The end of Wall St's Boom

T]he willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue. It’s an inherently flawed system, one that Lewis thought would crack years ago, but it appears as though its finally going to happen. In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces? At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system. Then came Meredith Whitney with news. Whitney was an obscure analyst of financial firms for Oppenheimer Securities who, on October 31, 2007, ceased to be obscure. On that day, she predicted that Citigroup had so mismanaged its affairs that it would need to slash its dividend or go bust. It’s never entirely clear on any given day what causes what in the stock market, but it was pretty obvious that on October 31, Meredith Whitney caused the market in financial stocks to crash. By the end of the trading day, a woman whom basically no one had ever heard of had shaved $369 billion off the value of financial firms in the market. Four days later, Citigroup’s C.E.O., Chuck Prince, resigned. In January, Citigroup slashed its dividend. http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom#page2

heh "In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000. "

STFU. The boom will return.

FINforLIL Wrote: ------------------------------------------------------- > STFU. The boom will return. You know, in sailing that’s a warning, not a promise of good times.

Love how people speculate that Wall St. will never experience a boom ever again. It runs in cycles, just like everything else.

I imagine some foolish prognosticator said that in every boom/bust cycle since the beginning of exchanges. Do you think humanity will decide that disaggregation is the “new thing” and finds it hugely beneficial to have tremendous friction, dead weight loss, and high transaction costs? Yeah, I didn’t think so.

Thanks for posting the link. enjoyed the read.

Please realize what I post is sharing links, not necessarily what I believe

these things do go in cycles; the question is how long these cycles are. The boom may not return quickly enough to take advantage of it; at least from a career perspective.

"Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces? " So true…

Sorry chap (author), when you are in a position involving allocating billions of dollars of capital, you will be rewarded handsomely.

dlpicket Wrote: ------------------------------------------------------- > FINforLIL Wrote: > -------------------------------------------------- > ----- > > STFU. The boom will return. > > You know, in sailing that’s a warning, not a > promise of good times. LOL, classic, and i speak from brief sailing experience.

I don’t think he’s talking about cycles, he is simply saying Wall Street and the whole financial market concept is flawed… He is saying this scam cannot be sustained. I’m just trying to help with the interpretation.

This confirms it–Micheal Lewis is officially the biggest Douce on the planet. It’s funny, he talks so much trash about Wall Street, but would anyone have read ‘Moneyball’ or ‘The Blind Side’ if he had never written ‘Liar’s Poker’?

All I got to say is FK Wall Street. It’s a massive scam that once again is coming on glued, but this time the scammers are the one’s that are NOT having the last laugh. Ye, the music stopped playing before they could get the loans off their books. They ran out of suckers to sell to, so they ended up being the suckers. Good for them. They had an eye on profits and no eye on common sense. Like Andy Layde stated, most of these guys on Wall Street are idiots, trust-fund babies accustomed to the highlife that was fed to them on a silver spoon. I would go out to client dinners and talk to sell-side whippersnappers in their mid-twenties, like myself, and hear them lament over how their bonus might be as little as 50% of their salary due to the unfolding credit-crunch. I would ask, “how is the trading desk doing?” and they would reply, “it’s a difficult year, very little balance sheet, on top of very little profits” and I would say “dude, your bonus should be ZERO!” (just kidding I wasn’t that open about my thoughts) As I mentioned before, I work for a buy-side firm managing Emerging Markets money and it is beyond belief to me that NOT ONE, NOT ONE, sell-side analyst/strategist (I’m not even talking about salesmen) saw this bust coming. It’s truly sickening. I would chuckle to myself each time that salesmen or these sell-side strategists would pitch to me and my group to sell-protection on X country at 50bps or buy a range accrual on Y country spanning 50bps - 100bps. 50bps!!! for X-country with twin-deficits. I took the other side each time. I have sales people, seems like each day, drowning in their sorrows telling me their 401k and personal accounts have been hit hard, but they’re still holding because “the government is going to turn things around.” Good luck. What’s the best job out there right now? Entrapreneurism. If you’re a fan of Wall Street, think deep to figure out what the next ponzi scheme is and how to profit off of it. I have to warn you though, it will be years before people fall for it and put money in your pocket. Best of luck.

cfa_gremlin Wrote: ------------------------------------------------------- > What’s the best job out there right now? > Entrapreneurism. If you’re a fan of Wall Street, > think deep to figure out what the next ponzi > scheme is and how to profit off of it. I have to > warn you though, it will be years before people > fall for it and put money in your pocket. Best of > luck. Come on now, with interest rates and asset prices where they are do you REALLY think it will take years?

cfa_gremlin Wrote: ------------------------------------------------------- > What’s the best job out there right now? > Entrapreneurism. If you’re a fan of Wall Street, > think deep to figure out what the next ponzi > scheme is and how to profit off of it. I have to > warn you though, it will be years before people > fall for it and put money in your pocket. Best of > luck. Come on now, with interest rates and asset prices where they are do you REALLY think it will take years?

From the comments to that article. On a personal note… I have been pursuing a CFA designation and had ambitions to work as an analyst for a wall street investment bank (maybe I can start my own now that they are “extinct”) or hedge fund. Right now I feel lost, as if my ambitions have been misdirected, swayed by materialism and my own greed. I read Liar’s Poker, and I have to admit that I too saw it as a how to guide. This article, however, really hit it home for me. I’m starting to do some soul searching and trying to figure out what I really want out of life. I’m not so sure that I want to continue on my path even though so much time and effort have been invested on my part. That line about Gutfreund weeping at the Wall Street panel at Columbia really spoke to me. I think I want to find something more meaningful to do with my life, I just don’t know what it is. But enough about my personal problems. Again, great article!!! By Dmitriy

I dunno… the stellar salaries always appealed to me, but I’m more drawn to markets because it’s just so darned INTERESTING to try to think these things through. I’d be happy to do this for only enough to have a modest existence, a hope for retirement without fear of poverty, enough money to care for and educate kids, and the chance to splurge on a modest vacation once or twice a year. The only reasons I’d want more than that are: 1) Compensation for endless stress and sleepless nights (happy to give the money up for less stress - except that the stress just comes with the job). 2) The assumption others make that if you’re not paid in line with the market, you must not be very good. If I ever did find myself with millions and millions, then I’d direct some or most of that to charitable work (similar to stuff that I did in the first half of my career). The remainder I’d direct to my family.

bchad, we are all in this for similar reasons, and we are all stuck in something we like.