However, we’ll have to put a pin in this story for now while we wait for KB to sign off on the rest of it… stay tuned…
Episode 23: The Suicide Shift
Wall Street trading desks normally divide themselves into three time zones in New York. If you work in the US markets, you get in around 6am and leave some time after the market closes at 4pm. If you work Europe, you have to at least be watching your screens by 3am, but on the other hand you get to leave at midday.
It’s the third shift I want to talk about today - which is trading Asia. It’s a big region with diverse opening hours and some of the markets even close for lunch! But long story short, you have to be switched on for Australia at 6pm and finish up when India closes at 5am.
As you can imagine there’s all sorts of things wrong with working hours like this and for many of those reasons, we say people stuck working Asia are on... the “suicide shift”.
Now I’ve always been an early bird, so when I got into the office at my first hedge fund, I’d run into these bleary-eyed individuals and they were some of the strangest people I ever met. The first guy who gave me the time of the day was an ex-military intelligence officer from Malaysia named Kamil.
Now why on earth you’d let a former dictator’s secret policeman have the run of your office overnight while no one else was around, I couldn’t tell you. Kamil couldn’t tell you either, but I later find out he spends hours rifling through the founders’ computers, pulling up documents and even going through their trash to see what secrets they might be keeping from the rest of us.
In any case, I’m in my 20’s and desperate for some senior mentorship in the business, so I go introduce myself to Kamil when I arrive on one of my first days in the office.
Trying to make conversation, I wonder out loud how tough it must be to work such crazy hours.
Kamil says, it’s not so bad and they actually have a lot of fun overnight. He asks me if I’m a drinking man.
I say “sure, I love to drink.”
Satan- I mean Kamil responds, “Well, you're gonna love Mondays then. On Mondays, that's all we do, drink! Whiskey, rum, Guinness, wine coolers, vodka, and even tequila. We drink 'til we throw up, and then we drink some more! And you don't have to worry about getting a hangover, because you leave at 5am and get to sleep all day!”
I’m like, "Gee that sounds great!"
Kamil goes on: "You a smoker?"
I tell him I smoke pot but not cigarettes.
Kamil seems to think that’s tip-top: "All right! You're gonna love Tuesdays. We get the finest marijuana from all over the world, and smoke our lungs out. If you get too stoned- no biggie, no one else understands these markets anyway.
He continues, "I bet you like to gamble.”
I respond that yes, as a matter of fact I do.
Kamil says, "Good, 'cause Wednesdays you can gamble all you want. Dice, blackjack, poker, coinflips, whatever! If you go bankrupt, it doesn't matter, at the end of the year you get a great bonus to work this shift.”
This gets better and better.
Kamil inquires if I like harder drugs
My pulse quickens, "Are you kidding? I love drugs! You don't mean...?"
Kamil says, "That's right! Thursday is drug day. Help yourself to a great big bowl of coke or speed. Smoke a crack pipe doobie the size of a submarine. You can do all the drugs you want! No one comes by until after we leave, so who cares?"
I’m pretty intrigued, "Wow! I never realized the Asia shift was such a cool place! I wonder if I can transfer over here?"
Kamil glances up from his trading screen and looks up at me properly for the first time, from head to foot, then asks,
"I’m not… um, I’m not gay"
"Ooooh, your Fridays are gonna be tough.”
Episode 24 - Dollar Bill
The most interesting thing to me about the television show Billions is not Bobby Axelrod, who is an inherently un-relatable character, but his trader, Dollar Bill.
This is because there are probably 20 Bobby Axelrods’ in the city, but twenty thousand Dollar Bill’s.
Over the next few weeks I’m going to relate short stories about some of the Bills I met.
To set the scene, one of my favorite guys back in the day was a trader named “Tow Truck”. We called him this because he actually drove a tow truck.
Tow Truck was the sort of person that populated trading floors in the early 2000’s. He used to work at Cantor Fitzgerald. Now Cantor had a lot of Dollar Bills.
And they also had a lot of Mike Wagners.
If you don’t follow the show that closely, Mike Wagner is the degenerate, fix-it guy for Bobby Axelrod. The one who can grow facial hair.
Cantor Fitzgerald had so many Mike Wagner’s, they had to stop hosting their Christmas parties at Windows of the World, because it was in the World Trade Center, and too many interns were getting banged on the trading desk a couple of floors down.
But before I continue with some of these Dollar Bill stories, you need to understand we used to divide up our social life into four categories in the aughts,
On Random Mondays the only rule was that you had to call an audible at midday, but no plans were allowed before that time. So around 12pm your inbox would fill up with suggestions of which bar to go to and we just ran with whatever plan had the most votes
The second category was made up by someone paranoid about being on broker compliance lists. It was called Off the Record Tuesdays - and the rules were simply that no one was allowed to use a corporate credit card or talk about the stock market.
Wassup Wednesdays in retrospect aren’t funny at all. Basically a bunch of retards without female supervision would drink Budweiser and just ruin everyone else's evening.
And the last category was Every Thursday.
So it was one of those Thursdays and a sales trader we know, let’s call him Major, called up one of his best clients. A big hedge fund... multi-billion-dollar, back when billion-dollar funds were rare. Someone unfamiliar picks up the phone and Major is like, “who the hell are you?”
The guy responds, [Queens accent] “I’m the new head trader, who the hell are you?”
Major introduces himself and his firm, points out they’re an important counterparty to the hedge fund, and asks if they can meet in person.
The hedge fund guy says, “Sure, take me to Metallica tonight” because they happen to be touring at Madison Square Garden then.
Anyway, Major jumps into action, calls a ticket broker, gets front row seats, and they hang out for a couple of hours.
Eventually the concert ends and they’re walking out of the Garden. And as they walk out, they see someone beating up their girlfriend on the corner of 31st and 7th.
You have to understand - while you’d be shocked to see this happening in NYC now - this sort of thing wasn’t an uncommon occurrence in 2002. At 11pm around Penn Station, weird shit was always happening to someone else back then. It wasn’t until Jeremy Lin and the MSG renovations that things calmed down a bit in that neighborhood.
So they look over at the commotion, and this guy is still slapping his girlfriend around for some no-doubt-imagined slight.
The hedge fund client yells out, “Hey tough guy. You want to beat up on someone? Beat up on me.” [aggressive]
The boyfriend doesn't have to be told twice and the two of them start wailing on each other.
Eventually the hedge fund trader picks his opponent up by the throat and slams him into the ground, prison-guard style.
This takes all the fight out of the boyfriend, but unfortunately for him, his night’s not over - the trader jumps on top of him and keeps hitting him repeatedly, while the guy’s girlfriend screams bloody murder.
Now Major still can’t believe any of this is happening during his first meeting with his biggest client. People who-didn’t-like-getting-stabbed-to-death minded their own business in New York City back then, no matter what you saw. But his client is doing a number on this guy, there are cops running towards them, women screaming... It’s a fucking shitshow.
So Major yells to his client, “you need to stop! Dude there are policemen running towards us!”
The client looks up and sees the cops. He glances down and sees this guy’s face again and just laughs and keeps punching him until the NYPD tackle him.
So turns out the client has a bunch of union cards or whatever and the police let him off and arrest the guy assaulting the woman.
And that was his 3rd day on the job at one of the biggest investment funds on Wall Street.
We’ll pull another dollar bill out next week
Episode 25 - Free Market Racketeering
There was a book I read when I first got into this business - I can’t find it on Amazon anymore but seem to recall it was called “Super Traders” - and it essentially explained each step of the investment process, by interviewing people who had reached the pinnacle of their career in each respective Wall Street job.
Now “Super Traders” is a ridiculous name for a book but so is Joel Greenblatt’s “You Can Be a Stock Market Genius”, and that’s one of the best books ever written on investing.
When you read Super Traders, you were supposed to be impressed by what each of these people did at work each day, but it had a different impression on me, even back then at such a young age. [short pause] Instead, I was just stunned to learn what an inefficient business I found myself in.
This episode is about being a sales trader, but first let’s go through a typical investment process in 2004 - remember this is some years after the Internet Crash should have led to people cleaning up their act.
Step One: Overpaid portfolio manager gets told what to buy at an investor dinner set up by someone who already owns the stock.
Step Two: Overpaid portfolio manager goes to work the next day, looks at the stock chart, and tells his buyside trader, Dollar Bill, to buy a million shares of it. Bill’s overpaid as well but doesn’t think he is and spends all day worrying about what his peers earn.
Step Three: Bill just calls whoever he went drinking with the night before and gives them the order. As he does this, he costs the firm’s investors at least $60,000 in commissions without giving it a second thought.
Step Four: The guy who picked up the phone - this is the sales trader - tells his position trader to buy the shares and then kicks some of the commission back to the sales person on the account. [short pause] All three of these people wouldn’t be out of home in a zoo.
Step Five: The position trader sends the order down to the floor or makes a market if it is a Nasdaq stock back then. Now in the interests of expediency, to see what the exchanges do with it you should listen to Episode 24. To learn about what other enormous additional costs are incurred in this process, check out Episode 17.
By 4pm, most of the time the stock heads lower, so the portfolio manager changes his mind and sells the whole thing… Setting off the whole process all over again.
Now let’s take just one of the people in this process, the sales trader, and run through a typical day for him.
Remember it’s 2004... The easy money days of the Nasdaq bubble are a distant memory, we’ve been through a recession, we just began two forever-wars although we don’t know it yet, our politics are just as poisonous as they are now. The days are long and tiring, and the business is even more relationship-driven as job cuts have rippled through the business.
5:30am: Wake up. Check Bloomberg. Ignore the Wall Street Journal and scan a new technology known as a “blog” for likely conversation topics. It’s your edge, hardly anyone else in the business is reading blogs. Go to work.
6:30am: Jump out of taxi in Midtown. Dodge aggressive homeless people on your way to office lobby. Log in. Check RSS blog feeds to see if anyone else has written someone interesting that you can steal as a conversation piece.
6:35am: Have a bagel washed down with three large black coffees. Watch new intern be bullied into eating 20 McMuffins in 20 minutes and throw up in her trash can.
7:15am: Nurse yet another coffee to try to stay awake during morning meeting, while also holding a contemptuous expression on face to show everyone who is boss. Pretend to be interested in trading ideas being pitched by more senior staff who allocate the bonus pool.
8:00am: Call clients you went out with the night before to remind them you spent a thousand dollars on dinner and disingenuously imply it was your own money that got spent at the strip club. Tell them about intern throwing up McMuffins in office.
8:01am: Sort client list by commissions year-to-date. Repeat intern story to each, starting from the top.
9:20am: Pray the phone rings or the AOL IM dings.
9:35am: Client calls and gives you an order to buy a hundred thousand GE vwap [pronounced “V-Wop”]. Yawn, enter order into system and it does the rest. VWAP stands for “Value Weighted Average Price” and is a way for all of us to discharge our responsibilities while using big-boy language to pretend our job is sophisticated.
9.36am: Start thinking about lunch.
10:00am: Copy and paste economic data into email. Look at tape. If S&P is higher, add the words “Risk-on!”, if S&P is lower type “Risk-off!”. This is what is known as “desk analysis”.
10:01am: Drink more coffee. Find busy-work for junior sales traders to do.
10am until 3pm: Try out a variety of techniques to get client attention in the hope they will have a spare order to send your way. There are hundreds of these, but here are the most common:
The Fat Finger – This is the oldest trick in the book. Just hit the phone line and say,“You ringing?” Immediately followed by “Hey, while I have you…” [Long Island accent]
The Fake Heads Up – Lob in an IM that says, “Can I call?”, “Do you have a minute?” or “When you have a second…” Then don’t call and see if they’re intrigued enough to hit you back. If they do ring back, have another sales trader pick up the phone and say you’re making an important call to another client. See if they send an order in to get your attention.
The Collections Agent – Track down what the client’s analysts have been up to and point out they really like your firm research. The buyside trader doesn’t care about anything besides the PM’s touchpoints, so he’ll never check if it’s true or not.
The Blackmail - This goes something like, “I was just thinking about that swamp donkey we heard you banging down at The Loft back in 2002… Anyway, how long you been married bro?”
The Food Stamp – “We need to get out to dinner”
The Norm – “You feel like grabbing a beer?”
The Stretch – “You cared in this name a while back…”
The Helpful Harry – “If there’s anything I can do to help, let me know.”
Helpful Harry with Capital Commitment – “It’s pretty quiet over here. Anything I can get in trouble with?”
The Stethoscope – “You guys busy?”
The Nanny – “Any difficult orders you want me to babysit, while you focus on the really difficult ones?”
The Jerry Seinfeld – Just call about nothing, it’s worth a try “Hey I got a funny story. You’re not going to believe this… I saw one of your PMs last night at Pastis and he was talking to some girl who’s sister’s uncle’s cousin is the aunt of a roommate of this guy I went to school with…. Small world – crazy right?”
The Blind-sider – Hook them with their soft spot, “So how are the kids doing?” and before they can finish, move onto, “How can we do more business ?”
By 2pm you’ve run out of political capital with all of your clients so you just sleepwalk to the close.
4pm: wait for an allocation on your GE order and pray for 6 cents per share.
4.02pm: Get paid 3 cents. Hit the bar with your company credit card and pretend it’s your money again. Drink until blackout as normal. [pause]
If you’re disgusted by what you’re hearing, remember this was all the way back in 2004 - the last person in this financial system Ponzi scheme ended up being the American public and we’ll end up giving these people nearly a trillion dollars in bailouts. [pause]
Hope that makes you feel better.
Episode 26, “Simple truths, bluntly stated”, will be released soon. Please subscribe to listen.
Episode 26 - Simple truths, bluntly spoken.
Iceland seems like an intriguing country.
Now if you’re like most people, you’ve never given much thought to the place, other than some vague comprehension that it doesn’t get much sun and the women may be hot. But I recently heard three fascinating things about Iceland. Which in turn reminded me about one of the most interesting people I met early in my career.
The first thing I was told is that a local genius there invented one of the first dating apps, and he did it for a pretty important reason - it turns out Iceland is so sparsely populated that you need to be careful you don’t accidentally fuck your cousin during the long winter nights partying. So this guy created an app that you log your DNA into and, when you bump phones with someone, you can tell whether any potential offspring will have three heads or whatever. Cool huh?
The second random factoid about Iceland, is that it was the epicenter of the 2008 global financial crisis. As Trump would say, not many people know this.
Now the reason I understand Iceland’s role in the crisis, is I worked at one of the hedge funds that predicted the end of the credit bubble and profited massively from it. But this episode is not about me, but about one of the analysts who managed to put the pieces together and then inadvertently set the whole thing off with a bang.
Now as a trader back then I didn’t really care why I was buying, selling, shorting, or covering a investment. I just wanted to do that one job well. I didn’t know anything about the investment process, nor did I generally care what happened to the investment after I executed it. As long as the account was making money, it was of little consequence to me how they did it. But occasionally I’d get to know one of the analysts better, usually when they showed some interest in the trading desk.
In any case, we had an analyst at my shop, let’s call him Gunnar [“gun-are’] - the name Gunnar is like Smith or Gupta, but for an Icelandic guy. He wanders down to the trading desk one day and starts asking pretty good questions about what we are doing. Happy to have someone show a genuine interest in our operations, I’m explaining what adverse selection means and he suddenly says to me,
“I hear you like to drink” [slight accent - Icelandic ]
Well yes. Yes I do.
“I’ve never gone drinking with men before, will you take me with you?”
Now Gunnar was a weird person. Sometimes I’d come into the office and he’d be standing ramrod straight in the hallway, just staring at the wall, lost in thought and absolutely unresponsive. But I like weird people. So I said yes and ask him to meet me at the Spotted Pig at 6pm.
6 o’clock rolls around and we are getting after it. The fund is up 10% on the year, while everyone else is losing their shirts around us. So we have a reason to party. Gunnar matches us drink for drink and he starts to loosen up. We compliment him on his investments and he even gets uncharacteristically arrogant. By the time the two of us go outside for a cigarette he’s puffing out his chest and he starts up a conversation with an Irish guy outside. The guy asks Gunnar what he does, and Gunnar says,
“I’m a rock star”
The Irish guy looks bemused and says,
“I’m a rock star too” [Irish accent]
We go back into the bar and later on the two of them strike up a conversation again. They talk for like an hour I think, I can’t recall exactly with all the chaos around us. But as we’re leaving the bartender asks us how our Icelandic buddy knew Bono.
To this day I don’t think Gunnar knows who he was talking to.
A few months later Gunnar comes down to the trading desk and asks me what I do to stay in shape. He had suddenly decided that, since he was in his 30’s, for longevity reasons it was time to start an exercise routine.
Now I’m no Van Damme but like most traders I lift weights 4 or 5 times a week, try to watch what I eat, and do cardio on top of that. I tell him he needs to join a gym and I give him the name of a place local to his apartment.
Skip forward six months into next summer and I run into Gunnar wearing a t-shirt. The guy is ripped. I mean it’s crazy the transformation that he has undergone. If I said he has put on 25 pounds of muscle and lost 25 pounds of fat I wouldn’t be doing him justice.
I ask him how he did it and he looks at me a little confused and says he went to the gym like I told him to. [short pause] I press him for more details and he says he walked in on the first day and saw someone who looked really fit. So he went over to this gym-head and asked him what sort of exercises he was doing to be in that sort of shape. They ended up working out together for six months and that’s what happened. He says the guy’s name is Colin.
Colin Kapernick. [pause]
This guy was working out with Colin Kapernick, thinking that’s what people did at the gym. To this day these two guys are friends and I’m sure Gunnar still has no idea what Kapernick, or for that matter what the NFL, does.
So what I’m trying to impress upon you is Gunnar is a strange guy with no understanding whatsoever about how normal people conduct themselves in public.
Now before I explain how Gunnar helped blow up the world in 2008, I want to spend a minute on how Iceland was the canary in the coal mine for the financial system.
For a multitude of reasons, in 2007 Iceland had higher interest rates than the rest of the world and therefore was part of what is known as the “carry trade”. This is when traders will sell one currency with a low interest rate and buy the another that yields a higher interest rate. The difference between the two streams of income is basically free money for them… but when they bought the Icelandic currency, which is known as the Krona, they had to do something with the money of course and it ended up in the three big Icelandic banks, none of which anyone could pronounce. The Icelandic banks then took this money and invested it in illiquid assets all around the world, shoveling money into obscure financial instruments like coal into the Titanic’s boilers.
This continued until the Icelandic financial system was something like 10 times as big as the real economy there.
So in 2008, just as people are starting to get a bit nervous at all this leverage in the system, the heads of the major Icelandic banks are doing a roadshow with Lehman in NYC. A roadshow is basically when senior management from companies leave the C-Suite to pitch their overseas investors and update them on their latest company news.
We send Gunnar along to the investor lunch, almost as an afterthought. Now there was a lot of investor interest in Iceland, so there’s hundreds of hedge fund managers at this lunch which has to be expanded to 3 or 4 conference rooms with televisions set up so everyone can listen at once.
About half way through the presentation, Gunnar gets a chance to ask a question and he stands up and asks the CEO’s of these three large banks if they still believe in elves. [short pause]
You heard that right. Elves. The third thing about Iceland I want to tell you is the people who live there believe in elves… [pause] like in the Lord of the Rings. [short pause]
Whichever CEO has the microphone sort of stutters unconvincingly, but Gunnar’s not done. He asks why investors should believe anything they’re being told if the people telling it think there are elves running around their houses at night and that thirteen ugly trolls visit their children on Christmas.
It’s lost to history what the CEO has to say about this, but I gather he retorts something about Westerners still believing in Santa Claus and that the Bible was written by a bunch of dehydrated Jews wandering around in the desert.
But the damage is done. Every one of those hedge fund managers at the conference goes back and reverses their Icelandic Krona carry trade. There’s a run on the banks, which have something called “duration risk”, which means there’s a fatal mismatch between their assets and liabilities. Basically they can’t get their money out of where they’ve reinvested it.
Relative to the size of its economy, Iceland's systemic banking collapse was the largest experienced by any country in economic history. This rippled around the world, carrying out banks and investors everywhere.
And that’s the story of how a semi-autistic guy named Gunnar from Iceland blew up the world. [hard stop]
Episode 27, “Flash Crash”, will be released soon. Please subscribe to listen.
Episode 27 - Flash Crash.
Now this episode is inevitably going to get a bit technical, but don’t worry I’m going to tie it all back into a bunch of traders getting hammered and destroying a hotel in Philly… so stick with me.
In May 2010 the market was kind of boring to be honest. At the time I worked for a big hedge fund however and at any one time was responsible for babysitting as many as 10 or 12 portfolios, some of them in the hundreds of millions. There’s two or three of us on the trading desk and I decide to go for a walk and grab coffee outside.
As I stand up, unbeknownst to me a plain-vanilla account in some flyover state enters a standard trading program. I gather he has to sell a wide variety of stocks… and to start off he hedges out his total notional short exposure with S&P contracts to protect himself as the sell program works its way out.
With the benefit of hindsight, this very-mundane everyday decision, sets off a tidal wave of selling. The numbers seem quaint in today’s world but in the 15 minutes that I’m away from the desk getting my caffeine fix, a million S&P E-Mini contracts trades. By way of context, 5.6 million contracts will trade on the entire day, 3 million traded the day before. [short pause]
While I wait for the elevator, I switch on my Blackberry and play a couple of rounds of block breaker. As I tap away at the keyboard with my thumbs, the New York Stock Exchange has detected the S&P E-Mini volatility and moved into what is known as “slow quote” mode, where they can delay acknowledging trades for up to 60 seconds. While the NYSE is only 20% of daily volume, it’s 50% of the national best bid or offer back then. When this happened, the secondary exchanges… BATS [“bats”], ARCA [“arka”], Nasdaq, and the CBOE [spell out letters]... became what’s known as the top of the book – these are non-primary markets without a mechanism to slow down in extreme volatility. [short pause]
I get out of the elevator and head over to the coffee cart on the corner. While I am ordering an espresso, high frequency trading systems realize something deadly is about to happen and just decide the best thing to do is shut down and watch for a while. Think of high frequency trading as day-trading computers that are had become the default market makers for US stock. Back then no one knew exactly how much of the daily volume these systems were and almost no one understood how the stock exchanges had prostituted out their server space so firms like Getco could gorge on institutional and retail orders all day. [short pause]
As I turn around I see some of my backoffice employees smoking cigarettes in the courtyard, so I walk over to have a chat with them. Yes, back then you would talk to people who smoked in public. Weird huh?
As I wait for them to finish up their cancer sticks, algorithmic trading all around Wall Street continues to switch itself off in panic and this exacerbates the liquidity void. [short pause]
As a group, the backoffice guys and I head back through security, laughing about how Ron Barron once shut down 5th Avenue moving a fish tank into his new offices. While we are heading back upstairs, the market is falling apart and Sell Programs that are designed to conform to what’s known as Reg NMS go ahead and hit the best bid like they’re required to. If the best price is one cent on a secondary exchange, then so be it. Stocks like Proctor and Gamble are trading down 99.9% and there’s wholesale panic everywhere. [pause]
Strolling out of the elevator I stop at reception to chat up the new girl for a while. While I tell her Stan Druckenmiller [important to check pronunciation on this name] apparently moved a neighbor’s house for him because it was blocking some fraction of his view, the market snaps violently back into place. [short pause]
I walk back to the trading desk and glance at my screens. All my stocks are trading at the same levels I left them and it’s not until some time later I find out I missed the a stock market crash while out getting coffee [medium pause]
Now let’s shift gears a bit. [short pause]
Back in 2010 people used to go to these huge trading conventions. Each would be known just by the name of the city itself. These were legitimate conferences on the surface but behind the curtain the events were actually chaos. By 4pm everyone would’ve thrown away their name tag and all hell would break loose. Imagine 400 trading monkeys with a poor ratio of intelligence to net worth, kept in a cage for 6 hours and then set loose with unlimited corporate expense accounts and you’re not far off how these things went down.
For instance there’s a story about a position trader named Large - who now works at Barstool Sports - losing his job because of Dallas Traders. God knows what went on down there and the story might be apocryphal, but after a weekend of drinking with lunatics, he supposedly flies back to the New York, goes to Doctor Scripts for a vitamin B shot, and then heads into the Citibank offices, thinking he can still pretend to work. But the fluorescent lights and noise are just too much for him and he takes off for a nap in a toilet cubicle. Now Large was a solid guy in more ways than one and he would’ve gotten away with that, but he eventually comes back to his desk and blogs about the whole thing on a site called “Take a Report”. That may seem like a crazy thing to do, but it’s just the way things worked at that time.
So, to get back on track, I attend one of these trading conferences in Philadelphia. The conference is at the Ritz Carlton and it’s been a long aggressive night drinking. There’s probably still 60 of us at the Ritz bar and I’m guessing we haven’t been good patrons. So around midnight management just shuts the bar down and turns the music off and the lights right up without warning. You’ve probably been in this situation before - when you see the people you’ve been talking to properly for the first time in hours it’s quite frankly jarring.
Now one of our crew back then, let’s call him Gary, is infuriated by this. He goes to the bar and growls at them,
[in a Gary Busey voice if possible] “You never did last call! You have to give us one more drink!”
Now management is willing to accomodate a few of us; remember we may be in Philly, but we’re at the Ritz Carlton after all. So the bar manager eventually concedes and tells him he can have one more round while people clear out.
Gary orders 40 Bud Heavies, 20 Bud Lights, 20 Mister Jack Daniels, and 80 shots to wash them down with.
Now the Ritz wants these animals out of their hotel so there’s no way he’s getting these drinks. Eventually Gary loses the argument, throws some money on the bar and says,
“fine we’re taking our business elsewhere”.
There’s still 30 or 40 us standing around, laughing at the argument and we follow him out the door into the lobby. [short pause]
Gary starts jogging. [pause]
Now Gary is a big guy, so when he spear-tackles a 5-foot vase in the middle of the Ritz reception area, he actually clears it right off the table it’s been sitting on. He hits the vase, Stone Cold Steve Austin-style, maybe expecting it to shatter, who knows.
But the vase is so big and solid it actually bounces off the floor [short pause] and Gary bounces off the vase, hitting the wall.
The staff and security run over to see what’s going on and finding Gary slumped on the ground, panic a bit. Gary opens his eyes and the concierge is like, ‘are you okay? What can we get you?’
And Gary says, “I’ll get three 12-packs of Budweiser”. [medium pause]
The rest of the night is lost to memory.
The next morning, I wake up in a hotel room and I look down and there’s shit running down my stomach. I mean actual brown, slimy, warm shit. And it’s on my skin.
Now I have what is known as a “shit intolerance” and it is visceral like you wouldn’t believe. I use entire rolls of toilet paper in the crapper to avoid any chance of getting it on my own hands and years late I won’t even change my kid’s diapers, it bothers me that much.
But I’m lying in a hotel room and I’m covered in shit and I don’t know if it’s mine or not. I’ve been drinking for god-knows-how-many-hours and I throw up a little in my mouth before literally screaming and running to the bathroom.
I turn on the shower, still gagging in horror, and am washing myself down and a gold coin falls out of my ass. [pause]
And I’m just thinking, what in God’s name happened last night?
I pick up the coin and realize it’s foil from the chocolate left on the bed by the turndown service. [pause]
And that’s all I remember about Philly Traders.
Episode 28: Letter to My Younger Self.
I don’t love football, but I follow it closely enough to recognize my life has improved since I’ve been married to a girl from Boston who grew up under The Curse of the Bambino and now proudly wears a Patriots jersey around New York City.
I also know football well enough to know who Deion Sanders is and yesterday I came across an article by him titled “Letter to My Younger Self”.
Reading it reminded me of some career advice my brother gave me some months ago. Now I’m generally happy with my job on Wall Street, but at the time I had been bouncing around various other ideas on what I should do with the rest of my life... I was too afraid to pull the trigger on them however, and this is what my brother said to me,
“Wait, you’re telling me you have to keep doing something that you decided was a good idea 15 years ago? [pause] Would you trust that guy back then? [slightly different tone, quickly]
Perhaps because it hit close to the bone, I actually thought that statement was better than anything I read from Deion Sanders - who after all used to get hit in the head a lot - so it inspired me to finish a riff I have on a book by Jordan Peterson called “12 Rules for Life”.
Now if you haven’t heard Episode 14 “Twelve Rules for Life on Wall Street”, you should listen to that before you continue. Episode 14 is my longest podcast, but that still only makes it about 8 minutes.
Go on. I’ll still be here when you come back [pause]
Anyway, to pick up where we left off...
Rule Number 7 - Do what you are asked to do at work, not what you think you ought to do.
As Leonard Lauder says; don’t add pages of data to prove your point. Summarize the data so your boss doesn’t have to. Don’t change the assignment. Give your boss what he or she asked for, and your life will be simple.
Similarly, when asked a direct question, answer, “Yes”, ‘No”, or “I don’t know, but will find out”.
Rule Number 8 - Honesty really is the best policy.
Outside of the moral reasons for being honest, the most important downside to lying is that when things get complicated, you won’t be able to remember all the bullshit you told.
The truth will set you free. If you are always honest, only your memory can be questioned and never your integrity.
Rule Number 9 - Don’t rush.
Speed can be important and responding quickly is often appreciated.
But trust me on this, no one will remember how fast you did something, only how well you did it.
Rule Number 10: You have more than one job .
Lauder says this one so well that I’m just going to use his words; You’re only as happy as your unhappiest child. You may have to be a husband, wife, father, mother, a son, a daughter, a nurse or a nursemaid during your lifetime. If you fail at any of these jobs, success in the others will be meaningless. You don’t have to cure cancer to be a success. Being a good citizen, a good parent, a good friend, a productive and charitable member of society is all most of us can hope for.
And remarkably few people achieve this.
Rule Number 11 - Don’t walk in front of taxis in New York, because the city insures them.
This one is self-explanatory for urban people, but for the rest of you deplorables, allow me to elaborate. If you cross the street to hail a cab in New York, you will get run over.
Instead you need to put your hand in the air and yell “taxi” until they u-turn. We’re still old fashioned, it’s how we don’t die here. Likewise, on the streets please walk on the left and stand to the right.
Rule Number 12 - Bike everywhere you can, even if you don’t have a helmet.
This is a bit counter-intuitive, so stick with me... A few days ago I took my kids - whom I refer to collectively as “the dreamkillers” - sledding, and around an hour later this guy turns up with his kids and they all have helmets on.
Now admittedly, their sled looked like it belonged in the winter olympics and two people could fit on it. But remember we’re in Manhattan and there aren’t many steep hills on islands.
While in general the world has become safer by almost every meaningful metric, social media appears to have informed people over the prior decade that the world is less safe. This is clearly not the case and if you want to send your young daughter to go to the corner store by herself to get milk, she should keep trying, until she gets there and brings it back to you. If people ask you why you she’s walking around by herself, tell them you taught her to do so.
So, not only do I not regularly wear a helmet when I bike - I don’t think kids should sled with helmets either. And this is why;
Doing rudimentary tasks builds confidence.
Looking back at my life I would say that having courage can be every bit advantageous as being cautious. Probably, it’s more important. [short pause]
A couple of years ago 17 people died on bikes in New York... So what? I’m sure every one of these deaths is tragic to the people who knew them, but remember these are New Yorkers we are talking about. [pause]. Bike fatalities almost doubled in 2018 but that’s still a low absolute number in a city of millions.
By wearing a helmet every day you’re telling yourself the world is dangerous, when by almost every objective measure the world is safer now than it ever has been. More to the point, you’re not addressing any of the real problems you face.
Many of the people gripped by bike helmet and other social hysteria drive around in cars every day - even though the chances of being killed in a car accident in the US are 1 in 88 compared with 1 in 5,000 odds of dying in a bike crash.
If you’re interested in this sort of stuff, you should read the book "Risk" by David Ropeik. Within it he lists the lifetime odds of what’s really likely to snuff you out; Heart disease has a one in 4 chance of killing you. Cancer, one in 7, Alzheimer's, one in 75. There’s one in 240 odds of dying in a homicide. One in 4,000 odds of electrocution. Hell, even trains are more dangerous than biking at one in 4,800. [pause]
So put down the donut, and don’t sweat the bike helmet. [pause]
That went quick, so we’re going to finish up with a random story… I just came back from Florida and discovered why exactly that state has the highest concentration of addicts per square foot and the methadone clinics are for-profit enterprises.
I’m four days into my holiday somewhere outside Miami and went to the local Walgreens. Now if you haven’t been to a Walgreens in Florida before the sun comes up in the morning... just think about those People-of-WalMart emails that used to circulate and you’re not far off what I was experiencing.
So I’m dodging degenerates there to find Flintstones-chewable-morphine for one of my kids and a pair of nail clippers for myself and in no time I find myself at the counter and I look to either side at the white trash and I wonder how I can possibly get out of here faster. [pause]
There’s only two clerks working this early.
The customer at the register on the left is clearly not planning on buying anything, just desperate for human interaction, and the clerk knows it. But he keeps pulling shit out of his basket and recalling teenage glory-day stories until he pretends he forgot his wallet and runs off. I look over to the right and the clerk there is fielding questions by some redneck about which countries need the $3 plastic power converters they sell up the front and speculating why the Europeans would use a different electricity system than us, since we invented it in the first place and America always knows best.
Eventually I get out of there and decide to kill some time by clipping my nails. This may seem like a strange thing to do in public but nail length is a neurosis I have and it was one of the reasons I agreed to go to Walgreens in the first place.
So I’m sitting outside and almost immediately a cop car swings by and they ask how I’m doing and where I think I’m sleeping tonight.
I’m a bit confused that they are taking the time to question me. There’s all this white trash around and drug addicts and scumbags… why stop me?
But then I look down at myself… I haven’t shaved in 8 days and I’m sitting on a piece of driftwood, outside a Walgreens in Florida at 6am on a Sunday, clipping my nails in my underwear. [short pause]
Florida is Alabama by the sea and eventually it will consume us all.
Episode 28 - The ASPCA Charity Bash
A quick additional disclaimer before we proceed.
As I’ve made clear in earlier podcasts, most of the time these stories are about my experiences in NYC. Alternatively I believe them to be as a reasonably accurate summation of events that, after all, took place a decade ago. I take these stories, make the characters composites, and then always change the names of the people and locations to ensure privacy.
However, this episode is a bit different.
Firstly the the fundraiser itself is a real thing - Barry Diller and the ASPCA have hosted many, many parties at the Interactive offices. If you’re familiar with New York, we’re talking about the odd-looking building that looks like an iceberg on the West Side Highway. As far as I know, the charity is still going strong there. I hope so and wish them the best.
Secondly, while I’m changing the names of the protagonists as I always do, I’m not just amending nicknames or inventing new ones. Instead in this episode I’m using the names of real people on Wall Street. That’s not to say they were actually there - they almost certainly were not. Instead they’re just various persons I pulled off of Bloomberg. If they have any problem with the way that their names are being used they should take it up with their parents, not me.
Anyway, let’s get after it.
It’s 2010 and a sales trader friend of mine, Matthew Wank [deadpan all funny names] invited me to a charity function on a Thursday night. He can’t talk up this fundraiser enough. It’s a dog charity, popular with the New York fashion set, and most of Wall Street hasn’t cottoned onto it yet. Secondly, not only is it down in the Meatpacking District - which is taking off as a new location in the city - but it’s at the IACI [spell out letters] offices which is supposed to be a really cool space. Back then we went out every Thursday anyway, so I have a broker buy me a ticket and arrange to meet people at a local bar called The Park on 18th Street.
I walk into The Park and see my friend Jack Labia with a bunch of his clients. Jack is an interesting character… the sort of sales person who made a lot of money not knowing a lot. He was enthusiastic and entertaining and would give you the shirt off his back. He’s an old school trader who has managed to reinvent himself covering quant funds.
Now quants generally love computers of course, but have genuine struggles dealing with people in person… but they knew what they were getting with Jack, which is the best sort of sales person you can work with.
The other thing you should know about Jack is he will take a lot of pills, a lot of the time. Jack had also been in an accident recently and just came out of surgery... He stands up to greet me with a cane in one hand and a martini in the other.
Jack hobbles over to me and explains he just got out of the hospital 24 hours ago and look at all the cool pills they gave him!!! He’s bubbling with plans and enthusiasm, moving fast but slowly going mad, still early in his evening’s journey into madness.
He looks disappointed when I only take two of the tablets, even though half the bottle appears to be already gone. The pills are as big as horse tranquilizers and stick in my throat a little as I swallow them dry.
We walk over to the table and there are 6 clients there already. All six are Asian or Indian kids, every one of them looking just as uncomfortable as you’d expect a young quant analyst in a hot restaurant to look like back then. Jack makes introductions,
[Long Island accent] “Hey so these are my clients, Alexandra Sukmawati [short pause], Fukky Tantang [short pause], Mami Takenoshita [short pause], Chetan Dikshit [short pause], Fu Kin Wanka [short pause], and this lovely young lady is Vanilla Dong. Everyone, this is Chris Fister and he works on the buyside as well.”
I sit down at the table and note the lack of drinking by anyone outside of Jack who already has 3 empty martini glasses in front of him. The service here is excellent and I already have a couple of gimlets coming my way, but Jack has a weird thing where, if he’s decided it’s going to be a big drinking night, he won’t let anyone take away his empties.
Now sitting at social events with quants is a double-edged sword. On one hand most of the conversation can be uncomfortable because you just have nothing in common with these people, but on the other hand they’re all really smart, unlike most of the monkeys in our business, so if you engage them you might just learn something. I stay as long as I can before I get antsy and say goodbye. By this stage there are six martini glasses in front of Jack and he’s moved onto Doctor Jim Beam. We haven’t seen the last of him though.
Across the restaurant I spot another sales trader I know and decide to use it as an excuse to get another free drink. I forget his surname but can recall he works at ABN and it looks like he’s entertaining a bunch of of European hedge funds who must be on a New York boondoggle. So I walk over there and introduce myself:
[me] “Gustavo right?
[in a Dutch accent] “Chris! Good to see you again. Yes, I am Gustavo from ABN. Gustavo Cunto.”
“Mind if I join you? I’m just here for another 30 minutes and then off to the ASPCA party around the corner”
[Gustavo] “We are also being [sic] at the ASPCA! Yes, join us. Meet my clients from Man Group. This is Gerhard Spanka [short pause], Oakim Kunstlicher [short pause], Fabienne Cretin [short pause], Dario Diklic [short pause], Donna Bumgardner [short pause], and Ludger Poos who works at Brevan Howard.
Coming from a table of quants it’s an enormous relief to hang out with some European traders, particularly since their markets aren’t saturated with algos like ours and most of them are a little old school and still know how to use a telephone like myself. We swap some stories about trading in Amsterdam, and while I down a few more beers a strange warm feeling comes over me.
It takes me another beer to realize it, but the two pills I took from Ross at the start of the night must be kicking in early. I wonder vaguely what they were and, given the severity of his accident, whether I should have pocketed one of them until I found out.
Well, too late now.
The warm feeling fades into mild unease and I recognize the telltale signs of a manic phase coming on. I’m still chatting to the European traders but my left hand is shaking almost imperceptibly, ideas and feelings are quickly rising within me, and suddenly the room is in total focus. Tables that were a blur of color in my peripheral vision become clear and distinct. I can follow 20 conversations all at once at 10 different tables. Now 10 conversations at 5 different tables. Then 3 conversations at 2 different tables. Now I’m totally focused on a single table at the end of the room. I recognize a senior executive from Knight named David, with several of his traders sitting around watching him.
Without a goodbye or a glance back at the Europeans, I bounce over there to talk to them,
[me, very quick] “Hi guys, sorry for interrupting but I believe we’ve meet? David, right?”
[David, Brooklyn accent, slowly] “Ah hi Chris. Yes, David Moron from Knight. We met at Philly traders. Sit down and join us.”
[me, quickly] “Sure, I can stay for one beer but then I gotta hop to this ASPCA party around the corner”
[David, slowly] “Great, we’re going to the Diller thing too. Let me introduce you to my colleagues. This is Edward Tittman [short pause], Karen Asola, [short pause], Yu Arafuka [short pause], Dik Blewitt [short pause], Chris Hardick [short pause], and our head of algorithmic trading Anil Banger.
A couple of years from now Anil Banger will be running a pilot program simulation for the NYSE [spell out letters] and an errant server at Knight will send out $7 billion in trades and lose them 440 million dollars in 45 minutes. Goldman will step in and buy the risk. Jefferies will keep their lights on for 48 hours more. And eventually Getco will buy the firm for the data. But for the moment none of the Knight traders know they’re going to be replaced by robots and I chat with the dead men enthusiastically.
Mid-conversation my buzz begins to fade. It’s been almost two hours and it feels like only [add time stamp of where we are in podcast, ie: “5 minutes and 22 seconds”] has passed since I walked in here. Overwhelming confusion replaces absolute clarity. Humor and a ready sharp retort have been replaced by insecurity and, yes, fear… Was that a smile or a grimace from the Knight guy opposite me?
I can’t humiliate myself in front of this third-tier firm, I need to find Jack to get some more of those pills to get this night back on track.
Suddenly there is a crash and a scream at the entrance. I use the distraction to escape the table and make my way over there. Someone has passed out at the front door and the doorman yells for a doctor.
I see Jack limp through the crowd while downing a handful of his pills like they were cheetos. My heart sinks as he throws the empty prescription bottle to one side, but I am transfixed by the scene as he staggers up to the woman who is unconscious in the doorman’s arms. He yells out,
“Back up, back up... I’m a doctor!”
[pause] Jack is not a doctor. [pause]
She quickly comes to and is all confused. Jack introduces himself as Doctor Labia and is asking her all sorts of BS questions about her health. [short pause]
Meantime someone calls 911 and the cops happened to be literally right outside. They come to check on her while waiting for an ambulance.
They learn that Jack is a doctor and ask ‘Doc, what’s going on with her.’ Jack looks up and says ‘I’m pretty sure she passed out’ [slurred]
[pause] The cops realize he’s either a hammered doctor or not a doctor at all, so ask him to back up and give them some space while they talk to the lady.
Bear in mind that he’s kneeling down, with a cane and a newly repaired knee. So, getting up looks more like a jungle fight than anything a normal person would do.
He finally gets up and is instantly bored, so he starts using his cane to poke at one of the cop’s guns.
Tap-tap. [quickly, “taptap”]
After a few more of these, the cop looks and says ‘Doc, can I help you’ in a super-pissed off tone. Now Jack has tapped the gun no less than 8 or 9 times.
With an angelic, genuine, reasonable facial expression and a nod, Jack asks
‘Can I hold your gun?’ [pause]
The cop looks at him aghast. Jack puts his hands up in the air.
“but I won’t shoot it… promise.”
We bail Jack out of the restaurant and begin the long walk northwest to the Interactive Building, which is a block away. [pause]
It’s 7pm. [hard stop]
Episode 29, “Barbarian Days”
This episode is the sequel to Episode 28, so let’s quickly recap where we left off; I’ve found myself in a herd of clowns out on a Thursday night and we’re on our way to an ASPCA fundraiser at the Interactive offices, which is the Barry Diller building that looks like an iceberg on the Westside Highway. We just bailed out of a local bar called “The Park” in the Meatpacking District to get away from the NYPD and begin walking over to the fundraiser.
On the way over there I get separated from the guys I arrived with and find myself with two very different personalities. Both need a little introduction, so bear with me, we’ll get to the ASPCA party itself shortly.
The first was a delta one trader from a bulge bracket firm. He was a tough Staten Island guy nicknamed “Soup”. When I say tough, I mean this guy was an ox - I’d take him over Ray Donovan any day of the week. He was originally a bookie and on the side he’d hurt people who needed to be hurt for the local authorities. And by local authorities I’m referring to the Italians, not the shitty Irish mob.
Legend has it Soup did time in Rikers and when he was about to be released into general population, he’s in processing with three other guys - one was a wiseguy like him and the other two were African American guys. The four of them were strategizing how to survive and he impresses on the two black guys it’s important to make a stand against the other inmates immediately. So he tells them,
“First thing you do, go find the toughest negro in here and bring him over to me” [Italian tough guy voice]
Later that day they bring the resident thug over in the recreation yard and Soup promptly houses him. A huge fight kicks off with the two new black guys fighting alongside Soup and the 4th inmate against the existing residents. Maybe the whole thing was an urban myth, but you get the picture that Soup is the kind of guy who you’d have to shoot if you wanted to hurt him.
The other person with me was an Antipodean we’ll call Knuckles. Now he worked for one of the biggest hedge funds in the world. Even if you’re not in finance, trust me you’d have heard of the founder. But this guy used to be a carpenter before he was on Wall Street and he’d be more at home in a Queens public house than alongside the rarified Manhattan set.
The three of us get on pretty well and as we head into the Interactive Building fundraiser, we’re quickly surrounded by well-dressed, beautiful women and equally well-behaved, sophisticated males. I find the Interactive offices as incredible as people told me they would be - We’re only allowed access to the lobby and the first floor, but the walls are covered in what I assume is the best art money can buy, there are antiques everywhere you look, and all sorts of paraphernalia that Barry Diller has collected from over the world. The centerpiece is a giant carved wooden Indian. It’s not quite a totem pole but it towers over the event like an ancient god observing some sort of bacchanal.
We line up and make our way to reception with our tickets to be checked in and when we’re up the front the woman checking tickets rolls her eyes at Knuckles and asks which of us is going to be responsible for him. This seems very odd until Knuckles happily explains to me he’s been thrown out of the event two out of the past three years. He promises to behave but I still think it’s wiser to quickly lose him in the crowd, and fortunately soon find other colleagues to talk to at the bar.
The party itself is everything it’s cracked up to be. It’s for a good cause, the attendees are friendly to a person, the open bar is top shelf, and the music is great. Two or three hours pass enjoyably, until one of my friends points out Bradley Cooper’s wife at the bar talking to Knuckles. Intrigued, we make our way over there to join them. As we approach, Knuckles gets up out of his seat next to her and states,
[Australian accent, laughingly] “You know, you’re hot, but this conversation is mediocre”
Then he sees us and says,
[Aussi accent] “Gidday guys. Bloody oath, I’m getting a bit legless and it’s time to cause some drama”
Let me translate. [pause, slowly] In Australian, that means 1) he’s drunk and 2) it’s time to get in a fight.
Knuckles looks over our shoulder and he sees Soup, who you should remember is the Staten Island guy we walked over to the party with. Soup has met one of his regular girlfriends, something he refers to as “a repeater”. She’s a ballet dancer or something and Soup is holding her way up in the air, her legs are wrapped around him, and the two of them are making out like a couple of teenagers first in love. Knuckles frowns, and yells,
[Aussi] “Crickey, that drongo is being a bit iffy with a PDA [spell out letters] like that. I’m going to go sort him out”
Which in Australian that means 1) public displays of affection are inappropriate in a venue like this and 2) he’s going to go tell him so.
Knuckles rolls over there and Soup sees him coming, puts his repeater down on the ground, and greets Knuckles by offering him one of the beers he has set up on the table. Knuckles slaps it out of his hand and it shatters against the wall.
Soup looks at Knuckles. Knuckles looks at Soup. Knuckles is smiling. Soup is frowning.
They exchange a couple of words and then Soup decides it’s time to take Knuckles to the cleaners. However Soup hasn’t been in a proper fight for 2 or 3 years and, as goes to take Knuckles’ head off with a punch, he loses his balance and falls right through one of the stylish, antique tables that have been tastefully placed around the function with ASPCA fliers on them. Knuckles sees him hit on the ground, double taps his forearm like Macho Man Randy Savage and drops a WWF elbow on his back. The two of them are rolling around like a bunch of idiots in the shattered remains of the table for a while until the doormen restrain them. Normally they’d be thrown right out, but security have a bit of a problem - if they let them go and the table is some sort of heirloom or something, there needs to be consequences. So they hold onto the two of them underneath the big Indian statue by the door, while someone gets Barry Diller on the phone.
Now Barry Diller is worth 4 billion dollars. He doesn’t know or care which guests are at his function or how many tables there are in his lobby. Eventually, the manager relays his message to Soup that he has to pay $350 for the table.
Soup says, “Sold!” then he snatches the phone off the guy and says,
[Staten Island, arrogant] “Hey Diller, how much for the Wooden Indian?”
Episode 30, “Robbie Stephens”, will be released soon. Please subscribe to listen.
Episode 30, “Robbie, Colman, Stephens & Woodman”
Last week I went to breakfast with a former colleague of mine. He’s a derivatives trader at a bulge-bracket firm that I’ve known since at least 2003; so between the two of us we’ve experienced a fair amount of volatility, both in and out of the office. We hadn’t seen each other in person for a few years and our conversation was typical middle-aged executive trope - it was fascinating to catch up, but if you’re a kid in your 20’s, you’d rather eat glass than listen to us.
Anyway the check comes and I offer to pay with cash because it’s unclear whether this is a business or personal meeting. We’re at a shitty Midtown diner, so it doesn’t matter to me one way or another.
But he insists on putting it on the corporate card. We go up the front to pay and there’s a delay because he needs an itemized receipt for the $30 or whatever we spent and the woman needs to go out the back to get it printed. It’s probably a typical New York morning scene that most of you would recognize right? [pause]
Well I’m telling you this is a million miles away from how business on Wall Street used to be done.
The following podcast is about the sort of cash that banks used to spend on clients, how I lost $250,000 of my own money in 24 hours, and where you can stick that itemized receipt.
It’s 2002, I work at a brokerage firm called Robbie Stephens. Back then I’m a junior guy; so poor compared to my peers I used to play my boss in darts to make ends meet.
Now, when fact checking this podcast, I was surprised to discover Robbie Stephens still exists today as a wealth management company. But this is back when it was owned by Fleet and was a proper broker dealer. And it was a real firm back then - we brought the Amgen and Intel IPOs for instance. I remember clients would call my boss desperate to get on our syndicate calendar, which is how we allocated deals - he’d tell them you have to do a minimum of $400k in commissions before we’d even have a conversation with you.
So one Friday morning my boss is off the desk and the outside line rings. I pick it up and the conversation goes something like this,
[LI accent] “Hey, what’s up it’s Vinnie from Slatwater Capital. We’re a Galleon spinoff. How do I get on your syndicate list?”
[Me]: “Hi Vinnie, I’m sorry my boss is off the desk and I can’t open new accounts yet.”
[Vinnie]: Okay, so what would your boss tell me if he was here?
[Me]: He’d say you have to do 400 thousand in commissions before we’d even talk to you.
[Vinnie]: Fine, cross 100 thousand Texas Instruments, put $2 a side on it, and then let’s go out for a drink this weekend.
Now let’s unpack that conversation a bit.
Back in those days, a hedge fund might give you an order to buy shares in the market - you’d either work the order in the open market to get them the best price you could, which is known as “agency trading”, or sell them the shares out of your own book which is “principal trading”. Generally NYSE stocks were traded agency and Nasdaq stocks principal. Either way you’d put 6 cents commission on it. If you traded 100,000 Texan, 6 cents got you 6 thousand dollars.
What Vinnie was telling me to do was print 100,000 on the buy and the sell side. Then put $2 per share on it. Instead of 6 thousand dollars, he was paying us almost half a million - in a single transaction.
I call him back with the execution price, but of course he doesn’t care about that because he’s buying and selling the shares at the same price. No one has any risk in the transaction. It’s not even illegal to trade this way back then. [pause]
We make plans to meet for beers after the close.
My boss gets back to the desk and I excitedly tell him about what happened. He just shrugs his shoulders and says good job but that he bets I’ll fuck up the relationship when the trader meets me in person.
I realize I need to play my cards very carefully. [pause]
1pm rolls by and I go to meet Vinnie at a local bar. I’m wearing a suit. He’s wearing a T-shirt that says in bold letters,
“If you can’t eat it, drink it, smoke it or snort it - then fuck it.”
Vinnie tells me he got his start in the business by borrowing 500 thousand of his father’s money and putting it into a 10-to-1 leveraged day-trading firm. He promptly lost $3 million of it in 48 hours and someone at the hedge fund Galleon was so impressed at the balls on him, they hired him as a trader. Slatwater Capital is a spinoff from Galleon and they pay tons of commissions to the Street and just trade on whatever information edge they can get their hands on.
Then Vinnie asks me if I want to go to Vegas with his crew. I’m like sure, let me know when… [short pause] and he says, this afternoon.
Now, today if someone asks me to do anything, let alone Vegas, with less than two weeks notice, I wouldn’t even dignify them with a response. Even a month out I need check my calendar and then still have to get permission from at least 4 members of my family. But back then I’m a 26-year-old redneck from Oregon who has just moved to San Francisco. [pause]
I say yes.
Four hours later we’re at the Mandalay Bay. We walk into the hotel room and there are 20 traders in there, 10-foot lines of blow, hookers everywhere, and a personal security guard named Truck passes us a goodie bag on the way in with god-knows-what inside it.
I’ll spare you the Vegas stories, because, while I’m a 26-year-old trader working for a prestigious firm, I also had a serious girlfriend at the time and I’m not a cocaine guy. I consider marijuana a magic potion that makes everything the person across from me says sound interesting - I don’t see how you can improve on that and to this day just don’t have any interest in coke.
I keep my nose clean, but all sorts of depravity is happening all around me of course.
Towards the end of the first night I beg off contributing to one of the nightclub bills by pointing out I’m just an assistant trader and promising I’ll pick up the pool cabana instead.
So fast forward and it’s 7am on a Sunday and my turn to pick up some expenses. I grab a couple of cabanas in a prime spot by the pool and Vinnie is the first of the 20-odd clients to arrive. He corners the waitress and orders 2 bottles of Jack, a case of beer, chicken fingers.
More people arrive. I don’t recognize half of them, but they’re all drinking on my tab. This repeats every hour and a half until 5pm, when we stumble back to the airport and head home.
I try to run out on the bill, but it ends up being delivered to us by valet in the airport… [short pause] and it’s $18,000 [medium pause]
I get back to work and submit my expense report into one of the new computer systems we’ve been forced to use ever since the market took its tumble.
The phone rings five minutes later and it’s compliance. A minute later I’m in my boss’s office.
He asks me what the hell I was thinking and which clients were there. I’m like, I hung out with traders from Pequot, Fidelity, Galleon, Amaranth, Dillon Reade, Avenue, Fortress…
He interrupts me and says, [short pause] Number 1. You never, ever, ever itemize a bill. [short pause] Number 2. he’d better get an invite next time. [medium pause]
Now there’s a little postscript to this story…
After this weekend in Vegas, one of the brokers who’d flown in the East Coast hedgefunds, calls me up and says he liked how I handled myself there. He says they’re opening a New York office and would I like to move over and head up the desk. A hand-delivered offering letter for $300,000 is on its way to me.
By this stage the barbarian days on Wall Street have temporarily run their course, my firm Robbie Stephens has gotten itself into trouble alongside the early 2000’s recession, the tech IPO calendar has run dry, accounting scandals at Enron and Worldcom have corporates on the defensive. An offer from a New York firm with a solid investment banking division and substantial retail operation looks pretty attractive. The money is many times what I’d make in a good year at Robbie Stephens.
But it’s a big decision. I’d be leaving my girlfriend and family, moving over to the other side of America… I ask him for a night to sleep on it.
Overnight, Robbie Stephens shut down. The parent company, Fleet, comes in and just closes the whole operation and shows us the door.
It’s the talk of Wall Street.
I’ve fucked up and I know it. I wait a respectful time period and then call up the broker who had offered me the New York job and just tell him, I’m so sorry I walked away from that offer. He says he understands and I’ll always have a seat at his firm.
I’m like, great I’ll sign and he should send the letter back.
He replies, I said you had a seat, I didn’t say that job was still available.
And that’s how I lost 250 thousand dollars in 24 hours. [medium pause]
If you’re looking for a lesson in this, take it from me, [short pause] if you’re dealt a good hand in life, just not screwing it up is a talent. [hard stop]
Episode 31, “Saint Jude”, will be released soon. Please subscribe to listen
Episode 31, “Saint Jude”
This story gets started all the way back in 2000 and is about a woman who was known as the “Mother of Teresa of Wall Street”
In part, this was because she could get your daughter into any school you wanted her to attend. Unlike Jack Grubman at Citibank, or these latest dimwits in the press today, she wasn’t going to get caught doing it either. We’ll get into the other reasons people called her that after a short digression to set context.
The iTunes RSS feed doesn’t reflect individual episode graphics, so I’ll describe it as well… what this chart shows is that in a single generation, young men have gone from 61 percent of college recipients to a projected 39 percent; young women from 39 percent to a projected 61 percent.
I bring this up not to reflect on the “challenges” that men face in the present day - something I address at length in Episode 16 - but instead to point out the issues that our Mother Teresa faced when she was in university. She was old enough that when she went to college people used to joke that she was there to get her M.R.S. [spell out letters] - M.R.S isn’t a degree but the implication that women only went to college to get a husband, to become a “Mrs” or a married woman.
And those numbers are positively cheerful compared to women in executive finance positions back in the year 2000. The air was thin up there, let’s just put it that way.
But through sheer grit and a certain amount of luck, Mother Teresa had risen all the way to become head trader of a multi-billion dollar fund. Back then my guess is there were maybe 5 women in a position like hers.
Now 2000 was a long time ago. But we’re briefly going to go back even further… in 1999 I used to work at an Outback Steakhouse as a busboy. No shit. Cleaning tables in Houston alongside a bunch of Mexican kids.
Mother Teresa used to fly down to Houston with people from her fund because a lot of the money they ran was Texas oil and real estate. They were all really nice and one night I saw her leave her business card in one of the giant fish bowls that they left out for free margaritas or whatever. I grabbed it and called her to tell her she’d won the happy hour that Friday and then asked her for a job on the phone call. She was so impressed at the balls on me and desperate for talent, she gave me a job right over the phone.
I ask her if I should start in a month or so and she says I need to be there Monday.
I’d never been to New York before, knew no one in the tri-state area, didn’t have a clue where I’d even stay. She says don’t worry about it, that they’ll put me up in a nice hotel until I can find an apartment.
Nine months later I’m still living in the hotel and my job during the day is to run around the trading desk picking up pink and white trade tickets when the traders were done with them. I’d take these tickets - pink were for sales, white for buys - time stamp them, rip off the carbon copies and run them down to accounting on another floor. [short pause] Such was technology back then.
One of my other jobs was to deal with Mother Teresa’s PA [spell out]. Now if you’re not familiar with the term, PA stands for “personal account”. On reflection, jobs on Wall Street back then were really just seats where you could trade your PA and ride the Internet Boom.
Mother Teresa’s PA used to come in by fax. Now to be clear, we had email back then, you could even sometimes trade electronically using Schwab or a place called Datek. But Mother Teresa had an old-school Texas retail broker handling her money and that’s how they used to send her portfolio. This thing would whirl and clunk and by the time all her positions were reported the paper would be down on the ground; so like 5 feet of Nasdaq stocks and all 10,000-share positions. Her PA would be the 13F of a decent sized hedge fund now.
It’s February 2000 and I bring her 5-foot-long faxed portfolio over to the desk. I try to make conversation by asking about one of her investments and she stares at me for an unnerving amount of time before responding, [long pause]
[female Texas accent] “You know what junior? I don’t even know what any of these companies do. I’m gonna sell them all.”
She gets her broker on the phone, sells the whole stock portfolio and rolls all the money into Long Island real estate and municipal bonds paying 15% tax free.
So skip forward a couple of years, the Nasdaq has crashed, the country is under siege from terrorism and our own incompetence, but Mother Teresa is living large. She decides she’s not doing enough to help out other people and gets it into her head that she’s going to use her considerable influence to help out what is then a little-known children’s cancer charity.
With her reputation behind it, the fundraiser gets pretty popular and one evening she decides to host a poker night to raise money. This event is going to be a big deal so the fund flies in people from all over the country, including one of the portfolio managers we used to call “The Wizard”. [pause]
Now I’d never met the Wizard before but it falls on myself and the other young guys on the desk to entertain him while he’s in New York. He arrives in the office and he’s a lot younger than I expected, probably mid-30s, short guy, big nose.
4pm rolls around and the stock market closes - we have around 2 hours before the charity gig officially kicks off. The Wizard wants to know what the strip clubs are like in New York and whether it was true they were topless only and you couldn’t actually touch the girls. He says, if that ends up being true, that he has a backup plan for us.
I’m impressed. This guy has done his due diligence on strip clubs before he’d even arrived in the city! He had a backup plan in case the girls wouldn’t let him touch their boobs.
Whatever that plan was, I was going to be a part of it.
So we take off to the local strip clubs and begin to drink heavily. Flash Dancers is around the corner from our office, so that’s our first stop.
And sure enough the strippers won’t let the Wizard touch them. They tell him he can have whatever he wants if he goes to the private room, but otherwise it’s hands off. Every girl who says that to him he drops a C-Note to and says just stick around and talk to us, they won’t regret it.
Eventually there are 10 girls around our tables, all happy to be $100 ahead before 5pm. The concierge is also there chatting away with us and he’s a thousand dollars richer as well if I had to venture a guess. But then the Wizard asks if he can “borrow the girls for a few hours” - he promises to have them back before 10pm when the club gets busy. They argue a bit and the concierge accepts a few more hundred dollar notes but eventually says, yes, that 2 of the girls can come outside with us. We head outside and the Wizard has hired a van that’s waiting with two huge security guards driving it. It’s packed with beer and the windows are blacked out, there’s even a stripper pole in the back.
It’s a stripper van.
So long-fun-story, made short-and-boring… we repeat this at like 5 more clubs. The van even stops at HQ on the Westside Highway and that place really was a shithole for degenerates back then. We’re driving around with the strippers, drinking beer and whisky straight from the bottle, and the Wizard is putting coke up his massive nose quacking like a duck and everyone is laughing, and eventually we turn up at Mother Teresa’s children’s cancer charity.
The whole circus piles out of the stripper van, 5 or 6 traders and 10 girls. Spilling out into the reception area, everyone around us is in a tuxedo or a ball dress of some sort. We’re a bunch of monkeys wearing Patagonia vests covered in glitter and one of our girls has live goldfish swimming around in her high heels.
The event is incredible. Mother Teresa finds me playing poker at a table and drops a pile of chips in my lap before walking off and doing the same for her other traders. This was basically her way of laundering money for her guys - go to a casino and give out chips like it was play money. Which for her it was of course.
[pause] Do you know what it feels like to be 26 and to walk around with two girls on your arm and a bunch of poker chips in your pocket worth thousands of dollars? Well, I’m telling you, I wouldn’t trade those days with anyone, it felt like the world could be mine and the possibilities were not linear but endless.
Then the Wizard goes into the bathroom with one of the strippers and comes out 30 minutes later wearing her dress.
Now if that happened today, he’d be a dead man, you couldn’t save him, no one would be able to do anything about it. Everyone has cameras on their pockets, social media is ubiquitous. It’d be on the front cover of the New York Post in minutes.
But back then, such was the power of Mother Teresa, that the whole story disappeared.
Episode 32 - Gilt by association.
Some years ago a Wall Street investor named Howard used to host regular drinks with several other colleagues in the business. They’d head off to a bar called Lot 61 on Tuesdays and between them they’d always spend around $1,000. The idea behind the evening was to split the bill in roughly the same way we pay our taxes in this country. So it went something like this;
The first four men, who were NYSE floor traders, paid nothing
The fifth person, an associate at a bulge bracket bank, paid only $10
The sixth, an equity analyst, paid $30
The seventh, who was a buy-side trader, paid $70
The eighth, in sales research, paid $120
The ninth, a senior sales trader, paid $180
And Howard, as the CIO of a prominent hedge fund, paid $590
The ten men drank at Lot 61 each week and seemed quite happy with the arrangement until one day the owner offered to reduce the cost of their bar tab by $200. Drinks for the ten men would now only cost $800.
The group still wanted to pay their bill the way we pay our taxes. So the first few men were unaffected. They would still drink for free. But what about the other six? How would they divide up the $200 discount so everyone would get their fair share? They argued over this for a while and eventually the bar owner intervened and said each bill should be reduced depending on how wealthy each of them was. The new arrangement was as follows:
Now five men, instead of the original four, paid nothing
The sixth paid $20 instead of $30 for 33% savings.
The seventh paid $50 instead of $70, saving 29%
The eighth paid $90 instead of 120, saving 25%
The ninth paid $140 instead of $180, claiming 22% savings
And Howard, again as the wealthiest amongst them, paid $500 instead of $590 - saving only 15%.
So four of the men continued to drink for free and the latter six were all better off than before. But one night outside the bar, after a heavy night of drinking, the first four looked at the savings the others had gotten and wondered why they had received nothing themselves. The other five all compared their savings to Howard and pointed out he had saved more than all of them put together.
They got more and more upset at the inequity of the situation until all nine men surrounded Howard and started to beat him up, leaving him with marks.
The next week Howard didn’t show up, so the nine men sat down at Lot 61 and had their drinks without him. But when the bill came they discovered something important - they didn’t have enough money between all of them for even half the bill!
And that is how the US tax system works. The people who already pay the highest taxes naturally get the most benefit from a tax reduction. Tax them too much and they may not show up anymore. In fact, they might start drinking elsewhere at Bungalow 8… where the atmosphere was friendlier. [Hard stop]
Episode 33 of Occupy A Job on Wall Street will be out soon. Please subscribe and rate us on iTunes.
And hey, if you liked this podcast tell one of your friends to listen. And if you don’t like it, and think it sucks, then tell everyone you know how bad it is.
Episode 33 - The Dismal Scientist.
This episode is about an economist named Dwyer.
The standing joke on Wall Street is that an economist is someone who doesn’t have the personality to become an accountant and is incredibly good at predicting the past. Indeed it’s unclear why hedge funds have in-house economists, since everything a hedge fund manager does is predicated on making asymmetric decisions and if all the economists in the world were laid end to end, they still wouldn’t reach a conclusion.
Furthermore, not only are economists are rare breed on Wall Street, the economist in question we are going to talk about was a Jew from Ireland that we used to call “The Leprechaun”.
Now this itself is unusual. There are two European countries with hardly any Jews - one is Spain which of course persecuted them terribly during the Inquisition, exiled them all, and as a consequence never produced a single scientist of note since that date - even their last Nobel Laureate was really a Peruvian. Ireland’s Jews were historically well-tolerated, there was just never really that many of them. The only Irish Jew you’ve ever heard of is Daniel Day-Lewis.
And now I’ll introduce you to one more… Dwyer, the Irish Economist from Long Island. AKA the Leprechaun.
Dwyer and I used to work together back in the early 2000’s. He was a young guy back then and the role of an economist in the investment process was resurgent, primarily because we were in a recession. The last recession was 10 years beforehand, so - much like today - it was hard to imagine one actually happening, even as we were going through it.
Also, because Dwyer was a young guy, he hadn’t predicted 10 out of the last 3 recessions like most economists. He had however cleverly anticipated the one we were in and managed to leverage that prediction into a job at our hedge fund, which was one of the largest in the world back then.
Unfortunately for Dwyer, when he arrived at our firm he was assigned to a soulless portfolio manager we’ll call Steinhard
It’s early 2003 and Dwyer thinks the economy is on the rebound. This however is an out-of-consensus call. The market has fallen the past two years in a row, Bush is embarking on his fool’s errand in Iraq, hedge funds are going out of business, there’s layoffs all throughout Wall Street. However Dwyer has some credibility and, based on his optimism, the CIO of our fund tells his portfolio managers to put 10% of their money into a sector that would benefit from an economic rebound.
Steinhard doesn’t really want to do this. He’s basically a momentum guy. He’d find out where the big trading flows were and just get his trader to jump on Instinet and front-run them. Everything was going down, so poor Steinhard’s trader had to just call the big trading desks to see what was being sold in size, then he’d short the stocks through Instinet and cover the positions on the close. That was his business model - and it worked.
So Steinhard approaches Dwyer and asks what he should so with the 10% of the portfolio he’s being forced to wager on an economic rebound. Dwyer says you want to get long a cyclical stock in Europe and the one he likes is Pechiney.
Steinhard buys his 10% position in Pechiney and the stock goes down every day for a week. Steinhard is furious, but there’s nothing he can do because the CIO has told him to allocate the money this way. For the next five trading days, he comes into the office and the first thing he does is scream at Dwyer for half an hour about what a - quote, unquote - “fucking idiot” he was. Now I’m not exaggerating this - we had a big open plan office and he’d walk right over to Dwyer’s desk and yell so loud at him that security checked in the first time to make sure there wasn’t some sort of riot going on. After the first day Dwyer would keep a roll of paper towels on his desk to clean up the spit that Steinhard left on his desk and keyboard.
The second week is worse.
Pechiney used to trade in Europe which opened at 3am Eastern Time, so Steinhard would know how much he lost even before he walked into the office and now it’s all he could think about. Dwyer becomes a nervous wreck. Here’s a guy who is used to looking at long economic cycles and waiting for weeks or even months for data, and he’s being judged on a daily basis by a total fucking demon of a man who has now taken to throwing full cans of soda at him.
Now I just want to repeat that last line, because some of you listening to this who have entered the workforce recently may not really have taken it in properly. All sorts of weird unacceptable things used to happen on trading desks back then, and admittedly this is an extreme example, but when the European markets finished up at 11.30am and Pechiney inevitably closed lower on the auction, Steinhard would throw cans of diet coke at Dwyer’s head. They’d hit him really hard and spray soda all over his computer screens and the wall behind him, which was soon stained brown despite the cleaning personnel’s best efforts.
We used Bloomberg software on the desk and they had recently replaced all the keyboards with fingerprint scanners so traders couldn’t share terminals. Dwyer became so terrified of coming to work, his hands would shake and it took him 5 or more times to get his thumb scanned.
So it’s been two weeks of torture for this poor guy and I decide Dwyer needs a break and tell him to come skiing with us one Sunday to chill out. We turn up at Hunter or whichever mountain was closest back then and sure enough Dwyer’s on the first chairlift with us. Three of us are heading up the slope and Dwyer pulls out a beer from his jacket and just starts venting at what an unacceptable excuse for a human being Steinhard is. He gets halfway up the mountain, crushes the beer and nails it into the trash can below that the ski mountain uses to catch garbage being discarded from the chairlift. [pause] Nothing but net.
He opens another beer and that’s finished by the time we start our first run.
This is probably the last skiing day of the year, we’re early, and there’s no crowds… we get 8 runs in before lunch and Dwyer drinks maybe 12 beers in that time, bitching about Steinhard the entire time. We break for lunch and Dwyer drinks another two Budweisers over fish and chips. Then he says he’s had enough skiing and he’s going back to the city to hang out at his local pub.
We’re like, are you okay to drive?
And he says he’s fine - that he still has beers in the car for the trip back.
I couldn’t tell you how he spent the rest of his Sunday but if I had to guess he drinks all day and doesn’t sleep more than an hour.
So Dwyer gets up on the morning on Monday and prepares for another week on Wall Street where he expects to literally be physically assaulted by his boss for the next five trading days.
Now, he’s hammered. He’s drunk probably 40 beers in the past 24 hours, it’s amazing he has a pulse. On the way out of his apartment he grabs a lacrosse helmet and puts it on his head, wondering why he hadn’t thought of it last week as a brilliant way to deflect flying coke cans. He gets on the bus and when it’s his stop he misses three feet of steps and crashes down into the midtown pavement. He hits the ground so hard he rips open his heavy jacket at the elbow and begins bleeding through it. [short pause] He bounces back up.
[internal monologue, monotone, LI accent, quick] “No-worries. No-one-saw-me. Get-into-the-office. Just get into the office and pretend to work. No one will know. The traders think I went home at midday. No one knows you’re still drunk. You can do this. You can do this”
Now unbeknownst to Dwyer, overnight Pechiney had gotten a takeover bid from a giant aluminum firm called Alcan, itself now owned by Rio Tinto. And the stock is up huge. Back then portfolio managers used to clip 15% of their profits as a guaranteed bonus at the end of the year. Steinhard will personally walk away with over a million dollars on this trade.
But Dwyer is an economist. Even when he’s sober he doesn’t log into bloomberg from home, and certainly doesn’t obsessively follow stock prices or news. He staggers into the office and sits down looking at his keyboard in confusion, because he can’t get it started properly.
I see him getting increasingly frustrated and tell him, don’t forget, in order to log into Bloomberg now, you need to use your thumb.
But instead of swiping his thumb in the scanner, he tries to type using his thumbs. [medium pause]
Here’s Dwyer, in a ripped shirt, bleeding from both elbows, wearing a lacrosse helmet, and he’s got his hands turned upside down like a chimpanzee, trying to type his login information in with his thumbs... It’s already one of the most retarded scenes I’ve observed in my career, and then Steinhard walks into it.
Now Steinhard should be happy right?? He’s just printed a million dollars on this stock being bought. Not only that, he was forced to take the position in the first place by the CIO, so even if he lost money he wouldn’t have been held personally responsible… in a mere two weeks he’s pulled off the trade of a lifetime. He’s eventually going to buy a boat and name it “Pechiney”.
But he’s apoplectic. [long pause]
He stalks down the trading desk and as he approaches he’s so angry he throws his diet coke can, which rebounds off Dwyer’s lacrosse helmet and explodes against the wall. Dwyer turns around and Steinhard gets right in his face and yells,
“Why is this only a 10 percent position???!!!! You’re a fucking idiot!!!!”
Episode 34 - Dove Hunting with Paul Tudor Jones.
While Wall Street has been very good to me and I certainly appreciate everything I have as a consequence, I’ve always been cognizant that my career is a consequence of being lucky not smart. I was practically a bum on the street when I was struck by lightning and started as an assistant on my first trading desk… so who am I to say I got here through hard work and grit?
Well, you might say, you were lucky at the start of your career, but it’s dedication and a solid work ethic that kept you here.
It might be flattering to me to think that, but it’s not true. It’s the wrong model.
With the benefit of hindsight, the important factor for success on Wall Street is simply proximity to other people’s money.
My first boss could’ve bought a small third world country and still had enough money to make a run on its neighbor’s currency. My proximity to him allowed me to meet other rich people and - like a remora on a Tiger shark - continue to bring the dinner home.
Now all that out of the way, let me get on with the story.
Living in the year 2010 was like arriving at a party that’s already been broken up by the cops. The mighty US had been shaken to its core by the financial crisis and the devastation of the credit bubble unraveling. The Europeans were arrogantly touting their seemingly-more-resilient economy… not realizing they will soon fall into a recession that will be many times as long as ours.
Back then we had created a weekly night out called the “420 Club”. We called it that because Obama had recently forced congress to extend jobless aid and those of us who were unemployed would take our benefits check and be responsible for the drinking tab up to and including that amount. Now my fund was on the right side of the credit crisis, so I still had a job… it was just fun to go out and watch someone try to drink $420 worth of beer in a single night.
So I’m out with these guys at a midtown dive bar called SNAFU and one of them asks if I want to go dove hunting.
I’m like yeah, there’s a negative chance of me doing that.
He said, are you sure? There will be 10 guys and three are billionaires.
Okay… guess I’m going dove hunting.
He tells me it’s at one of the billionaires’ estates down south and last summer he was granted an audience beforehand with one of the these masters of the universe. Now the Deep South is hot as hell and he foolishly had the driver drop him at the gate rather the entrance of the house. By the time he walked up the driveway and sat down for his meeting, he’s sweating like a rapist in court. The billionaire rings a little bell and one of the housemaids scampered out with a cold, damp towel and patted his forehead and neck with it for the rest of the conversation.
Point being, we’re talking about real money. It’s post financial crisis, but for just one weekend this is an opportunity to act like we’re still in the housing bubble.
The more I hear about our weekend, the more I like it. Not only will we stay on the estate and go hunting. Afterwards one of the bankers is going to take us to an Indy 500 track afterwards and we’re going to drive racing cars before the flight home.
The weekend in question arrives and we pile out of the car at this stunning, historic plantation. We’re met in the lobby by a lawyer who makes us take off our watches, give him our phones, and sign some sort of NDA that I’ve ignored from the moment I signed it. We’re then ushered into an enormous ballroom with hunting trophies and all sorts 18th century furniture and paintings.
The owner of the estate simpers in and he’s surprisingly soft spoken, welcomes us gracefully and says he has opened up a special part of his wine cellar for the weekend. There will be two wines available to us while we go shooting. Both are French. One is a ‘73 and one is a ‘74. I’m too busy checking out the decor to pay much attention, but this becomes relevant later.
And then we head off dove hunting.
Let me tell you, dove hunting is boring.
Now I’m not a big hunter. I like guns - even living in New York City I own three firearms including a Springfield 45 which is a joy to shoot. Hunting however involves tons of standing around and the way they do it here isn’t even a challenge - a groundskeeper just brings us over to a clump of bushes where they’ve captured 10 or so of the poor creatures; they let them go and you just blast the confused birds with buckshot. I’m quickly bored with it and, because I’ve been paired with my friend from NYC, don’t even have anyone new or interesting to talk to.
So I ask after the wine that the billionaire mentioned and whether we can have it now. The house servant that’s been haughtily trailing after us says,
[southern uptight accent] “Yes, the master of the house says he has opened up his cellar to you and he is a man of his word”
So we walk around this billionaire’s estate, drinking and shooting things with our Parker Shotguns and we plow through about 6 bottles of the wine. There’s a version of this story where we shoot a bald eagle, but in the cold light of the present day I can’t confirm that claim.
Around 5pm we stagger back to the main house and are smugly informed by the head of the household staff that our presence is no longer required at dinner. Word has gotten back to the other guests about what a couple of idiots we are and quite frankly it’s probably for the best anyway. We settle in outside our rooms, which open out onto the grounds and have beautiful views of the forest below and I’m like, ‘well don’t just stand there Jeeves, go get us a couple more bottles of that Frog wine, a hammer, and a box of nails.’
Now being back in the south had really brought out my inner redneck and I’d decided we were going to play a game called “Hammerschlagen”.
If you’re not familiar with Hammerschlagen, the point is to line up a bunch of nails on a tree stump and hammer each in with a single blow of the hammer. Miss the nail, or bend it, and you have to drink.
I grew up drinking wine out of a box. Bend a lot of nails, you have to drink a lot. Drink a lot and you bend a lot of nails. [short pause]
We play Hammerschlagen until we pass out under the stars with probably $20,000 worth of empty wine bottles scattered around us.
The next morning we’re hustled out of the estate and sent off to the Indy car racing stadium. The other 8 guests are dressed in their Sunday Best. Tweed jackets and all. I’m wearing jeans, flip flops and a t-shirt and have completely given up on life. I figure I already know how to drive a stick shift and nod off during instructions.
However an hour later I find myself in a half-million-dollar supercar and realize I’ve slept through how to drive it.
It’s hot as hell, I’m crawling around this course at 35 miles per hour, jamming up the gearbox, while one of the billionaires laps me repeatedly, beeping his horn in frustration at the lack of competition.
I eventually pull into the pit stop to hoots of derision and the other car roars in behind me. The billionaire jumps out and stalks over.
Now, I may be hammered and unfit for presence in the general public, let alone behind the wheel of a supercar, but I’m not one of his fucking sales guys. I’m also a client, I work on the buyside… most importantly I’m not taking any shit from anyone just because they’re richer than me - everyone in the damn country was richer than me before I earned my first honest paycheck.
I stand up straight with my shoulders back.
He takes his off his helmet, shakes my hand, and asks me how my weekend was. And, for future reference, was that the ‘73 or the ‘74 we were drinking?
Episode 35 - Cocaine Cowboys
Drugs aren’t a complicated subject on Wall Street because it’s a binary decision... You’re either a cocaine guy, or you’re not.
Now I’ve personally tried every drug under the sun that didn’t involve sticking myself with a needle. I grew up in a town so far away from civilization, that our hardcore drug of choice ending up being acid. This is because it was expensive and dangerous to ship most drugs all way out there, but a dealer could just soak a book’s pages with DMT and send it via post. I always did feel bad cutting up old copies of American Psycho into quarter-inch squares, but it’d keep us high for a year, so c'est la vie. I eventually settled on marijuana as my drug of choice, and have since been vindicated I guess, since nowadays they’re even adding it to hamburgers.
The point is, because there was nothing else to do where I grew up, I got into drugs much earlier than most people. Ironically, this also meant I was over them by the time I arrived on Wall Street.
But my friends in the business? My friends loved drugs.
And cocaine? They felt 110% on cocaine.
Sure, Bernie Madoff bought so much cocaine the dealers called their office building “The North Pole”. But one of his traders did even more coke than him, picked up two girls from Flashdancers, and left them handcuffed to the radiator in his apartment on a Tuesday morning. He was taking down orders on his Palm Pilot in a cab before he remembered and had to turn around to wake them up and let them go.
A further disclaimer before I get into the story. While I personally didn’t and don’t have that much interest in cocaine - I loved it when my friends did coke. And I loved them when they were at their 110% best, roaring down the highway of life with nothing to stop them. I assign any early departures by these people to alcohol, not other drugs.
Onto our story
Anyone in New York back in 2006 will recall it as the winter of snowstorms. The record was broken recently, but before that you have to go back to 1947 to find a comparable snowfall.
So there’s 18 inches of snow on the ground and I’m rolling with a crew that’s coked up to the gills and after mischief.
The first protagonist of this episode was a hedge fund guy we’ll call Kang - as you can tell from his name, he was an Asian guy, and on a whim he asks a broker from Lehman to get us tickets to a concert at Madison Square Garden to a Korean R&B singer called “Rain”. Kang worked at a big fund called SAC, so his Lehman sales guy jumped into action and got a block of 20 seats up the front and in no time we’re surrounded by hot little Korean groupies and the whole lot of them are doing key-bumps and swallowing Vitamin Q’s while singing along to music none of us had ever heard before or will ever recall again.
It was 2006, these were diehard people, and bank expense accounts were unlimited and unaccountable. Every time the beer guy would come by, a random sales trader would take down the whole tray. The vendor would protest that it’s a 2 drink maximum and we’d just throw money at him and give out drinks to everyone in a 10-seat direction.
So around half way through the concert I get up to go to the bathroom. I walk into one of the stalls and the hedge fund guy Kang has his assistant trader trussed up like a turkey and he’s pounding the poor guy in the ass, whooping like a circus clown.
While I’m standing there in shock, someone pulls down my pants. [long pause] I turn around and there’s a huge black guy standing behind me. I don’t know what medieval playhouse I’ve walked into, but I’m terrified.
I reach down to pull my jeans back up and smash my head into something and fall over onto the disgusting bathroom floor. The black guy now fully takes in the scene in front of him, realizes he’s pantsed the wrong person as a joke, and knows there’s no way he’s not the one going to jail in this situation, so just takes off out the door.
Kang hasn’t looked up from his assistant’s ass the entire time, so I clean up the gash on my head as best I can at the sink and go back out to the concert. I tell the brokers what I’ve seen and, even as high as they are, no one wants to see the SAC guys ever again, so we agree to ditch their clients and the lot of us do a runner, taking 10 or so of the Korean girls with us.
We jump into the cars that Lehman has waiting for us outside and shoot up to the Empire Hotel, chatting away merrily to the Korean girls who don’t speak a word of English but no doubt think this is great fun to be escaping their domineering parents with a bunch of round-eyes wearing suits and me bleeding all over the place.
Having seen enough depravity for a normal person’s lifetime, while they rent a hotel room I abandon ship and head home to clean up.
The next morning we’re all chatting away on AOL and the consensus opinion is that hanging at a hotel room is actually more fun than going to most bars in the city, so this becomes a sort of regular thing for my group. Each night one broker from a different bank would book a hotel suite in Midtown and we’d get our night started there… people just came and went as they pleased. A sort of informal conspiracy.
So people knew which hotel room to come to, a trader would always put the room under the name of “Bob McKay”.
Now I should add here that no one remembered who Bob McKay was - it was just an expired Discover card that someone had come across and never given back to the owner. See, back then you could get away with hotels physically swiping a credit card using paper sheets…. That’s right, paper. As long as you checked out and gave them cash or a real credit card at the end of the day, it was that easy to book a hotel under a fake name.
Now, you know, and I know, this story is going to come to an ugly end, so I’m going to revisit a bunch of the funnier hotel incidents in a future podcast and try to bring this episode to a swift conclusion. The best way to set up it up is to compare what happened to a boiled frog.
The “boiling frog fable” is based on a premise that if the animal is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water, which is then brought to a boil slowly, it will not perceive the danger and will eventually be cooked to death.
If you’d walked into one of Bob McKay’s parties for the first time, you’d immediately see 5 ways you could get arrested, turn around, and walk out of there. But there were 40 of these functions, slowly getting out of hand, and no one had the good sense to say no, until the authorities said it for us.
In any case, I walk into the Four Seasons and immediately something is amiss. Normally you’d walk into the suite and see at least a couple of friendly faces. But tonight Bob McKay has taken down the entire 38th floor and I’m greeted by a couple of angry hookers stubbing out their cigarettes out on the curtains. A senior sales trader from Bear Sterns is getting the lunch knocked out of her in the main bedroom while some interns from her firm peek through the door. People are pulling the art off the wall and jumping on it. There are traders trying to break down the bathroom doors, to get in on whatever they think they’re missing out on in there.
I run into a bunch of my peers from the Rain concert - they’ve pulled off the Wall Street party of a generation and yet there’s no sense of jubilation in their faces. Lines of cocaine only seem to bring into stark realization that this is a part of the business that will be gone forever after tonight, and they’re not even going to enjoy their swansong. I stay with them for a sad beer as the chaos mounts around us and then beeline for the door as a Fidelity trader begins flinging champagne bottles off the terrace.
The next day the Four Seasons has the NYPD calling every bank on the Street, chasing up compensation for the damage that’s been done. But no one will own up to being there.
Anyone who used a credit card at the previous 39 parties potentially has their head on the block. It’ll be their jobs and their marriage if any of this gets out.
Now, one of my key skills is being a prick and pretending I’m a lawyer for guys named Bob. So I gathered cash from as many people as possible, settled with The Four Seasons for 9 thousand, and everyone seemed happy with that.
Episode 36 of Occupy A Job on Wall Street will be out soon.
Episode 36 - Rochdale Securities LLC
This podcast picks up where we left Paddy Nails. If you haven’t listened to Episode 4 you should check it out for context first.
For this episode you need to understand that when you sell a stock today, 99% of the time it settles - meaning, you get the cash - in 2 days or “T+2”. But back in the aughts, trades used to settle T+3.
Now most of the time it didn’t matter, but we’re going to talk about one of those times it did.
It’s 2010. A financial analyst named Dick Bove, who worked for a mid-size brokerage with regional offices, had already made his reputation calling Bank of America “a generational buy”. After that he just talked to whoever he felt like and rightly so. But the rest of his firm was a bit of a zoo, with some odd characters running around.
One of the traders had a pretty good sense of humor and I always remember heading through Grand Central Station with him and his colleagues. He’d have done a fair amount of drinking, and if he hadn’t managed to get laid, he’d fall asleep on the benches and hope a woman woke him up. This never worked of course, but he’d sleep and talk his way through the night, and when I got off the train the next morning he’d still be on the bench or another one close by. [short pause] I’d whack his feet to wake him up and presumably he’d go back to the office and work the rest of the day, because they never fired him.
So a year or two into this, I’ve settled in for the night and my phone rings. Now back then it wasn’t as surprising when someone called you directly, but it was still pretty odd to see “Paddy” pop up and wonder who the fuck was calling you at 10pm.
I pick up the line, and Paddy pants,
[LI Irish accent] “I need your help.”
I don’t really know what to say to that, so I’m like where are you Paddy.
There’s a brief moment of silence and then I hear in the background,
[Quieter] “Where Am I? Okay, got it.”
[Louder, back on the phone] “I’m in Westport. I got pulled over. They say if you can be here in 30 minutes, they will let me go.”
Now Westport is more than thirty minutes away but he sounds sincere and besides, I’m curious. I figure I can always turn around if a Russian calls me next or something else weird happens on the way.
Remember there was no Waze back then, so around 5 minutes before I figure I’m there, Paddy calls me again,
[firmly] “Where are you man, you said you would be here.”
I tell him to put me on with the cops or I’m turning the car around. He hands the phone over and I introduce myself and tell the police officer I’m five minutes away. He grunts and hangs up on me.
When I get there I walk over and tell Paddy to go get in my car. I then speak to the cops at length and see if I can do anything for them. I genuinely meant the Police Benevolent Fund or whatever, but they’re good-humored about my efforts and tell me to forget it.
I go back to the car and ask Paddy what happened. He says he probably shouldn’t have been driving, but when the cop asked him to get out of the car, he couldn’t handle the pressure and broke down in tears. He told the cop he’d lose his job and his family if he had to do a breath test and the guy took pity on him.
I’m barely molified, but fine, I figure he played his cards well, so I pop the clutch and turn the key. Paddy suddenly sits up straight and tells me we can’t leave his car there. That he’d left drugs and a gun in the back seat. If the cops tow it and find them, he’s screwed… he’ll lose his job and his family.
Now it’s unclear I’d do this again, perhaps not even for a sibling, but I’m younger and dumber so I get back out of the car and explain to the cops that I’ll drive Paddy’s car home and then circle back for my pickup truck later. The officers are nonplused but grudgingly agree, so we jump in Paddy’s car and I head off for the freeway. His directions quickly make no sense and I’m like, Paddy just tell me where you live. He replies,
“Oh I’m not going home. I’m off to Norwalk to see a hooker.”
Now I’ve finally hit my limit. I pull the car over and read him the riot act.
I tell him he needs to get his act together. That he’s not everything he could be, and if he’s honest with himself, he knows it. That he needs to to stop avoiding what he needs to do to take care of not only himself, but his family and his community. That the things that he does and does not do are far more important than he thinks. That he needs to take the responsibility that is associated with that… and to choose the more meaningful path going forward.
Paddy takes all this in and breaks down in tears. And when you think about it, realizing your life isn’t everything it could be… it’s a terrible thing to admit and it’s a terrible to thing to consider. But there’s real promise in it. Because it means that perhaps there’s another way to look at the world and there’s another way to act in the world.
He’s crying and dry-heaving with emotion. He hugs me and won’t let go. Tells me he was supposed to go to Vegas on Friday and that he’s canceling the trip first thing tomorrow. Going forward he’ll abide by his conscience, sit down with his wife and tell her everything, ask her and her kids to forgive him.
We get back on the road and eventually I park his car outside his house, but refuse to give him back the keys. I tell him to call me tomorrow and I’ll meet him at the train station if he wants them back. I watch him walk to the door with his head hung low.
There’s no call from Paddy the next day, so later in the afternoon I call Rochdale and check in on him. He’s suitably thankful, so I ask him to make a donation to a charity I am particularly fond of as further step in his personal redemption. He’s like, “yeah, yeah, yeah, you got it”.
This sounds a lot like the old Paddy to me, so I ask if he was still canceling his trip to Vegas. He sounds a bit startled by that,
“What? Fuck no, I’m leaving with a trainload of hookers after the close. Why, you wanna come with?”
Paddy never did donate to my charity. And I’ll always wonder why he called me that night.
There’s an odd postscript to this story. A couple of years later, my firm owed Rochdale some business so I call up Paddy and ask him to buy a couple of million shares of GE. He’s gracious and professional and there’s no problem executing the trade. Back then we probably paid 5 cents a share, so 2 million shares is $100,000 in commission for Rochdale and Paddy might clip thirty or thirty five thousand of that. Good to pay down the mortgage for your family… or a couple of big nights at the Mandalay. [pause] I’m less judgmental by then, so I don’t ask. It’s not my problem. However he wants to play his hand is fine for me.
Now remember, trades back then cleared on the third day. The commission doesn’t transfer to the firm and certainly not to Paddy until the trade has cleared.
It’s Day two and Paddy is sitting around waiting for the market to close. One of his colleagues gets an order from a client for 150,000 shares of Apple. It’s a decent size trade but the stock is liquid, so they execute it promptly. An hour later the client comes back and buys another 150,000 shares. We were trained back then to think in share count, because that’s what you got paid on. Basis points were for the Europeans. But Apple was one of those rare stocks that had a large notional value. What I mean by that is if you buy 150,000 shares of Nokia at $10 a share, you’re only long 1.5 million dollars worth of the company. But if you buy 150,000 shares of a $200 stock, you’re long thirty million. [pause] It’s a significant difference.
The day wears on and this guy’s client keeps coming in and buying larger and larger amounts of the stock.
It suddenly dawns on Paddy that Apple reports earnings after the close… and he’d never even heard of this sales trader’s account before. He has the back office look up the client’s paperwork and best guess they run $100 million or so… but the sales trader has bought a billion dollars of Apple. With a “b”.
Before anyone can do anything, the market closes and the broker who had bought the Apple shares just gets up out of his chair and walks out of the office.
Now no one really knows what the hell is going on. It takes the FBI itself years to put their case together. But the bottom line is the client just isn’t taking the shares... and that means Rochdale Securities is.
Apple earnings are good and the stock is bid the next morning. The remaining Rochdale traders are professionals. They keep their mouths shut and manage to trade out of three quarters of the position. Then it leaks to the Street that they’re long a bunch of shares that they shouldn’t be, the stock tanks, and their clearing agent Pershing makes them sell a block in the hole. They lose 10 million on the trade and have to close the firm down.
Paddy never gets paid on the GE trade. And never finds out whether he’d have paid down the mortgage for his family… or gotten a last couple of big nights in at the Mandalay.
Episode 37 of Occupy A Job on Wall Street will be out soon. Please subscribe and rate us on iTunes.
Episode 37 - The Intern
For now I’m not to say the name of the brokerage firm in this podcast, but they did have a football-sized trading floor in Connecticut back before the financial crisis and some of their employees were caught evading US taxes carrying suitcases of cash around while they were flying back and forth from Zurich.
The trading floor probably had 1,000 people on it and at any one time 40 of those might be interns. Back in 2006 however, one stood out - let’s call her Jenna.
Jenna’s dad was worth bank, like a hundred million back when a hundred million was a lot of money. So that’s clearly how she got her job there, because she certainly didn’t give a shit about finance.
Jenna used to wander into the office wearing knee-high boots and tight tops... her long hair was a different color each week. She’d walk in most days, clearly crushed from a big night out, put her head on the desk, and just fall asleep with a Red Bull still in her hand. She wouldn’t even bother coming to work on Fridays.
So Jenna was the sort of girl who’d get attention in any case, but women wouldn’t have made up 10% of the trading desk back then and this sort of behavior drew all the wrong sorts of scrutiny as you’d imagine. What’s more, Jenna worked in a part of equity trading that bumped up against the mortgage bond team.
Nowadays bond trading is all done by computer because prices are simply a function of the underlying yield, which itself is really just an unknowable macro factor - but back then these guys were the gorillas of the trading floor. They’d literally run around and beat their chests, ;short pause] they’d throw phones at people, basically a bunch of animals.
So this is the situation I come across when I walk in to visit the bank. I start off visiting the equities division, which has always been my main area of focus. When I’m sitting with the ETF guys, one of them points out Jenna, so I decide to walk past her on my way to see the bond desk. I can’t even get her attention, she’s just talking on her cellphone and rolls her eyes at me when someone tries to introduce us.
As I sit with the bond guys, I have to ask why they’re so subdued around around Jenna. From what I know about mortgage traders, having her in their general proximity would be like introducing bambi to bunch of starving lions in an abandoned Syrian Zoo. I’d expect them to be throwing stuff at her, drawing on their own faces to get attention, whatever would be normal mating behavior for this bunch of monkeys whacked out on PCP. But there’s none of this and, ironically enough, it’s because they’ve recently found out Jenna is a porn star.
Let me repeat that. The laziest, richest intern on one of the biggest trading desks in the world in 2006, was a porn star in her spare time.
And not just any porn star but an anal specialist.
Now this may not mean that much to you young bucks out there. But remember most of us were watching porn on DVDs or even VHS back then. There was no RedTube or YouPorn. Watching an actual porn star get pounded in the ass… it was usual.
And there was the conundrum for the bond guys. Part of it was they were just over-awed, but they also didn’t want it to get out, because when it did… well then no more Jenna to brighten up their mornings Monday through Thursday.
I’m obviously intrigued, so I go back and manage to strike up a conversation with her. She’s dumb as a box of rocks, but even she recognizes the name of the guy I work for, so I get her business card. Oddly, what I remember most about Jenna is she literally thought Africa was just one big country.
Anyway, I go back to New York and the next day I call up Jenna, say I like her style and I’m open to changing sales trading coverage. I ask her for a market in an industrial distribution company called Beacher Tool and Dye. She’s never heard of the stock but says no problem, she’ll get me a quote.
She’s just stolen one of the biggest clients on Wall Street from one of the nicest sales traders at the bank, but she doesn’t give a shit. She stands up and yells out, “Beacher Tool and Dye, I need a quote”.
My real sales trader suppresses a giggle and says, “Beacher Tool and Dye? Better check the pinks”.
Now if Jenna had any sense of empathy she’d have caught onto what’s happening… She’s just stolen this guy’s client and he’s offering to help her make a market in her first trading order. But she’s used to people kissing her ass, amongst other things, so she runs down to the Pink Sheets and asks for a two-sided market in Beacher Tool and Dye. They’re like “Beacher Tool and Dye? That one’s a real prick, he’s going to shove it in our ass. Better go check the OTC counter.”
She runs over the OTC desk and they want to know if it’s a size situation or not before they’ll make a market in Beacher Tool and Dye, so they send her back to the Listed Desk.
Meanwhile I’m calling other traders, pretending to get all bent out of shape. My light’s blinking on hold. It’s a stressful situation, especially for someone like Jenna who has essentially paid no attention to how trading desks work in the time she’s been working there.
My sales trader yells out at her, C’mon Jenna. Beacher Tool and Dye - it’s a fast market. Don’t hold to anything. It’s a short squeeze.”
Jenna calls Teddy from the NYSE who is an old school guy and he’s not having any of it.
“Beat your tool and die? They like that market tight hon’. [pause] You’re going to wind up wearing this thing.”
She hangs up the phone and is literally standing on the desk and yelling, “beat your tool and die, I need a market!”
Eventually she gets me on the phone and says UBS doesn’t seem to make a market in that company. I’m like no problem, I’ll give you another shot. How about ticker symbol LBW… Layback and Wackit.
I’m giggling even now it was so juvenile.
But that’s what makes any great period in your life just that. You don’t realize it until it passes.
The stock market has changed. I’d argue it’s changed permanently and probably for the better. You move on. The next part of your life can be just as wonderful, but it’s just going to be different. However that was surely a time on the Street we were lucky to be around for.
I would’ve been just an extra if life was the show Billions… just a pissant trader… but it was so much fun. I can’t believe we got compensated for some of it. You could have sold tickets to this job. It’s terrible, but I look at friends of mine who worked at IBM or something and say I almost feel sorry for them. Sitting in a cubicle, hoping to get a 10% raise and a bigger cubicle and invited to some lame IBM sales force boondoggle.
I wasn’t a big player but it didn’t even matter. I still feel lucky.
Episode 38 - Goose.
A close friend of mine died some years ago.
He has a memorial in Central Park that I visit each week, so I still think of him often. The plaque is one of those granite paving stones that make up the entrance to the Literary Walk. My dog has gotten used to the routine, so she normally runs ahead of me and seemingly waits patiently at the location for me to arrive. I kneel down by his name and give his memorial a couple of taps with my knuckles, as if he can somehow know I’ve not forgotten him. On a clear day I look over to the Pin Oak he has endowed and then stroll down towards Bethesda Fountain, which is my absolute favorite place in the city.
Each one of those engraved paving stones has a story to tell. I have, however, struggled to write about my friend because it’s difficult to find the right tone. Outside of his passing, I’m blessedly unfamiliar with tragedy, and hope this remains the case for the near future.
However, I recently read that, if you struggle with 10 ideas, then you should write down 20. So here’s my first shot at some things I remember about my late friend, who we’ll refer to as Goose.
Goose looked a lot like Will Ferrell from the movie Old School. He was big, gregarious, and would give you the shirt off his own back. Before working on Wall Street he opened up international offices for Google. This was prior to the era of compliance, so human resources was just the perfect job for him.
We called him Goose because he was the world’s best wingman. Just a pleasure to hang out with in the evenings. He would never say no to anyone. I wouldn’t be surprised if he went out six nights a week between the years 2005 and 2010.
Every Friday morning he’d hit you up on AOL with the song “Hello” by Martin Solveig. You may remember the video, because it has 80 million-odd views and involves Novak Djokovic and a couple of DJ’s playing tennis. Go ahead and look up the song on whatever platform you’re listening this to [pause] it’ll set a new, sunnier tone for the rest of the episode.
My favorite story about Goose was when he busted into my apartment, bubbling with excitement. He tells me he hooked up with a pop singer named Kesha. I’m like, I don’t know who that is, why are you so worked up about it? He says to think of Kesha as an STD with glitter and that she got so into it when they were having sex, she started taking photos of him with her iPhone 4. Back then Apple had just launched their "Retina Display" function - which meant the phone had a resolution so high that you were unable to discern individual pixels for the first time. People take that for granted nowadays, but I’m telling you that, when someone stole her phone and leaked the photos to Perez Hilton, the images of him going down on her were really something. They’ve long since been scrubbed from the front pages of Google, so she could pursue some Me-Too vendetta… but nothing’s ever gone forgotten on the Internet of course.
Another time we were at a seedy place called Madame Wong’s and he meets what he thinks is a nice girl. When they get back to his apartment first thing she asks is what sort of food he has in his kitchen. He lives in a railcar apartment on the lower east side and there’s nothing but beer, bread and nutella in the fridge. The night passes eventfully and he’s woken up by the doorbell at 6am. Now back then, after big nights out people used feel free to crash at his place all the time, so he saunters over and opens the door thinking it’s one of his friends. His mum is at the door and he’s naked, covered head to toe in nutella, there’s nutella spread all over the kitchen table and the cabinets… as well as all over the sheets and the naked chick sleeping on his futon.
Goose was the character in Episode 18 who rolled out of the fountain in his underwear when we were having brunch one morning in Rio de Janeiro.
Another night we went to a club called SL. This was when it was in Meatpacking, underneath Abe & Arthur's. As we walk in he’s like, “Ah, there’s Mark. We’re friends”. I look over and Mark Cuban is sitting at a table with like 10 girls. I’m like, yeah right. Cuban looks over and yells out, “Goose, what’s up!”, picks him up and hugs him right off his feet. Guy just became a billionaire. Goose is part of his entourage. Never told us. Was just another Friday morning out to him.
Like many of my generation, Goose became a wall street guy almost by accident. When he left Google, he had a job offer from a staffing agency called Spear that did a lot of work for Facebook and the other big Internet firms that were growing like crazy from small bases back then. His boss takes him go to a conference somewhere in Florida and their client contact is some hot chick from Facebook named Mercedes. Goose and Mercedes get on well and eventually end up back his hotel room. But he’s sharing the hotel room with his new boss right? So he leaves a sock on the door, locks it from the inside, and just refuses to open it when his colleague leaves the conference to go to sleep. The next morning, understandably, his new firm wants to know why he slept with his client and locked his manager out of the room they were supposed to be sharing. [pause] As they are confronting him he’s flabbergasted… he just can’t understand what the fuss is about - he had remembered to leave a sock on the door handle right? Apparently that’s guy-code and his boss should’ve known it meant he scored and shouldn’t be interrupted. Even months after they fired him he was still expressing surprise the sock didn’t work.
Another story, perhaps apocryphal, has him stealing a statue from a restaurant at Kansas City Traders and making out with it in the largest hot tub in the country. I’m not on solid ground with this one, but it has the ring of truth.
Goose dated this girl once who was sort of quasi-famous. She used to run around for some late night TV show like TMZ and interview celebrities as they were coming out of nightclubs at 2am. It was a pretty good business model, so credit to her for suggesting it at work and coming up with the concept early. Remember, this was before everyone had a super computer in their pocket, so understanding where and when to be with a proper camera and a microphone was in demand back then. You had to know all the right people for a job like that. Longer story short, we’re at a bar and one of our group complains that a girl who lives down the corridor from him is leaving used condoms by the elevator. We put two and two together and realize it’s Goose’s girlfriend that lives there. I draw the short straw and am responsible for telling him his girl is cheating on him. So we sit down and he asks how I know this... Think about the story I have to tell for a minute…. How much of a skank do you have to be that when someone bangs you they don’t even stay in your bedroom long enough to take their condom off? Instead they roll out of there so fast they’re still half-hard and just fling the rubber off as they’re waiting for the elevator. It boggles the mind. [pause] But there’s not a trace of hurt feeling on Goose’s face. He’s totally unperturbed and such a free spirit, he just says, “Ah that’s okay. At least she’s using protection”.
I like to keep these podcasts short, so let’s take a break before the next 10 stories. I would however like to leave off with a thought.
There’s increasing noise lately from commentators that millennials and the older cohort of Generation Z are more risk averse than previous generations. It’s hard to know if this is really true but the statistics seem to bear out that they are doing less drugs, don’t drink as much, are having less sex, and perhaps even going outside infrequently.
I can see why. When I grew up and TV was boring, you had to go out into the real world for stimulation. Now everyone can live what feels like an entertaining life without the prospect of leaving the house. Streaming television and video games offer an experience that is nearly hazard-free, even if takes you awhile to look up and realize that you are truly alone. But like avoiding risk in any activity, the benefits are limited. Taking risks is how we get more from life.
You might be entertained, or horrified, with the stories in these podcasts, but there’s no doubt that Goose lived life to the fullest. It’s one of the things that comforts me in his absence. He may have left this world early, but my friend lived a hundred normal lives.
And if that’s true, then how many of us can say we’re still living our best existence?
Episode 39 - Opening Night at STK.
One of the reasons I’m interested in writing about New York back in the early 2000’s is because I still live in the city and it’s just changed so much. Now, for the most part it’s changed for the better. I have a couple of ankle-biters now and they can roam somewhat freely around the neighborhood without being raped and stabbed to death by some crackhead. So that’s great.
There are however some ways where it’s gotten worse.
As I’ve noted in an earlier podcast, when you complain that the city has changed, what you’re really complaining about is that you’ve gotten older. So I recognize part of my grievance is that I’m in my 40’s and not in my 20’s or early 30’s... People just don’t find me as entertaining in person as they used to, and I get that.
But I’d also argue that everyone nowadays seems to have a stick in their ass and even a mild show like Seinfeld would not fly today without the loudest people getting outraged.
I was out last week at a new Midtown hotel bar. Some work colleagues had taken down half the rooftop, so I skip the line and we’re pounding beers upstairs. It was fun, but it became increasingly clear that another group of guys, clearly not affiliated with the bank, were making derogatory comments about us.
I let it ride for a while, but I’d smoked a lot of weed on the Citibike over here, so my senses are like a military-grade radar. The nearby group are sniggering like a bunch of teenage girls, and no one’s patience is infinite… so eventually I turn around to take a proper look at them and clearly I missed the Gotham fashion scene memo this year… They’re wearing suits, but the material looks a little like pyjamas and they seem to have Hugh Hefner smoking slippers on. They’re also wearing those summer scarf things. I don’t know if you’ve seen these yet, because douchebags only bring them out at night, but they look somewhere between a cravat and a regular scarf and seem like they’d be perfect for strangling their owners with.
Now my colleagues are older guys, but these are traders who grew up selling knives and vacuum cleaners door-to-door in Jersey and Staten Island. Any one of them would be worth 3 of the douchebags and besides no one fights anymore in New York, so I’m not worried. I walk over to them with a few of the bank’s beers and tell them to drink up and breathe through their mouths for the rest of the night.
That normally shuts anyone up, but they’re game for a confrontation so I get into it with these guys and start throwing out offensive material, trying to figure out what’s going to trigger them first.
I’ve planned to start making fun of Italians, the Irish, Mexicans, Asians, Catholics, Jews, Muslims, hipsters, women, liberals, conservatives, gays… then start all over again with Italians.
Now I only got as far as being rude about Mexicans before these guys got too offended and had to move to a safer space. [pause] And that, ladies and gentlemen, inspired me to write about hispanics on Wall Street. [long pause]
People still complain about a lack of diversity on Wall Street, but let me tell you it was very unusual to come across someone from Central or South America on a trading desk 15 years ago. There was the odd exception - one of the traders at Soros was an Ecuadorian for example.
This story is about another one of those exceptions to the rule, a trader we’ll call Slayer.
As I discuss in Episode 16, there was a lot of hazing on Wall Street back then - and for good reason. Baiting a colleague was Wall Street’s way of training people to handle the criticism it takes to be successful in a high pressure job. At least amongst men, hazing is a prerequisite for success and test of whether you can be trusted by your colleagues.
So every day Slayer walked onto the trading desk, as far as people were concerned, he was from a different country south of the border. Evo Morales gets elected in Bolivia? Slayer is a coca-chewing Bolivian for the day. CIA tries to overthrow Hugo Chavez? Slayer would be Venezuelan that week and the desk would be speculating about whether his sister had fake boobs.
Now when people voluntarily face things that they’re afraid of, they get stronger. So while Slayer was a bit taken aback at first by the constant teasing, he quickly got thicker skin and was giving it back to all of the guys on his desk in no time.
However, this episode is about the time that Slayer got triggered.
So it’s opening night at one of the STKs. We have a big table reserved and meet beforehand at a local watering hole called Sutton Place. I’ve never met Slayer before, but I’ve heard of him and we had very similar jobs, executing equity trades for a large hedge fund.
Now Slayer may be hispanic, but he was built like a brick shithouse and is an amalgamation of every Irish guy you’ve ever met. He also worked on the buyside, so while hazing kept your ego in check there and meant you were never allowed to build up any sense of entitlement on the trading desk itself… when we were out at night it was easy to get a bit full of yourself. After all we had a hundred sales counterparties back then, so the chances are we were out drinking with at least one of them - maybe 3 or 4. And they’d all be competing to kiss your ass.
At bars buyside guys used to gravitate towards each other to avoid too much broker conversation. So Slayer and I find ourselves at Sutton Place downing shots and he suddenly turns to me and says,
[Rough, deep, gravely voice] “wanna do some drugs?”
I’m like sure. I have a dugout on me, let’s go outside and smoke. He’s says “nah, it’s fine I have some we can take right here” and reaches into his pocket, coming up with a wide and interesting variety of pills. They’re different shapes, sizes, colors. All scattered around on his massive hand like children’s candy.
Now, not knowing what the pills are, no sane person would touch these things. But as I describe in Episode 12, mental illness is an asset on Wall Street, not a liability… It turns out Slayer just came back from a holiday in Las Ventanas and while he was there he brought back every over-the-counter drug he could find. He shrugs his shoulders at my reticence and pops a couple of pills that look like they might be horse tranquilizers.
An hour later we are at STK. It’s jammed.
Brokers would divide up expenses, so Deutsche Bank is in charge of this part of the night and this is back when they were a real bank. The head guy there has a black card and the reservations are solid at 9pm… We are led to a huge table in the middle of the room that has been purposely kept empty for an hour beforehand, as a reflection of our importance as clients.
There’s 12 of us at the table, but I maneuver myself next to Slayer. I ask him, what drugs do you have left? He grunts at me, checks his pockets and says,
“Only these little white things. I think they’re rohypnol or something. I bought them to help me sleep.”
And then he shrugs his big shoulders again and downs all three of them.
That’s right. At that exact moment in time Slayer has the best seat, at the best table, at the best restaurant you could be sitting at in New York City - or perhaps the world for that matter - and the first thing he does when he sits down is rohypy himself.
Now the moment the pills touch his tongue. Slayer’s eyes roll up and his head hits the table.
He can’t remember anything after. Any normal person you’d be calling an ambulance. But this guy is such a unit, 20 seconds later he bounces back up, ramrod straight. Maybe one of the many uppers he took earlier in the night kicks in and takes back control.
Falling unconscious in the middle of the most important dinner of the year hasn’t gone unnoticed though. The Deutsche Bank trader who reserved the table, yells over in an arrogant voice, “Hey lightweight, you still with us down there?” and all the sycophants around him start giggling, thinking they can have some fun at a client’s expense and no one will be the wiser tomorrow.
Slayer fixes him with a stare and says,
“You know the Deutsche Bank logo was replaced by a swastika in the 1930s right?
The table goes silent. We did not know that.
“Also your firm financed the building of Auschwitz. At the end of the conflict, your CEO was tried and convicted of being a war criminal. [short pause]. Your desk sits on top of a mountain of skulls pal. Keep your trap shut or I’ll close it for you.”
Now the Deutsche guy has misjudged Slayer, but he’s still misjudging the conversation. He thinks this is an intellectual argument. It’s not. This is about hierarchy and dominance. He splutters some pathetic response and is saved by the waiter coming over.
There’s an uncomfortable silence while the Deutsche guy pretends to inquire about the food and Slayer stares murderously at him.
He asks the waiter if the tacos come with rice and beans….
And that’s when Slayer gets triggered.
See “Rice and Beans” was Slayer’s first nickname on the trading desk.
He had to sit back and take it then. But the concept of hazing doesn’t extend to environment outside - it doesn’t mean that someone from outside of the group is allowed to harass him. Just the opposite.
Slayer is in the flow. He gets up, walks around the table to the Deutsche Bank executive, picks him up out of his chair, ducks a half-hearted punch, and floors him with a clean left hook.
The guy folds like the house of cards his bank is. Slayer turns to his friends who are aghast at the turn the night has taken. They shrink back and Slayer yells out.
“Slayer Wins. Fatality!”
There’s a moment of silence and then chaos. Security surge towards us. Slayer sees them coming and pulls his shirt off. The doormen are so taken aback by this, they actually stop dead in their tracks confused. You can’t blame them. It’s confusing.
Everyone clears a path and Slayer strolls right by them and towards the front door. There’s a 100 punters at the bar, all staring at him. He throws the remains of his shirt at the people waiting outside and growls,
“I’m not being thrown out, this bar is banned from me!”
And then we went rickshaw racing in Times Square. [short pause] But that’s another story.
Episode 40 - A game of thrones.
I was speaking with a younger friend recently and found myself taken aback by a question of his about Wall Street.
He wanted to know where all the jobs went... UBS used to have a football-sized field of traders in Connecticut. The hedge fund Diamondback had something like 25 traders. I had made some introductions to financial firms on his behalf and and he just didn’t anything like that in today’s environment.
And he’s right. Jobs like that just don’t exist anymore. Walking into a lifeless, silent trading operation might as well be another planet when I think about the desks I cut my teeth on 20 years ago. And this episode is about why that is.
The death of trading is best addressed in 2 parts. Let’s deal with the Sellside first because it’s relevant to the most people, and then I’ll explain what happened to the Buyside.
If you worked on Wall Street in 2010 there were two mergers that mattered. Bank of America Merrill Lynch was one and the second was Bear and JP Morgan. By way of context, both Bear and Merrill had been safely sold by then and business was improving. Things weren’t all flowers and sunshine though. To say we were apoplectic at the big brokerages after the financial crisis would be an understatement. Even people on Main Street, who didn’t realize the full scale of the taxpayer money that had been committed, were furious at the banks that were left.
But this is the situation the banks found themselves in. So let’s run through the challenges facing sales trading in 2010
One - commission compression. In 2007 we paid 6 cents per share to trade or - I don’t know 20 cents a share - who the fuck cared while everyone was making so much money. By 2010 it was 4 cents and much less for program trades. And nowadays the big aggregator firms like Citadel and E-Trade actually pay for order flow. So, commission compression of 100%? That’s a lot.
Secondly, after the crisis there was just less business because all the plain vanilla clients lost money catching knives and many hedge funds had been knocked out of the market, because you-know… they weren’t hedged.
Thirdly, you have the increasing migration to passive investing and ETF’s, which pushed business away from active traders, but also reduced volatility, making them less necessary in the first place.
Fourthly, our banks became more efficient and internalized their business, which killed the smaller competitors. Last week I had beers with someone who was an “IDB” or Inter Dealer Broker. Essentially he was a broker’s broker, someone the bank went to in order to unwind risk - the last guy on the line. This friend of mine tells me he had an actual pimp on his payroll to drum up business from the big banks. Once the banks automated that risk management, no need for an IDB… and because of that you guys miss out on funny stories today about the “Inter Dealer Broker’s Pimp”.
I could go on forever, but you should always strive to make the complex simple rather than the opposite, so let’s do just one more... The last reason the sales trading job disappeared was the fintech competition just got better. Quite frankly, executing with a firm like Liquidnet is just faster, cheaper, better. If you didn’t adapt to that trend, you lost your job and rightly so.
Let’s move onto the Buyside.
The best way to describe what happened to buyside trading jobs is they just had their balls ripped out.
Like I said, make the complex simple.
Let’s take the poster boy for a swashbuckling-hedge-fund-maniac, George Soros. Now I have a great story about George trading the gold markets in Episode 9. I was lucky enough to speak with another person on that desk and he gave me a different angle on the same situation.
In those days, when George wasn’t throwing lampshades at strippers, he would take extraordinarily outsize investment positions…. both of these things are a benefit of managing permanent capital.
In 2008 George had taken such a large bet on gold that he exceeded the speculator futures limit that was set by the CME back then. So his traders arrange for what was known as a “total return swap” with the banks, which essentially meant you would use the big bank’s IDs to buy more of something you probably shouldn’t be buying. Whenever you hear “swap” on Wall Street, someone may dress it up in complicated language, but what it really means is you are skirting the rules.
So George had bought so much gold, billions upon billions of it, that he had exhausted the capacity of three banks and was moving onto the 4th. Think about that for a minute - he’s taking a position so large that the regulators didn’t even think it was safe for a publicly traded bank to be in it. And he was on his fourth bank ID.
So George has already called the trading desk once to try to understand why gold was down and the fund was getting killed, losing something like 3 or 4 hundred million. An hour later he calls back again and gets a different trader on the phone. He asks him the same question,
[George Soros voice] “Where is the P&L trading right now?”
The trader responds [LI tough guy voice, pissed off], “we’re down 400 million dollars”
[George Soros, nonchalant] “Okay. Why is the P&L down?”
[Trader, emphatic, deliberate] “Your longs are down and your shorts are up”
[George Soros, nonchalant] “Hm, why is gold down?”
The trader is like, [still LI tough guy voice, but slightly softer tone] “Well George, you spoke and the market took care of it.”
George responds, “that’s wrong”.
[trader] “Well, what can I tell you, that’s what happened”
George then wants to know where he can buy another billion dollars of gold. Remember, the Quantum Fund has already exhausted three banks’ ability to buy gold. The traders scramble, but there’s pushback everywhere inside the firm for some sort of position limit. There’s just not a market for buying more gold, so they call him back to question his decision. George is implacable though,
[George voice] “If there’s nothing trading then that means the market is wrong. Take it up to the level where the market is right. Go for the jugular. Okay? Very good.”