[Editor's Note: DealBreaker correspondent Everett Stuckey just returned from covering an important event on Wall Street. His report:]
When I was an analyst scurrying back and forth to my rat’s nest/cubicle the one thing that was missing from my life (besides a soul) was another tourist trap on wall street. Cause what I really need during my red bull run is crowds of slack jawed yokels moving in slow motion down the hallowed canyon of finance. So it is with great fanfare that we announce the opening of Museum of American Finance at 48 Wall Street (where else?). Soon every huckseed from Mayberry with a Scottrade account will be descending upon Wall Street for a history lesson.
Now the so called mission of The Museum of American Finance is to promote financial literacy. Yet there’s a shocking dearth of literature in the place. In fact I’m quite sure the average person can learn more about the finance industry by watching Boiler Room.
[More on the report after the jump.]
Wall Street
This has been a rough year for investors in Wall Street firms, many of whom work at the firms themselves. The Amex Broker-Dealer Index is down for the year, as are the shares of nearly every Wall Street investment bank and brokerage. With the exception of Citigroup, most started the year out with gains in their share prices. But when the broader markets plunged in February, the stocks of the banks and brokerages saw much steeper losses and few every recovered. Although there have been up weeks and down weeks, for long term investors, investing in these companies has been a losing strategy this year.
Morgan Stanley, JP Morgan Chase and Goldman Sachs all recovered into positive territory, while Merrill Lynch, Lehman Brothers and Bear Stearns struggled and, except for brief pops for Citi and Lehman, shareholders found themselves losing money all year. News of the credit crunch and subprime mortgaged related losses in late July and August, bringing the stocks in the group down even further. None of the Wall Street firms have traded higher than they did at the start of the year since July.
The sole exception to this has been the recovery of Goldman Sachs, which rose after its third-quarter earnings report revealed it had made massive gains in the areas where so many of its competitors have stumbled. It’s stock is up close to 12% year-to-date. The next be performer, with a share price decline of less than 5% for the year, is JP Morgan Chase. All of the others have declined by more than 20%. At the bottom of the barrel are Merrill and Bear, which are quickly closing in on declines as high as 30% for the year.
Wall Street is a place of legendary stress. And legendary techniques for stress relief. Jim Cramer was once famous for smashing computer key boards. John Mack used to pulverize telephones. We once had an M&A bigshot throw an entire telephone console at us. There are therapists who specialize in dealing with the stresses of life in finance.
And, of course, there are drugs. Lots of drugs. New York City is famously awash in drugs these days. In fact, just the other day a journalist asked us to put her in touch with “Wall Street types who smoke a lot of pot.” We don’t know exactly how to take the assumption that we know about these things but we couldn’t help her anyway. Most of the folks we know prefer their recreation in other forms.
According to an article in the newly businessy BusinessWeek, the use of hard drugs is greatly diminished from the days of yore. And it’s all the fault of Wharton. Or something.
While Wall Street still has its rough edges, the culture is far more straitlaced today than in past eras. “It’s more institutionalized,” says one hedge fund manager. It’s no longer acceptable to deal with your stress by hurling a computer on the floor or by indulging in drink, drugs, or alcohol. As a practical matter, the threat of a lawsuit is much higher than before. And traders are generally a more professional group than in past decades. “There weren’t as many Wharton MBAs on the scene during the 80s,” says the fund manager, who spoke on condition that he not be identified.
Today, when drugs are employed against stress, they’re more likely to be the prescription variety. Another hedge fund manager, speaking on condition of anonymity, says he has been taking antidepressants for years. While his work didn’t cause his depression, it can exacerbate it. That can lead to a modification in medication or work habits. He once even closed a particularly troublesome fund at the urging of his wife, who said it was leading to severe stress that was affecting his behavior and disrupting their marriage.
There certainly are a lot more people in finance putting on the Ritz and taking the A-Train—that is, taking Ritalin and Adderall—than there were in the days before the little pills that could were invented. But is usage of the hard stuff really down as far as the article claims? If so, then Wall Street must have been under a permanent blizzard in those days.
Gives new meaning to the idea of not trusting anyone over forty. They’re probably a drug addict.
Stressed Out on Wall Street [Business Week]
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Wall Street
Reflections on Being and Non-Being
Fashion Week, Fantasy Football and An Encounter With A CDO Cowboy
By John Carney
Last night we found ourselves at some stupid fashion week party where we learned two things. First, fashion week is just fantasy football for girls. Second, there is no CDO business on Wall Street these days.
The latter became crashingly clear when we ran into a guy in the structured credit products business who we haven’t seen for years. He’s been too busy. But last night he told he hasn’t worked a night in weeks.
“It’s over. Everyone is getting fired. Entire divisions. Think vast empty wastelands,” he said.
We ordered him his favorite drink: a very dry, Hendrick’s martini on the rocks. He took the top half off it off in one swig. Then he took the bottom half off. We ordered him another.
“Right now CDO stands for Close the Door on you way Out,” he said.
We were getting a pedicure yesterday and were thus in closer proximity to a stack of horrible women’s magazines than we usually like to be. Since they’re all the same mindless trash, we randomly selected the Marie Claire with a hungry-looking Ashley Olsen cover girl off the top and set to work educating ourselves about “women who choose starter husbands,” whether or not “Botox ages you” and “Grandpa crushes.” (This is an actual quote: “Donald Sutherland is hot. And not in the ‘he’s a great actor’ way. In the ‘we’d like to strip the 72-year-old down to his sock garters and get crazy with him’ way. In fact, a poll taken at a recent mojito night revealed that every woman in our office has a grandpa crush, even the ones without major daddy issues.” Like a trip to Idiot Island, isn’t it?). Anyway, just as the pederist started massaging our legs, we came across “A Field Guide to Wall Street Women,” by Dana Vachon. Obviously, we had to continue.
Seems there are four types on women on the Street: the Social Commando, the Ivy Beleaguered, the Nuptualista, and the Big Swinging Chick.
The Social Commando, according to Monsieur Vachon, hails from Los Angeles, Houston or San Francisco, works in sales, wears DVF wrap dresses, counts the $50 mojito pitcher as her signature cocktail, and has a life expectancy on Wall Street of 2-3 years. Commando goes commando so as to mix things up around the office, disarms with “charm” (read: breasts), and sleeps with as many co-workers as time will allow. Vachon says that Commando has a Brazilian ex-boyfriend named Nacho, though all of the Commandos we’re familiar with have always had a penchant for a more Aryan breed of man. Agree to disagree. Commando doesn’t stress about getting reports in on time, because that’s not what she’s there for, she’s there to have fun, which might explain why she’s been to rehab three times. Commando is everything Penelope Trunk has always wanted you to be, except she doesn’t dress halfway between a man and a harlot, she just dresses like a harlot.
We’re not sure what this means but we’re sure it means something when Sarah Lewitinn, the famous hipster DJ and music taste-maker who is also known as Ultragrrrl, starts worrying about subprime effects on the broader financial markets.
So while trying to find articles to explain to a friend of mine exactly what’s about to happen in our economy and how a ton of people are going to end up without jobs in wallstreet and then eventually all over america resulting in a crazy recession and an impending economic turmoil, i found this article that I literally thought was from The Onion…
Her comments are echoed today by Bloomberg’s Bob Ivry. “Federal Reserve Chairman Ben S. Bernanke was wrong. So were U.S. Treasury Secretary Henry Paulson and Merrill Lynch & Co. Chief Executive Officer Stanley O’Neal” he writes. “The subprime mortgage industry’s problems were contained, they all said. It turns out that the turmoil was contagious.”
Beep Beep Beep Beep [Ultragrrrl]
Update: We’ve swapped out the picture of Ultragrrrl to preserve our “reading on the monitor at work” friendly status. The original picture was too hot for even this market. (Or, maybe, especially this market since the boss may be looking for fire someone, anyone today.) Original picture after the jump.
Delving further into its favorite class war between the Haves and the Have-Mores this weekend, The New York Times found that in Silicon Valley, people who are rich don’t feel rich compared to their very rich neighbors. And they’ll try anything—even working a whopping twelve hours a day—to move into that next tax bracket. You know, the one that will make them feel a sense of superiority and self-worth and raison d’être. Just like us (you)!
Yes, many members of this “digital elite” feel bad about themselves because they are “surrounded by people with more wealth—often a lot more.” One gilded geek, Gary Kremen, pouts, “It’s just like Wall Street, where there are all these financial guys worth $7 million wondering what’s so special about them when there are all these guys worth in the hundreds of millions of dollars.” Reminds me of this story Keith likes to tell about sitting in the steam room of the 92nd Street Y with an inconsolable Daniel Seth Loeb, weeping over the fact that he made $150 million last year, sure, who cares about that when James Simons is spending that much on cigarettes annually?
But lest you think you and your West Coast brethren are too much alike, the Geek Squad makes sure to point out a notable difference: they feel bad about it. Sure, talent played a role in their good fortune, but so did “being at the right place at the right time” and many feel “sheepish, even at times guilty about their piles of cash.” See, they’re just as obsessed with money and chasing the top one-tenth of a percent (if squarely in the top one percent), or the top one-one-hundredth of one percent (if in the top one-tenth of one percent) as you, but in Silicon Valley, they’re introspective and self-doubting and have issues about their stacks of gold. Sometimes they even cry about it (when was the last time you shed some salty discharge over your bonus? And not the “I feel bad about my bonus because I got screwed out of three extra zeros so I’m going to silently weep about it in a little locked room” kind).
Which begs the question: Is it better to be a rich prick who questions his/her rich prickocity or a Dealbreaker reader? (I love you people, I do).
In Silicon Valley, Millionaires Who Don’t Feel Rich [NYT]
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Make Money Money Take Take Money Money
Answer: Working on this street will earn you the most money without holding you accountable for any of your failings.
By Bess LevinMaria Bartiromo: [Five second face]
Dennis Berman: What is Wall Street?
Yes, people, Dennis Berman’s answer (and column from yesterday’s Wall Street Journal) would suggest that he’s on to your little game. Don’t even act like you don’t know what we’re talking about. You know, and we know, and Dennis knows. You get your bonus checks every twelve months, but the risks created by your work are spread over a longer time frame. By the time your fuck-ups (sometimes monumental, other times just run-of-the-mill) are revealed, it’s too late. You’ve already blown your checks on the Wii (Sun Trust) or ten Wiis (Goldman) (and if you’re Brian Hunter, tackle and bait). What’s Bear Stearns going to do, repossess your sense of self-worth derived from buying that Scores girl a newer, bigger set of implants?
You’d have to bend over backward to a. not get an enormous bonus as a banker or trader and b. sexually harass everyone within a 100-foot, 2-floor radius (merely running the firm’s hedge fund into the ground won’t do it, right, John Costas?) to even flirt with the idea of getting canned. One “top merger banker” told Berman on Friday: “I’m underwater on every single loan on my book.”
So get out there today and buy a million shares of Homebanc Corp. Georgia, which is probably about to fold and turn into junk. Then infect yourself with HIV via a Port Authority regular and pass it on to the boss’s daughter. And don’t forget to send your numbers to tips at dealbreaker dot com so that we might update our bonus bumper to reflect your handsome reward. Wall Street: long-term is just a fancy way of saying the next period of short-term.
Best Bet Against Risk Further Down the Road May Be Wall Street Gig [WSJ]
After adding 10,000 employees in June, the U.S. Securities Industry is now 848,300 worker bees strong, higher than the March 2001 level of 840,900. This is a new all-time record, and June was the biggest single month gain in number of employees since June 2000.
Despite the record number of big winners trolling the Street, DealBook reports that with the credit crunch and arguable peak of PE/M&A deal bubble, many firms have frozen hiring. Is your firm one of them? Comment or send an email to tips at dealbreaker dot com. (There are even stirrings that…gasp…bonuses might not keep pace with last year if we’ve reached the peak of the current cycle.)
Banking jobs hit record high [Financial News via DealBook]
1928 was a great year to be a WASP—the Crash hadn’t yet happened, no one questioned the sexuality of a man who adorned his body with silk twill pocket squares, and Mein Kampf was going into its ninth printing (only to be outdone several years later by Dana Vachon’s Mergers and Acquisitions, now in it’s nine-thousandth printing). To commemorate this glorious 26-times-a-fortnight, when life was droll and full of hilarious bon mots, and to celebrate the recent opening of their Wall Street branch, Hermès is offering a limited edition version of its “Cape Cod 1928” watch (“Cape Cod Wall Street”) for your consumption, exclusively at the 15 Broad store.
Complex has deemed the piece a “little Eichmann” and notes that it perfectly captures the “homogeneous banality” of “long summers on the beach,” which was the designer’s intent. We want to agree and say something about how the wearers of these things specialize in autoerotic asphyxiation but we’re actually really into the black crocodile strap, rose gold case and sunny bronze face. Jesucristo, what’s happening to us? Look away, please. Is this what it sounds like when doves cry?
Hermès Watch Reminds Us Why Wall Street and Cape Cod Sucks [Complex]
What’s more conceivable: that there’ll be another terrorist attack on par with 9/11 or that Pennsylvania could be a stand-in for Wall Street in the event of the former coming to blows? If you’re one of the officials from the Keystone State trying to “capitalize on fears of the chaos another terrorist attack might cause in New York’s financial industry,” and hocking your product, “Wall Street West,” you’re probably crossing your fingers and hoping for both.
Catherine A. Bolton, project director of the Wall Street West consortium, maintains that PA—the Poconos specifically—is ideal because , at 100 miles west of Manhattan, it is out of the “theoretical blast zone” (to beat the terrorists, you must think like the terrorists) but still close enough to link directly to the machines running the banking and trading systems.
P-town is so excited about this idea that they’ve brushed off the suggestion that New Jersey and Connecticut might be better suited for the job (not enough Amish). Governor Edward G. Rendell announced a plan yesterday to build a $24 million network of fiber optic cables to transmit data from Manhattan to the Poconos, perhaps a bit prematurely, as the New York Times notes that there’s yet to be “any sign of serious interest from firms in the real Wall Street area.” (Our emphasis, ‘cause where does the Times get off?)
Goldman Sachs has already leased Amaranth’s old office space in Greenwich, so it seems unlikely that they’ll be persuaded to take a 3 night, 4 day stay in the most luxurious resort destination in the world. And Rendell has said that “if no one decides to come, we won’t build it.” Which is such a brilliantly defeatist statement that it might actually work.
Pennsylvania Tries to Sell Itself as Backup for Wall Street During a Disaster [NYT]
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