The Other Side of Wall StreetST
It's not very often that I do a full book review on WSO. The book has to be very, very good and offer something above and beyond the typical finance books that line my shelves. I almost didn't buy this book, it was so misrepresented in the media. I even mentioned it somewhat dismissively in my Bonus Bananas from May 20. Boy am I glad I did buy it, though, because I finished the entire book in one sitting.
The book I'm speaking of is The Other Side of Wall Street: In Business It Pays to Be an Animal, In Life It Pays to Be Yourself by Todd Harrison. It's Harrison's own story, chronicling his journey from a $28,000-a-year rookie on the Morgan Stanley equity derivatives desk, to his brief and unsatisfying stint at Galleon Group, to becoming the president of Cramer-Berkowitz (Jim Cramer's hedge fund) and writing for TheStreet.com, to finally stepping away and founding Minyanville - the home of Hoofy and Boo.
A lot of media outlets billed the book as a negative tell-all about the author's sometimes contentious relationship with Cramer. I'm here to tell you that it wasn't that at all. Quite the opposite, in fact. In the sections of the book dealing with Cramer, the author shows a tremendous amount of respect and affection for the wild man. They were (and perhaps still are) close friends and partners.
When Harrison got a phone call from the Honolulu PD that his father (whom he hadn't been in contact with in ten years) was a homeless drug addict who'd been arrested, it was Cramer who picked up the phone and called all his contacts in Hawaii to get Harrison a place to stay, flights, etc... That Jim Cramer is mercurial and perhaps a bit bi-polar will come as a shock to no one who has watched his show for more than five minutes. Harrison doesn't skewer Cramer for this, as some would have you believe. On the contrary, it was at Cramer-Berkowitz that Harrison finally made the big bucks.
A large part of his story is the financial journey he took on Wall Street, and it was rarely a smooth road. He started out at Morgan Stanley on the equity derivatives desk in 1992 making a $28,000 annual salary. He was utterly clueless, and struggled to figure out what was going on. When bonus season rolled around, everyone went to the their performance review to get their numbers. When his name was called, he was told that he was lucky to keep his job. That's right. He rolled a donut his first year in the business.
He promised to do better the next year, and started to figure some things out. He even learned how to make a market in some of the lesser-known companies no one else wanted to bother with. He felt like he really improved his game. Bonus season rolled around again, and this time he was confident he'd be looking at a fat check. Instead his boss told him to consider a new line of work. Boom. Another donut. Two years in a row at $28,000 with no bonus.
I know there's no way I would have hung in there after that level of humiliation, but Harrison stuck to it and redoubled his efforts. Year 3 was his year. He worked hard and started to specialize in bank stocks. He made it rain a bit and his total comp for 1994 jumped to $150,000. From there he was off to the races.
Despite a massive trading loss in First Interstate (the traders who read this book will absolutely cringe at what happened to him), Harrison rose to the level of Vice President at Morgan Stanley and became an accomplished, and well compensated, trader. Unfortunately, it didn't last. Management shake-ups and personality conflicts put him at odds with his new boss, and he knew it was time to go. He worked out a deal to join the new Galleon Group, led by the now infamous Raj, and then he took a page out of your old Uncle Eddie's playbook: with Morgan Stanley none the wiser, he waited for his last $500,000 bonus check to clear and then he walked out the next day.
On balance, Galleon was not a good move. He was never taken into the "inner circle" and it was made plain to him that he'd never be a partner. He received a nice salary, but no bonus after his first year there. The next year, when Galleon made hundreds of millions, his bonus was $50,000 and he was out the door.
He'd known Cramer from his days on the equity derivatives desk at Morgan, and Cramer and Jeff Berkowitz offered him a partnership and the presidency of Cramer-Berkowitz. At the time the firm was running around $400 million AUM, so they were much smaller than Galleon, but it was a good fit. Harrison's somewhat bearish outlook on tech stocks in mid-2000 led the firm to make boatloads of money when the dot com bubble burst.
Around the same time, Cramer convinced Harrison to start writing for TheStreet.com, which Cramer owned. Harrison found that he enjoyed the outlet, and it was a good way to blow off the steam of trading. He quickly found a huge audience and was almost as popular as Cramer himself (Cramer was beginning to become a TV personality at this point as well, with frequent appearances on CNBC). When bonus time rolled around that year, Todd Harrison finally got taken care of, walking away with a cool $5 million.
This book should be required reading for aspiring finance guys. It's about the evolution of a guy who was all about the money to a guy who figures out that there is far more to life than green paper. It should also be required reading for both current and future financial bloggers like myself, because the author really lays out the blueprint of how Minyanville came to be and how to be a success at financial blogging.
I can't recommend the book enough. Some parts had me laughing hysterically, because I saw so much of myself in the author. He even took it in the tailpipe on one of my deals. Focus Enhancements was a company specializing in Apple peripherals back before Apple was cool again. We took them public in 1993 and it was a bit of a disaster from the start.
I remember I bought some of the stock in my then mother-in-law's account (lesson here: never do business with family members) when the stock was cheap. For some reason, a few months later my firm decided to pump the stock up and my mother-in-law was sitting on a 25%+ return in less than six months. So naturally I sold the stock, and the stock of several other of my clients. A buddy of mine did the same thing, and he had a ton of Focus. Well, between the two of us we managed to not only kill the momentum in the stock, we managed to make the son-of-a-bitch close lower than it opened. The number 3 guy in the firm happened to be in our office that day, and you'd better believe we were lucky to keep our jobs. One of the worst reamings I've ever received.
Years later, Harrison somehow got a tip about Focus Enhancements and he took out a sizable position that quickly went to shit. This was one of the parts of the book where Cramer really came unglued, and I sat there chuckling because I remembered what the same stock had cost me years earlier.
I had a really good time reading this book, and you will too. I'm actually looking forward to re-reading it when I'm on vacation next week. Sorry about the long, rambling review, but it's not often I enjoy a financial book this much and I wanted you guys to know that it's worth the cover price and much, much more.
The Best of Braverman: Special offer for WSO readers only! Use coupon code 3off for $3 off at checkout!