Wall Street Financial Truth

Chapter 4 The Truth About Wall Street (2)
That day, I came to Leonard's office 15 minutes early in a well-fitting suit.After his secretary went in to report, he asked me to wait.I picked up a magazine on the sofa outside and read it. Half an hour later, the secretary went in to remind him that I was waiting for his "summoning".He said that in another 5 minutes, let the secretary go first.As a result, I sat outside alone for three hours and couldn't rush in.Until 8 o'clock, I couldn't bear to knock on his door, but there was no response from the door.Later, I learned from the headhunter that he had already slipped away through another exit without saying hello.He also plausibly told the headhunter that it is common for us to get off work from 8:10 to 5:[-] in the evening, and this is a small test.Recently, I read an interview about Leonard in a magazine. He is already worth [-] million US dollars.

Another mean thing happened to my co-worker Ken that also stuck with me. Ken made an appointment with his girlfriend to go to France for a week's vacation. He asked his boss Sam for leave a month ago.But just the day before the holiday, Sam's boss asked Sam to hand over the work report for the next week. Sam is in a hurry because he is going to attend an important golf game and talk business with his clients.How to do? Sam pretended to forget that Ken was going on vacation to France, and he ordered Ken to finish that work report by Monday morning. Ken is extremely embarrassed, but facing a mean boss, he has to cancel his vacation and use the weekend to hand over the work that should be done by Sam on time.Now Sam is already a billionaire and owns a large tract of land in Wyoming.

Rich people are not only very mean to their superior and subordinate colleagues, but their attitude towards women is also different from ordinary people.Many rich men on Wall Street are diamond kings, so there is no shortage of beauties around them.But these diamond kingpins think:

"Marriage is a long-term investment. At a certain time, beautiful women provide beautiful appearance. We pay for beautiful women. What a fair deal. However, the beauty of beautiful women will disappear year by year, just like luxury cars, cars The value of your money has been 'Depreciation' (depreciation) the moment you get it, but our money tends to get more and more. In our jargon, every transaction has a position, and dating a beautiful woman is a 'transaction' Position' (Trading position), once the value drops, it will be sold immediately, and it is not suitable for long-term holding."

Therefore, the famous beauty social club on Wall Street has a booming business, and rich people go there to "rent" beautiful women every now and then.Spitzer, the former governor of New York State and a well-known Wall Street lawyer, is a frequent visitor there, paying rent according to the level of beautiful women, ranging from [-] to [-] US dollars per night.

As the saying goes, "A drop of water can see an ocean", from these "little things" it is not difficult to see the characteristics of Wall Street millionaires.As Zhou Libo said in the last paragraph of "Laughing and Talking about Shanghai": "The primitive accumulation of capital is shameless...how can you earn so much money without being wicked?!"

There is a saying of the Chinese ancestors, "Being rich is not benevolent", which is the embodiment of the characteristics of the rich on Wall Street.

4. A CEO’s bag of tricks

Reuters conducted polls on major financial websites in North America, asking the public to vote on whether to give high salaries to CEOs of North American companies.

The CEO is elected by the company's board of directors to take the helm of the company, and bears a fiduciary responsibility to the company and the majority of shareholders. Its quality is related to the fate of the company, and it seems understandable to take more money.If there was no financial tsunami in 2008, perhaps people would not care how much money the CEO gets.CEOs in Japan, Germany and the Nordics are usually paid 5 times, up to 7 times, and up to 10 times that of ordinary employees in other European companies.While the salary of CEOs of North American companies is 20 to 30 times higher than that of employees, the salary ratio of Wall Street CEOs to employees is as high as 50 times, or even hundreds of times, which seems a bit outrageous.Especially in this financial crisis, Wall Street CEOs ignored the interests of enterprises and shareholders, put aside their fiduciary responsibilities, and played a risky game. As a result, the company faced bankruptcy and had to rely on taxpayers to save it.Even at the point of being kicked out, tens of millions or even hundreds of millions of dollars in "bonuses" will be taken away when you get out, which is really unimaginable.People can't help asking, is the "bonus" a reward for financial predators who use immoral means to deprive society of wealth in order to maximize their personal interests?
I have worked in many major investment banks on Wall Street. Whether I listened to the company’s CEO’s big report at the Town Hall meeting, or shook hands with them at the Christmas party, I feel that they are all eloquent and charismatic. This is their style. Leadership charisma.

Ten years ago, I returned to New York from Toronto and was employed by a booming ECN company at that time.This ECN company was established by 26 large and small investment banks including Goldman Sachs and Merrill Lynch with an investment of 2 million U.S. dollars. It has dug a large number of people from Instinet (company name), the originator of ECN, including CFO (Chief Financial Officer) David, and became our company. CEO of a company.

At that time, the company was still small, with only 150 employees. David would patrol the office for a week every day at work, greet each employee, and encourage everyone to work hard. billionaire.He also took us to restaurants for dinner every now and then. It felt like he was a department manager and got along very casually with everyone.

Once at a dinner party, drunk, I dared to ask David, what exactly does your CEO do.David may also be drinking too much. He told us: "This was originally a secret. Let me tell you a story today. A company has a new CEO. When the CEO who just stepped down was leaving, he handed three letters to his successor. The numbered envelope said: "Don't worry, if you encounter problems that you can't solve in the future, just open these envelopes in order. Remember, you can only open one at a time." Hearing this, I couldn't help thinking of Zhuge Liang's clever plan, it turns out that this is also popular in the United States.

I just heard David continue: "In the first six months, everything went well. But after six months, sales performance began to decline, the market became threatening, and the stock price also fell. The new CEO felt the pressure. Just when he couldn't do anything, he Remembering the letter left by his predecessor, he opened the drawer and took out the first letter. He opened it and saw that there was only one sentence in it: 'Blame your predecessor.' (blame your predecessor)"

"Therefore, the new CEO immediately held a press conference, skillfully attributing the current decline in sales performance to the problems left by his predecessor. He is working on solutions, and sales will pick up. His words were recognized by the market, and the company's stock price Started to pick up."

"After another six months, there were many problems with the company's products, sales continued to decline, and the stock plummeted again. This time, he quickly opened the second letter from the former CEO, and saw on the piece of paper: 'Reorganize'".

"The new CEO immediately announced that the company will drastically lay off 25% of its workforce and reorganize its departments. The market will react immediately, and the company's stock will rebound quickly."

"After another few months, the company couldn't keep going. The CEO closed the office door and opened the third envelope: 'Prepare three envelopes.'"

After David finished speaking, everyone laughed. What I admire most is David's self-deprecating sense of humor.

It was just a joke.But what our company went through after "9" was such a process: first we blamed the market, then laid off employees in batches, and finally, the company was acquired by Nasdaq for $11 million, and all my departments were laid off.David got a $5 million severance package.On the day the partnership broke up, we received an email from him: "I have retired and settled in Spain. From now on, when you come to Spain to play, I will be the host."

5. On Wall Street, ethics are a luxury

People with a unique sense of justice are not suitable for Wall Street. Even if you are a genius, it is difficult to climb to the top. If you don’t believe me, listen to me tell a true story.

Dai Fan used to be my subordinate, and we developed and managed the online automatic trading system together in BRUT (company name) ECN (electronic communication network, business group).He is from Sri Lanka. He is a talented student in the computer department of the Massachusetts Institute of Technology. He was poached by Microsoft for three years and rushed to Wall Street as soon as he got his green card.

Wall Street opened Dai Fan's eyes, especially the gold medal financial analysts, who pocketed a lot of dollars as long as they moved their lips.However, it is not easy to change careers as a financial analyst. Unless you have the support of Wall Street seniors, you can only climb up step by step.Dai Fan worked hard for six years in his spare time, first got the MBA, and then got the CFA (Chartered Financial Analyst).According to the publicity of the media at the time, once you get the CFA, you will be able to rise to the top. This certificate is like a key to a treasury. Dai Fan imagined that there are a lot of jobs with a million-dollar salary waiting in front of him.

Perhaps too many people have seen the exaggerated propaganda of the media, and too many people poured into Wall Street, especially a large number of Chinese and Indians who are "examination machines" have obtained CFA, so the jobs with high salaries of millions have suddenly shrunk.As a result, when Dai Fan became a CFA, it took a lot of trouble to find a position as a junior analyst. The basic salary did not rise but fell. Fortunately, the boss promised that the bonus would not be capped.

On the first day of work, the boss gave him a "BlackBerry" mobile phone, and he had to be on call 24 hours a day like an obstetrician; he buried himself in piles of documents and data every day, doing income analysis, cash flow assessment and researching the balance sheet; Write at least three reports for big-name analysts every day, providing reference for those masters to issue "buy", "sell" and "hold" recommendations to investors.It's really "working harder than a donkey, eating worse than a pig, getting up earlier than a chicken, getting off work later than a lady, pretending to be better than a grandson, and looking better than anyone else."

It's okay to be a little tired, because Dai Fan's analysis and suggestions have played a considerable role in the stock price.Often when a stock is recommended to "buy," the price magically rises.And when he suggested to "sell" a stock, the stock price fell like a ghost, as if he was directing the ups and downs of the stock market. This kind of satisfaction made Dai Fan forget his fatigue and feel that his efforts were rewarded.

However, Dai Fan gradually discovered that he often had to cheat.Once, a client in his hand wanted to price the employee's share placement, and the boss specified that Dai Fan must lower the rating of this client.But according to the financial report analysis of that company, it is a good time to buy, and it should be 'Strong buy' (strongly recommended to buy).He had already stepped back and gave a "buy" recommendation, but was scolded by his "gold analyst" boss: "The customer is God, you don't want to do it anymore." False "selling evidence", the result can be imagined, the company's stock price fell by 4.5% the next day...

Only then did Dai Fan deeply understand the mantra of Wall Street financial analysts: 'Revenue is nothing, margin and profit is everything. (Turnover is nothing, profit is everything)'
Soon, Dai Fan encountered "moral challenges" again.There is a milk company whose income column is very good, which is not surprising, because it is the third largest milk distribution company in North America, but its profits are not very good, and the stock price of course cannot go up.The milk distribution company paid a huge sum of money to ask Dai Fan's company to make a "strong buy" assessment to improve the stock price.

Dai Fan received a task to study several latest scientific research reports and found that Orientals, especially Oriental adults, are not suitable for drinking milk at all, because the genes in the body cannot absorb the nutrients in milk.Moreover, because the current dairy cows generally use chemical feed, Asians are sensitive to milk.It’s no wonder that many of my buddies around me are often “crying bitterly” after immigrating to North America. Women who drink milk for many years may even get breast cancer.Even though Westerners are mostly due to overnutrition, drinking milk does not have much effect on strengthening the body.

Dai Fan is a devout Buddhist, one abstains from killing, and the other is not to tell lies.This time, his moral bottom line was touched. No matter how much his boss forced him, he couldn't write a "buy" report. Of course, he would be laid off and leave!Now Dai Fan is more relaxed, and he is still working in his old profession - computer engineer.

When a financial analyst is hired by a company, he has to listen to the company, and when the company takes money from the client, he has to listen to the client, even if he has to turn black and white out of conscience, as long as there is profit.

So, on Wall Street, morality is a luxury.

The rules of Wall Street are the "law of the jungle". Moral people cannot survive in this primitive jungle. Morality is like a bunny, weak and defenseless.

Take the example of a Wall Street employment relationship.During the 16 years I spent on Wall Street before, ordinary employees had a performance evaluation every year. They were rated on a scale of [-], [-], [-], [-], and [-], with one being the best and five being the worst.

Let me first talk about how the evaluation is carried out. It includes the evaluation of your boss, your colleagues and customers, and then a total score.

A rating of five is the worst, basically 5% to 10% of people get a rating of five.For those who get five, you don't need to tell the boss, just pack up and leave.

Because, if you have to wait until the company lays you off, it will be miserable in the future.Once you are laid off on Wall Street, this is a bad record, and it is very difficult for other financial systems on Wall Street to get in again, which is quite cruel.

For those who have scored four, after three or six months, if the performance does not improve, and others do not have obvious praise for you, you can almost leave.

Now, there are basically 10 to 12 levels on Wall Street, and if you go to level 1, your position and salary will also increase.This sounds good, but it’s the same as the high jump. As the level rises, the high jump bar moves up. Next year you have to jump this height. If you can’t jump next year, you will come down.

Wall Street uses this mechanism to push everyone to the limit.

The same goes for CEOs.I used to work at CSFB (Credit Suisse First Boston). At that time, the parent company Credit Suisse had two CEOs. One was my boss at that time named Mike Big Knife, and the other was a CEO from Europe.

Big Knife Mike is quite famous on Wall Street and is also a strong man, but one mountain cannot accommodate two tigers. He failed in the competition and came down.

I later worked in Bank of America, and the CEO at that time was also well-known, named Louis.This boss started from a young age and has been able to "call the wind and rain" on Wall Street.But during the financial crisis, during the merger with Merrill Lynch, he was tricked by Merrill Lynch, and in the end he couldn't even be the chairman or CEO.

The whole of Wall Street is basically the same. Like Lehman Brothers, it was once one of the top five investment banks on Wall Street, but it lost [-] billion in the financial crisis. No bank loaned it, so it could not get [-] billion.The boss called Buffett a few times at that time, but failed to save him.Lehman Brothers is not in the circle of Goldman Sachs. They say they let you fall, and they let you fall. This is the rule of Wall Street.

On Wall Street, it is completely impossible to use moral constraints.Moral people cannot survive on Wall Street.Because you are dancing with wolves, if you want to play with him, you can only be tougher than him, if you want to survive, you have to be tougher than him.

China is now in line with Wall Street, and is also dealing with Wall Street investment banks. You must pay attention to this point. You must treat it like a wolf, and you must not be polite to it at all, otherwise you will become a sheep in its mouth.

Remember: Wall Street is here to plunder your wealth, not to help you make money!If you are more powerful, go and plunder the wealth of Wall Street!
(End of this chapter)