Knowing what you are doing; Do you know what you are doing?

The question in the title must be always yes and always true in banking and finance.

• Don't say things you don't understand
• Don't do things you don't understand
• Don't make "educated guesses
• Say only what you know for sure, if you must, do not email, call

It sounds common sense, but you would be surprised how many bankers, buy side sell side, bull**** all the time. Even to unsophisticated clients, don't bull****. This will eventually come back to you. If you don't understand the impact of QE in the bond markets, just ask. If you don't understand how the money supply affects the equity markets, just ask. You will see that the underlying mechanism in both cases is relatively simple (I am not saying that theories underpinning these are correct, but what are taught about these things at college, reasoning is not difficult to understand).

What you learned at college stands in professional world. In Economics and Finance, things have to make sense and what we do is to create tools/theories/models to explain things, to make sense. We can't run a regression without understanding what goes on underneath it, theories that might explain the relationships.

Technical analysis, I am suing the term broadly, and some success achieved by mathematicians and rule-based trading models (that ignore underlying theories) made some people think that they can talk nonsense. If you see a weird relationship, think why it is happening. Remember most of us don't work at Renaissance Technologies and even if we try, most of us wouldn't be able to.

I have had a boss, senior bankers who knew next to nothing about finance. This was fine when things were good and everyone was making good money. It doesn't cut it now. Probably this was related to the hiring policies and misguided conception of those who go through the CV book. "Technical skills" are a complete waste without the willingness to understand an underlying mechanism in a qualitative fashion.

• It is embarrassing if you don't know ATMF if you are in fixed income space and what they do.
• It is hopeless if you don't know the role of indices or benchmarks if you work in portfolio management.
• It is embarrassing if you don't know what deferred entries are if you work in corporate finance and related areas.
• If you work in fixed income, you must understand overall macroeconomic framework or cannot explain the Black-Merton-Scholes option model based on volatility.
• If you work in buy-side, please correctly understand what "going long" means. People often use this expression as a proxy for buying one asset.

To sum up, don't talk ****. It is so easy for your reputation to fall apart, takes a long time to build it. If you have nothing concrete to say, shut up.