Trading Rules

I started at a small buyside shop a couple months ago. I do not like that I have to get permission for all of my personal trades. I don’t want others to know what I am doing in my personal account. Not because I am doing anything unethical, but because I don’t want to be judged by my decisions. Everything has to go through my CEO. For example, say I wanted to buy Wal-Mart, but I knew the CEO didn’t like Wal-Mart right now. I still have to tell him and he may judge me by that. I don’t want to get judged by decisions that affect only my own wealth, and not the company I work for.

I can’t imagine them judging you for that. Its a legal issue. They need to make sure you’re not doing anything unethical, because they will likely be on the line as well. If my boss judged me based on what I put in my PA I would definitely be looking for the exit.

lol, i was on the wrong side of platinum today. ouch. I can’t imagine what the professional traders would say if they knew.

So it is a silly concern?

It’s a moot concern. Can’t do anything about it anyway

Yeah, I’ve never seen any professional traders do anything silly. Your CEO won’t give a rat’s behind if you buy Wal-Mart (unless it is on a restricted list or something at your company or similar)

You guys are crazy if you dont think the CEO/PM judge you by your stock picks in your PA, especially if your function is equity research.

negativefcf Wrote: ------------------------------------------------------- > You guys are crazy if you dont think the CEO/PM > judge you by your stock picks in your PA, > especially if your function is equity research. and my function is equity research

How many other people know about it?

I don’t know. I think the CEO has a lot of other things on his/her mind than whether your PA makes sense. Remember that individual positions may seem very strange but then make sense in the context of an entire portfolio. So they see that you’re buying Wal-Mart, but maybe you’re buying it, or maybe you’re covering a short, or maybe you’re changing the direction of a derivative position, or maybe you’re involved in a pair trade because you think Wal-Mart will outperform Target. Figuring out if it’s a smart move or not takes a lot of energy and context, and if the CEO is spending time trying to figure out your strategy, he’s probably not paying enough attention to how the business is running.

Wow, if your CEO has to approve your personal trade, you must in a “really” small shop or you are a top-dog in your firm. You should be in the industry long enough to know that this is a legal issue. There is no way you can get around that (regarless how you are going to be judgeed)…remember, for ER, you only have to be correct 51% of the time.

Yes, I am in a small shop. I also understand the “why” of it for legal reasons. I just don’t like it. I have to let the CEO know because he runs a hedge fund for the corporation, and he is basically the only person that knows about some of the trades.

I just had an interview with a place that had 70-80 employees. I walked into the lobby and the receptionist was away but on the receptionist’s counter/desk were a bunch of account statements from retail brokers. It was obviously her job to track them but she left them out for the world to see!?!

I’m pretty sure I don’t get judged by our compliance officer, or else that $3 purchase of Thornburg Wednesday would surely have classified me as “vermin” in the caste system of buy-side finance…

to the extent that ERs would be judged by stock picks in their PA, surely the CEO would be caught up in other management matters to be micro-managing employees’ personal matters to this degree?!

Boy, I am in a cranky mood this morning… Here’s a few facts that your CEO knows: a) There are reasons to buy nearly any listed stock. There is nobody out there who can tell you with any certainty that any particular stock is overpriced or too risky. If they could, they should be making huge bucks on market neutral trading. b) Your personal goals in equity investing are likely to be quite different than the goals of the firm’s equity trading. The equities you buy should be significantly different than the ones that the firm buys. c) You should be steering clear of equities in your firm’s portfolios anyway because you already get paid on the success of those picks and you do’t want any problems with front-running or restricted list. Your CEO wants you in different names than the firm is trading. d) Good equity investing is about integrating your equity portfolio into your overall portfolio of assets and life risks. Your CEO doesn’t know about those things (or you have been sharing too much at work) and doesn’t have context to judge your “picks”. e) People buy dumb stuff just because they want to own it. I know a guy who bought BRK-A just to say that he owned it and because he liked having the annual reports around his office. A compliance person or CEO who came up to me and questioned my individual picks (not for some compliance reason, in which case I would listen very attentively) would get enough condescension that they would leave pretty quickly.