CNBC called and soon William and I were on the show for one of those 60 second spots with a 30 second commercial in the middle. You can watch it here, although to get a better sense of what we’re trying to say it is better to read the original articles.
The problem is that this is more easily said than done. Most people working on Wall Street can make ends meet while a small few can make vastly more money than they need. The trick is to make sure that the process of making money does no harm.
Question: How much money would all the participants in the mortgage securitization industry have to give to charity to undo the harm they have caused?
Answer: More than they have ever made.
The real opportunity to do good on Wall Street is to reform it from within. But to do the right thing you have to be able to recognize the difference between right and wrong, and then you must be able to say “no” when ordered to do the wrong thing.
Usually, employers rapidly scan the resume of each job applicant looking for relevant education, skills, and work experience. They select 10 candidates for telephone calls, invite three in for interviews, and hire the one they like the best.
This is a bad way to hire because at best it gets you nice people.
You don’t need nice people.
You need good people.
Good and nice are not the same thing. The opposite of good is bad. The opposite of nice is unlikable.
Nice people care if you like them; good people care about you. Nice people stretch the truth; good people don’t. If you tell a nice person to do something evil, they might do it because they do not want to upset you; a good person will refuse to do it.
You might think you are a good person, but you are fallible, so if you want to avoid inadvertently doing something evil you must surround yourself with good people, not nice people.
My son went to a good school, studied physics, and did well. Then, after his junior year, he got a glimpse of the life physicists lead and decided it wasn’t for him. He graduated with a physics degree and then asked himself, “Where do I go now?” I was relieved when he informed me he had no interest in going into my field, quantitative finance.
His physics education alone has not equipped him for what he will find in my field. Although he might have had a successful career as measured by income alone, I don’t want him to come home from work conflicted. Because much of modern economics and finance reads like physics, he will be able to read literature that many others cannot—perhaps not his boss, nor his clients. I would be afraid that he might someday build a financial model that blows up his firm or costs a client loads of money. I know he is a good kid, but I think the environment on Wall Street for people like him is bad.
My father told me to judge people not on how much money they have but on how they make it and what they do with it. My dad was a sculptor who believed in truth and beauty; art was about uncovering the truth and creating beauty.
That is also what scientists do; they uncover the truth and find the most elegant way of expressing it. You can think of Occam’s Razor as an aesthetic litmus test for scientific theories.
But what about business?
Although my dad only ever had formal training as a sculptor, he had a very successful career arc that took him from fine art to commercial art to advertising to marketing to management consulting.
You can attribute his business success to his belief that business is just another art form, and by that he did not mean that making money was an art. He meant that business was about finding the truth (What do people truly need? What is the state of the art?) and creating beauty (How do we best meet people’s true needs?).
Running a profitable business simply means that revenues exceed expenses, and that is another way of saying that the art is economically sustainable.
This past February, I retired from finance. Although I intend to continue to study the markets and write about them, I have no intention of ever working in the securities industry again. This makes it easy for me to talk to you about what I think is going on and what needs to be done.
I worked at Merrill Lynch as a computer consultant in the mid-1980s, and from 1986 through 1992 I was an employee—first doing research and later creating and running trading desks in New York and Japan. After a brief stint at Credit Suisse First Boston in Tokyo, I returned to the US in 1993 to work as a consultant to a couple of large Wall Street firms. In 1995, I built and ran a statistical arbitrage trading desk for the US branch of a medium-sized Canadian securities firm.
This February, at the age of 61, I retired from that job of 18 years. I can honestly say my time at that Canadian firm was the best of my entire working career and unlike anything I experienced at any other Wall Street firm. At first I could not put my finger on the difference, but at a Christmas party an elderly co-worker from South America I’ll call Eduardo told me he’d been wondering about the same thing. “I have figured it out,” he said, “The word is ‘decent’ and my theory is that in Canada they raise their children to believe that it is more important to be decent than to be rich.” Continue reading To save Wall Street, start with better parenting.
Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured. – Mark Twain
Whenever I speak at colleges I begin by asking, “Why are you here?”
This catches the students off guard and after batting the question around for a bit someone says, “To find my passion.” The rest agree and they imagine they are done with the topic.
But I am not done with them.
I ask them to define “passion” because if you cannot say what a word means then you are shooting the shit rather than answering a question.
So they discuss that for a while longer and eventually settle on some variant of, “I don’t know what passion is but I’ll know when I have passion for my work because I won’t have to motivate myself to do it.”
“Really?” I say, “Where I come from we have a word for that, and it is ‘like’ as in ‘I like my job.’ But I know I am passionate when I do something even though I hate every second.”