What's with the stigma against finance?
When I tell people that I want to be a financier, they look at me horrified as if I just said that I wanted to rob a bank. There are some negative stereotypes of the greedy banker circulating in the general layman society, which are somewhat true--most of us are in it for the money, but we're not all Madoffs or Jordan Belforts either. I think it's the media portrayal of Goldman Sachs and Gordon Gekko that give our profession a bad rep.
Which brings me to my question. Wtf is wrong with trying to make money? It's like a sin nowadays. Everybody wants to make money, but financiers just want it more than others. It's as if people are jealous that financiers get paid so much or something. "People who think money is the root of all evil don't fucking have any."
I only get that from people studying politics, and they are long haired hippie douchebags who have no human rights or say anyway.
oh and from poor jealous people, but fk them
the slogan of the top 2% in this country..
Making money is not bad per se. Under the original capitalist system, the free markets acted like a voting system - by allowing people to "vote" where they spend their money, entrepreneurs with foresight were able to create companies that did amazing things, while making a ton of money (e.g. Facebook, Microsoft, Oracle etc.)
However, what you have in the United States now is a kind of rampant capitalism that has no ostensible value. For example - the whole 2008 meltdown was precipitated by Wall Street banks creating exotic derivatives based on CDO's. Lenders (and Wall Street) engaged in predatory lending practices against "Main Street" (who didnt know any better), and after a while, when the whole system collapsed, millions of Americans were left without homes / jobs while the Financial Institutions that instigated the entire problem got a $700 billion tax bailout paid for by the American people.
When your top tier talent at Ivy League institutions are choosing to go into banking / finance / prop-trading because they are saddled with 6-figure debt and the promise of a fast way to pay them off instead of fields like science, engineering, technology -- that is a long term problem. American primacy is driven by innovation, which in turn is driven by talented individuals. Nowadays, in most tech/sciences fields, most of PhD's are foreign nationals, and as opportunities increase in their home-countries, they will choose to go back.
The long-term implications are serious. Over the long-run, if the US continues down this trajectory, it will inevitably lose its hegemonic status in the world, while other regions increasingly become hubs of innovation and growth.
You forgot to mention that individuals on Main Street were the ones who took out the 'liar loans' that made those CDO's possible. When you consciously sign a legally binding contact stating that you will pay back $X every month then you ARE obligated to do so and you are NOT getting fucked over when the bank says you actually have to pay back the money you borrowed. It isn't Wall Street's fault you make $30k a year but want you want to live in an $800k house. The recession was caused by the questionable activities of BOTH Wall Street and Main Street; to say otherwise is to lie.
OP - the stigma against Wall Street is nothing more than scapegoating
Touchdown ---
Yes, the people on Wall Street did take out the "liar loans". You had Ivy-league educated financiers on Wall Street creating exotic asset classes, and writing complicated legal/financial contracts for these loans. You expect that the average-joe in Main Street USA to truly understand the catch-22's embedded within these contracts???
Wall Street TRICKED people into signing these loans with interests rates that jumped up after 2-years. The average joe could not possibly understand the implications of these loans, and it was not explained to them in most cases because the system was set up in such a way that the loan-agencies did not want these people to understand what they were getting into. Because of securitization, the loan-underwriters had no skin in the game - these things were just sold to someone else later on so as long as they underwrote loans, everyone made money.
Just because technically people did sign these documents does not make what Wall-Street did right. The people holding all the cards should have the moral obligation not to take advantage of the people who don't know any better.
And by the way, for all the monkeys that are fervently defending Wall Street - we're not the capitalists either. We're in a sense, another exploited asset class for the true 'capitalists' sitting atop the pile of money they're making every year.
So its our fault that the avg joe didnt understand what he was signing? Isnt the first rule of signing a contract to understand EVERYTHING in that contract? I fail to see how avg Joe was such a retard that he signed a 800k house on his 30k salary. But thats what America is nowadays, full of retards.
Wall street packaged these deals, nothing more. Sure they are somewhat to blame, but the people who DEFAULTED on these loans are to blame. That and Barney Frank and his retarded bill.
Also the avg main street person is just jealous. Thats what America is full of these days, jealous, lazy people. An Indian immigrant told me and observation of his one day. He said that Americans are born believing and taught all the way that they are the equal of anyone else. That no one is really better than them, no matter what. hat is why a janitor will, at a level so fundamental that I find it hard to describe, consider himself the flat out equal of a CEO, even though he's bowing and scraping to that executive every day.
All well and good, except for the fact that banks want individuals/Main St. folks to 'own up' to their debts and their mistakes, while they have passed off their own mishaps onto the American taxpayers to what will amount to the trillions of dollars. Structural advantages afforded to the largest of banks also let them get involved in practices that would be considered usury anywhere else via borrowing dollars at extremely low, otherwise unavailable, interest rates from the Fed. Further, in the case of many of these housing scandals, there was outright fraud on the part of the underwriters and the banks in getting more loans to be processed. It of course takes two to tango, but people who are certified by various gov't agencies and the like who then commit fraud also hold a greater amount of blame when it all comes crashing down.
After reading your posts, I honestly wonder if you've ever been to college. Such a baffling response would not be expected by a literate, educated person.
Just because he is disagreeing with you, it makes him a ib failure? Wtf is behind that logic. You are a first year analyst calm the fuck down, step off the fucking ladder you are nothing but a monkey, so don't act like Lloyd Blankfien.
Yes, it isn't the bank's fault all-together but packaging them which provided more liquidity into the market when they knew all along that some of these MBS' were nothing more than crap is. America isn't full of retards, this country is a great country, your answer is the reason why people hate financiers. You come across as a pretentious prick.
Again, most "Main St" people don't give a shit nor are they jealous. They see the tax-payer them footing the bill and then getting screwed. The problem is idiots like you who think they are God's gift to man because you know the formula for wacc.
Fuck off.
Actually, ibhopeful is saying some pretty thoughtful things and making some sense. I've posted extensively on the crisis and its causes and don't feel like rehashing to some dickhead first year analyst who thinks he's hot shit and was in intro-to-econ 101 while the crisis was actually going down.
In all seriousness, I recommend you read the Levin-Coburn Report on the Financial Crisis as a solid primer to understanding the true nature of the crisis. Here is a link to it: http://levin.senate.gov/newsroom/release.cfm?id=332491
Additionally, there are a number of books out there on the subject, movies, documentaries, etc. It's very easy to educate yourself on the topic, just be sure to take off your ibanking-shill horse blinders when you do your research.
And get the fuck off your ibanking analyst high horse. I did the job and am now in PE, and guess what? Both of them aren't all that special. But, if telling yourself that you're some sort of King of capitalism and all that is right with the world makes it easier for you to turn presentation edits at 2am on Sunday night, then keep it up.
Fucking faggot.
I never said that what Wall Street did was right, nor is that the point of this thread. I was merely saying that Wall Street has been purported to be the sole cause of the recession, which is an idea that is not congruent with reality. Main Street DOES bear some level of accountability for their actions IN ADDITION to the wrongs committed by Wall Street and loan agencies. All three played a role in the downfall, from the office assistant feeling she should live in a $600,000 home to the loan agent using aggressive signing tactics to the guys on the Street securitizing the faulty loans / rating them as "safe."
I am not talking about the level of wrongdoing of each party involved - I am simply stating that Wall Street should NOT be blamed as the SOLE cause of the recession, although it certainly did play a part.
Very few people I have encountered--actually none to be quite honest--believe that Wall Street is 100% to blame. They do likely hold the largest brunt of the blame for many reasons as have been discussed in this thread and are the easiest for people to get angry about since it is an easily identifiable target that still receives gov't assistance in many forms and through the courts to help justify their actions, while the same cannot be said for most Main St. folks, some of whom continue to face setbacks with unemployment and the like.
No I don't expect them to understand. Nor does it matter if they actually do. In (almost) every case, a legal contract requiring a signature will bear some form of the statement: "In signing this document you understand and agree to all of the clauses that the contract entails," etcetera. The act of signing implies that you DO understand and is upheld WHETHER YOU ACTUALLY DO OR NOT. In signing the document you throw away your right to claim "I did not understand..." given that you have endorsed the statement that you DID understand.
After you sign the document, you are subject to whatever the document entails, whether you understand it / like it / can afford it / feel it, etcetera.
I am not saying that this is good or bad, just that this is how the legal system/the world works. Signatures matter. *A signature is NOT only relevant when the contract signed benefits the signee.
For as much as it bothers me, I have never been able to get this belief into my head. I am a generally nice person and am not cold hearted, or trying to sound bad-ass or something, I just simply do not see it... It's like something does not click in my head, and this claim makes no sense to me. Countless people have tried explaining it to me, had an argument the other day over this point exactly. I just don't see why if someone doesn't now any better, it becomes a responsibility of other people's to look out for them like that. I wouldn't expect someone to do that for me, in smaller situations in the past even I have not. I just don't see it. It's not that I argue FOR the opposite either, it's just that I don't see this side of it. I don't know.
Its not truely even the streets fault. Its not like ibankers went out and gave people morgtages.
Here are a few reasons that there is a "stigma". First off there is the fact that Wall Streeters aren't like Main Streeters, Wall Street tends to be more driven, more intelligent, better educated and significantly wealthier. It also has a lot of minorities i.e. Asians, Indians, Jews; there is a lot of hate, think the "Jews control the banks" and similar canards. Secondly most people have no idea what IB or S&T is. Thirdly the mislaid blame of retail banks onto Investment Banks. Finally it is the fact that the liberal media hates IB.
Sorry about your Ivy-rejection Malarki. I'm not going to dignify your ape-ish reply with a response. People like you are the problem. Ignorance breeds ignorance.
But I agree with you - America is increasingly full of idiots. Except these 'idiots' aren't limited to Main Street USA. They're taking over Wall Street as well.
And I didnt go to an Ivy, I went somewhere thats better than any of the low tier ivys. Sorry Cornell/Brown doesnt count as an ivy.
just that line tells me that you are an immature teenager. The fact that say Cornell and Brown are not ivies just shows your blatant ignorance. Brown is a world renowned school as is Cornell. Cornell had 11 people hired at just 1 BB. Also it is known as one of the hardest universities and has a top engineering program.
Brown placed more than 15 people into BB that I know of. Again, sorry you did not get into an ivy. There are not many schools that are better than the ivies and in actuality, you would probably have to consider them equal.
For example: Stanford and MIT are great schools but their alumin network is not as large and you can get the same education at any ivy. Also, there are no tiers within the ivy's as well. They are all great schools.
Alright guys geezes... at least PRETEND to show some compassion???....
Tobywashere --- I agree with the premise that structural inequality exists in any society, and there's not much we can do to eliminate it. However, your assumption is wrong. I.e. Do you really think that inequality is perpetuated just because some people "work harder" / "are more intelligent" than others? To be sure, yes, America probably is one of the most socially mobile countries in the world - opportunities do appear for those with the enterprise to seek it.
But don't delude yourself for one second that growing income inequality in this country is perpetuated simply because some people "work harder / smarter" than others. The people with capital have the ability to structurally change the rules in their favor... and that will be perpetuated over time until the discrepancy between the management level and the working class is so great that you get something a la Marx's proletariat revolution.
Dudes, all of us are fucking monkey analysts at various banks. You do realize that in exchange for relatively insignificant amounts of money, we are sacrificing our health, our relationships, our families in order to make the higher ups a LOT MORE money right?
'U JELLY' of Lloyd Blankfein, John Paulson, et al? You're a BB analyst. Don't fucking delude yourself one second that you're among the "IN" crowd. We're just the peons.
@Malarki,
I don't want to argue with you, or anyone else. Perspective is always good. There's nothing wrong with finance, but I hope for the sake of this country, and for the sake of the progression of humanity that we all keep the bigger picture in mind. With our one wild and precious life on this earth, hopefully, we'll all do something that allows the next generations of humanity to live in a better world than the one we inherited.
'For what does it profit a man if he gains the whole world and loses or forfeits himself?'
^Im sorry you dont understand the financial crisis. I dont even know where to begin with your post. Im far too lazy to teach you how the financial meltdown happened. As for your point on borrowing trillions of dollars, yes. The banks did, they also payed it back with interest in a few years. Have you paid back your 700k loan?
And most of my posts are just trollling/shooting the shit. The board went to hell approx a year ago. It was better back then when the trolls were Dan Bush.
And most of my posts are just trollling/shooting the shit. The board went to hell approx a year ago. It was better back then when the trolls were Dan Bush.[/quote]
Please, I would love to hear your great history lesson on the topic. I'm sure most people would here as well. You seem to have such brilliant insight on this topic.
Borrowing money at essentially 0% in TARP and TALF and paying nearly 0 interest on it years later is your idea of how healthy, ethical, and well run corporations should be allowed to act? Having the government provide non-recourse, no-to-low interest loans to banks to purchase various assets from one another is your idea of how a free-market capitalist banking system should run. Mind you, Citi never paid back their debts and just had converted into equity instead. I personally never realized any of this was considered appropriate, ethical, or in the spirit of a free-market at all.
I look forward to receiving a crash course in the financial crisis from you. Thanks.
Please, I would love to hear your great history lesson on the topic. I'm sure most people would here as well. You seem to have such brilliant insight on this topic.
Borrowing money at essentially 0% in TARP and TALF and paying nearly 0 interest on it years later is your idea of how healthy, ethical, and well run corporations should be allowed to act? Having the government provide non-recourse, no-to-low interest loans to banks to purchase various assets from one another is your idea of how a free-market capitalist banking system should run. Mind you, Citi never paid back their debts and just had converted into equity instead. I personally never realized any of this was considered appropriate, ethical, or in the spirit of a free-market at all.
I look forward to receiving a crash course in the financial crisis from you. Thanks.[/quote]
The banks paid back the loan, end of discussion. It doesn't matter what the interest rate on the loan was... look at the government... they haven't paid off shit when it comes to their loans, so your argument doesn't hold a lot of weight. When looking at the contributors to the crisis, the financial institutions are the only ones who really took it on the chin, paid for their mistake and moved on. Meanwhile, the government continues to rack up debt, as do the American people. People, at the end of the day, are going to hate on those who are more successful than themselves. No one was complaining about leverage when these firms were helping their clients earn double digit returns year after year.
What pisses me off more than anything is how congress seems to slide by with no one calling them out for making horse shit laws that to an extent force banks to take on loosing loans in order to "improve" poor neighborhoods.
the crisis is mainly the regulators fault.
Wall street just aims to maximize profits in the given regulatory framework, its not the players job to make sure the games rules are set correctly.
Main street will take advantage of cheap loans, since they do not understand the term papers, and again it is not their job to ensure the rules of the games are set out correctly.
The problem arises due to lobbying where wall street changes regulations, that is where the real issue lies.
Except, Main St. has to live with the consequences. They go into bankruptcy. They lose their homes. They potentially lose their jobs. Individuals that lied can go and have already gone to jail.
How many traders and bankers from Wall St. are in jail? How many received large bonuses from their failing banks or from taxpayer money? How many banks would have gone under if not for gov't loans with very favorable terms not available to msot of the public?
Except, Main St. has to live with the consequences. They go into bankruptcy. They lose their homes. They potentially lose their jobs. Individuals that lied can go and have already gone to jail.
How many traders and bankers from Wall St. are in jail? How many received large bonuses from their failing banks or from taxpayer money? How many banks would have gone under if not for gov't loans with very favorable terms not available to most of the public?
greed. everyone is greedy... average joe is greedy for taking out a loan, but wallstreet is greedy for pushing them tryin to make profits no matter how
however, i think that the reason people who keep putting the blame on wall street is that, with some of the top talent in the U.S. (and around the world, for that matter), you would think that THEY were the ones who should have tried to avoid reckless lending practices
Wall Street has the intelligence and foresight (more than the average joe) and should have realized what was going on, put in more stringent requirements, or for that matter, stop giving out loans/mortgages/etc.
Do you know how dumb it looks to the whole world after we've put everyone through a huge financial crisis and then just point to the lazy ass average joes of america who don't know shit and say "they did it. it's their fault"
Its because they believed their guidance counsellors when they said to "find a job you like." The only problem with that is they don't like to do anything when they've been living off of wealth that has been created over the past several generations. They do not associate work with wealth. Everything has been easy for them, and now they are graduating college with degrees that are increasingly worthless to the job market. Suddenly things aren't so easy, and they justify their lack of income by pretending they planned it that way.
On the other hand, I think people just like to bitch about things. I would take their derision with a grain of salt.
They are all just jealous that they aren't making the same money as we are. So they decide to make us out like crooks to give them selves a feeling like they had done something right and moral by not "stooping to our level" when really they know inside themselves, deep down, they just fucked up when they got out of high school. Simple as that.
Look, this woman i knew got a loan for a million dollars to buy a house. She makes 28k a year doing daycare. She had another house that she rented out (got in the divorce) but she could barely make the payments. Fact is, she shouldn't have gotten the loan and she shouldn't have been stupid enough to ask for the loan.
Both parties should get some blame here. While the loans were made to idiots, idiots should take some responsibility for signing that shit. When did grown adults become minors who should not be held accountable for their actions?
In the end of the day, they're jealous they can't get in and are stuck in their crappy jobs. Fuck them, do what you want. If you worked your ass off to get a position, kudos. I like how in our society, people always say, "Get an education and be successful". But they don't talk about the extra part that most people imply "..but don't be way more successful than me."
http://www.wallstreetoasis.com/forums/whats-worse-hippies-or-hipsters
Jobs are like women.
Finance is a tall blonde with a nice ass and perky tits. Yes, it is possible to love her based on genuine interest and to help her out of genuine concern. But for some reason the guys who she is with are the assholes talking to her are completely uninterested, could care less about how she is doing, and simply want to bang.
Social work is the ugly fat chick with braces and acne. If you see a guy hooking up with her you know he is either insane or has a genuine deep connection because he sure as hell isn't in it for the ride.
Both girls need love too but since the hot one attracts nice and mean guys, and nice guys never win you end up with a lot of assholes. Also, both girls have the potential to go through some rough times and when the former goes through some rough times you raise your eyebrow at the guy (cause you know its not beyond him to have done something like sleep with her sister) and when the later goes sour you do not jump to conclusions.
But then again there is the hot girl who finds the nice guy who genuinely loves her and everyone goes awwwwwwww
Long story short, if it's a good fit for you, who cares what anyone else thinks? There's a million viewpoints on everything and you need to do what's best for you. It's easy to hate on Wall Street, but at the end of the day it's a JOB.
Hahaha
^cibo,
i don't think people are jealous of ibanker's successes
if steve jobs walked by, the average person would show him respect with his achievements
for average people, they don't understand/care what wall street guys do. they do know, however, that the big banks were partly to blame for the financial crisis. end of story
again... putting the blame on morons who earned 28k and wanted to take out a million dollar in loans is like making fun of retarded people.
wall street hires the best talent, from ivies, the smartest people from around the world. WE should have said "no" to people coming for loans. WE should have imposed stricter regulations. WE're smarter than those idiots who kept asking for loans who don't know better... seriously.
They are just envious.
They realize that you will make more money than them. It's human nature.
The next time it comes up, just ask them - U JELLY?
It's simple guys. I can't believe all this discussion is about financial crisis. The bankers stigma transcends that. It gets amplified during financial crisis, but its there during non crisis years too.
And the reason is simple - banking as an industry will always be on top of other industries due to the very design of reserve banking system. Banks are making something that buys anything else from other industry - money. To give an analogy, let's look at a different kind of system - communist system. In communist system, by the very design of it, those who are distributing the "common" pool of goods and deciding who"deserves" more and less, will always be on top of compensation chain. At least in capitalism you get banks competing against each other, so it makes it slightly better, hence the long hours. But lets come back to the main question, why are bankers getting paid so high? You may say intelligence, long hours, etc. That's partly true, I am sure many intelligent/rational individuals, being aware of the system and its rewards, will try to get into banking, thus making the claim partly correct, but in the end its the system that matters. If only idiots self-selected into banking, it would still be the highest paid jobs.
That alone is enough to make many people upset. Put in the recent bailouts, "failing" banks paying huge bonuses to staff, that's enough substance to make most rational individuals furious already. Further, I would be willing to put forward a theory that banks benefit from skewed income distribution, where small fraction of society holds most of the wealth - since they need to store in the banks, and here comes all the meat for hedge funds, etc. If true, the latter point would have the most disastrous consequences for society as a whole, and would totally justify the hatred of banks. But I see reasons why banks should have interest in more balance income distribution too, so not convinced yet if the main premise of this thought is true.
While you all present valid reasons to justify the hatred or to defend it. I have a simple statement Wall Street has selective hearing as does Main Street. Wall street plays the we paid the loans back with interest card yet glances over the problems the downturn created for main street. Main street does the same thing they focus solely on the problems that were caused partly by financial frims, yet they conveniently skim over the fact that a large majority of them made bad investments in their houses, spent money like it was on fire, racked up tons of debt that they realisticly had no way of repaying.
It comes full circle nothing will change if everyone points a finger at everyone else. The root of the problem needs to be fixed before the tensions will go away. The real solution is everyone blame the government.
Pretty sure most of the shitheads in Arizona and SoCal don't come from one particular race...
...what? racial profiling is very different from giving million dollar loans to a poor person who can't afford to own it
how much intelligence does it take to NOT sell the loan? common sense. JPMorgan was the only bank that was relatively smart about this
There's still a hole in the "jealousy" explanation for the stigma. Medicine is the other profession that pays a lot--how come everyone has respect for doctors?
health care is more palatable for the average person.
You can see a doctor's value added to society much easier than a bankers. Consequently, the compensation is more easily justified.
because doctors save lives, cure diseases, etc etc
if you have a heart attack and you feel pain in your heart and you're freaking the fuck out, you're going to pay a lot for someone to fix it and show a lot of respect for the guy who saved your life
I can't speak for everyone, but I have my opinion on why bankers get more flak than other professions - when you go to a doctor, you expect that he/she will offer you the best advice. You don't want a doctor that only prescribes medication from one company because he gets paid by them even if you die. You want a doctor that gives you the best possible advice. You trust that the doctor's education and experience will get you great results. And if he messes up? You can sue him until he's broke.
But on the flip side, people associate all bankers with the ones that offered them insanely pricey loans. If you go to a bank to get a loan, you go assuming that they'll use their experience and education to do what's best for you and make money doing it. Fiduciary responsibility should be like the medical responsibility doctors hold. But it's not. Banks get money on your interest, if you can't pay they take your home, and on top of that the average person has no recourse when he realizes he was given terrible advice by the bank.
Many people here likes to stroke their ego and say that bankers are more intelligent than the average person. And that's true, considering the talent that gets into managerial positions. But if bankers really ARE more intelligent, don't they have an ethical obligation to NOT try and screw over people that just aren't capable of understanding the terms and consequences of these loans?
Yeah, I admit Main Street has to take some of the blame. But if your doctor gave you medication from one company because he was getting paid regardless, even though it wasn't the best medication for you, wouldn't you be a little pissed too?
Doctors do that.
Despite some of the holes in his examples, he brings up a great point. Everyone recognizes the issue of moral hazard in the financial services industry (whether they can explicitly state it or not) and it pisses them off. Farmer Joe knows that if he accidentally poisons his crop and that gets people sick, he'd be sued to hell/thrown in jail. But the guy who forged Joe's signature on his mortgage walks away with a slap on the wrist and a fat bonus to go with it. Wouldn't you be angry?
This claim presupposes more than a few questionable ethical premises. Just to play devil's advocate, why do you think being more intelligent obliges one NOT to take advantage of those who are less intelligent (let alone directly help them)?
lolwut
why would you give a shit about what those idiots think? You need to worry about what the people that will hire you think and how they think not what an average joe dumb ass thinks when you say you want to be a financier. Anyone dumb enough to blame Wall Street as the sole cause of the financial melt down is too dumb to be a friend.
To be fair, very, very few bankers add any value to society.
Very few people add any noticeable value to society....period.
So far the only useful comment on here was the one mentioning Deep Springs College...had never heard of it before, but sounds like an interesting place.
I don't care if people don't like bankers. I like being a banker and that's all that matters!
If I wanted to be liked, I'd fly to Japan and shovel radioactove shit into lead boxes.
^U JELLY?
I think another reason for the anti-wall street sentiment is because people think that trading stocks and underwriting securities are not real contributions to the economy. When I tell friends and family who do not know about finance. I want to manage money or become a trader, they think that I just shuffle money and paper around to take advantage of the average investor. People see the benefits to society of doctors, lawyers, and major CEOs every day, whereas they do not understand how role of Wall Street and believe its just a sophisticated form of Las Vegas for the rich.
Most are pushing paper and doing little for their clients. Most don't return close to the S&P after fees. When they fuck up, they don't participate in the downside like the rest of the public does. In other fields, you get sued, you go to jail, lose your license to practice. It is much rarer in many areas of finance.
cant believe people are actually arguing with malakari he is clearly trolling.
or he really has the intellect of a five year old but hey.
the argument of more intelligent people having a responsibility for the less intelligent reminds me of the factory in atlas shrugged that gets run to the ground because the most able to have to work the hardest to help the least able and everyone starts hiding their ability and stuff starts going to shit.
It's the liberal media and left-wing who need someone to blame for their misfortunes.
Here's the problem with finance:
Who pays for the risk free profit the banks use to engage in trading? The Treasury is supported by American tax dollars.
In other words, the banks make the bulk of their money by trading American tax dollars. And when the banks fail, the American tax payers bail them out.
The average American who hates financiers doesn't understand this, the stigma against finance really is due to liberal media.
Pretty much.
We are smarter than most Americans.
Feels good man...to be better than people
You know what made the stigma of finance easier? Realizing that I don't give a shit about anybody outside of my family/friends/acquaintances. I rely on myself, my family, and my friends and it's awesome. The thing Main Streeters don't understand is they don't work hard enough, they don't do their due diligence, and they don't work long enough. (Yes, generality, obviously that's not true for everyone.) Money is how you control your fate, if you choose a job that pays 30-40 per year (dont get me wrong, not a bad choice if its what you want)...
...be ready to get fucked Oz-style.
The responsibility is not all on the people who made the loans. It falls back onto the "Average Joes" you were talking about, who should be able to understand that a $30,000/yr paycheck does not and will never equal the amount required to live in a several hundred thousand dollar house. Stop playing so dumb blue collar America, if a freshman in college can "get it", so should you be able to. I don't care how long you've been breathing in the fumes and asbestos in your factory assembly lines.
While there is truth to this, you need to keep a few things in mind:
1.) The average joes didn't force the lenders / banks to give these loans
2.) The average joes didn't force the lenders / banks to give billions and billions of these shitty loans
3.) The average joes didn't force lenders like WaMu to implement growth strategies predicated on shifting their loan portfolios from 75% 30-year fixed rate to 75% sub-prime / alt-a / liar loans
4.) The average joes didn't create complex CDOs and related products to spread the risk of the excessive shitty loans throughout the system
5.) The average joes didn't force the rating agencies to rate crap as AAA (equivalent to US Treasuries) at an unprecedented rate for fear of losing business. Thus allowing investment trusts and pensions (etc.) to hold on to crap securities which were rated incorrectly
6.) The average joes didnt force the same rating agencies to decide on one day in July 2007 to start doing their jobs and perform an unprecedented mass downgrade of hundreds of CDOs and RMBS rendering the market for these products DEAD and leaving everyone holding worthless shit (including pension funds, investment trusts, etc.)
7.) The average joes didn't force AIG to write more naked CDS than it could ever cover (by an order of magnitude.) They also didn't force AIG to mislead investors about this.
8.) The average joe didn't force lenders and banks to ignore their fiduciary responsibilities and mislead him/her into taking on loans that were not in their best interest
But, yeah. Keep oversimplifying things, you fucking shitbag.
The financial crisis is not a black and white issue. Many parties are at fault, but to say "it's all the fault of the average joe who took a shitty loan" ignores reality and shows me that you literally do not understand a thing.
TheKing just ended this thread.
"The financial crisis is not a black and white issue. Many parties are at fault, but to say "it's all the fault of the average joe who took a shitty loan" ignores reality and shows me that you literally do not understand a thing."
I agree with you, although I could make a symbolically logical argument that is solely Bill Clinton's fault ;)
Reading the comments about how "intelligent" the people in finance are and how this Ivy is better than that Ivy makes me glad I headed West years ago. In Silicon Valley, nobody cares (in general) if you went to Stanford, Berkeley, or East Bangalore U. Rather, it's what you can actually DO that matters, thankfully. Perhaps that's why we develop technologies and found companies that actually create wealth, while psychopaths on Wall Street scheme to get rich just by moving it around.
I can assure you that the people who design airplanes, computers, pharmaceuticals and other necessities of modern life understand basic statistics better than the MBA out to make mint in lower Manhattan. Bundling a bunch of home mortgages together and stamping them AAA doesn't change the fact that they're correlated and (by the central limit theorem) still risky. It was a really stupid idea. And then it got worse: these geniuses realized that poor people with subprime loans pay a higher interest rate, so bundles of subprime garbage (miraculously also stamped AAA) represented an even better deal! The impetus to give $800,000 mortgages to Mexican grape pickers in SoCal came directly from Wall Street. Bleeding-heart liberal desires to give loans to poor people played only a minor part.
Judging by the current state of affairs in Washington, the stigma against finance obviously isn't strong enough. Despite what happened, there have been few substantive changes in the rules. With 30:1 leverage, the continued promise of taxpayer bailouts, and toothless regulators, the shenanigans that caused this mess will continue.
If you want to make money in finance without being a leech on the rest of society, here's a suggestion: study something useful, like engineering, physics, biology, or math. Then work you way into a venture capital firm. They can be every bit as arrogant and cutthroat as the biggest jerks on Wall Street, I can assure you. But at least they make money by doing something useful: getting seed cash into the hands of people who actually build companies. They get to make serious bank AND sleep at night.
By the way, David Shaw, evidently a hero to many of you, left Wall Street years ago. He uses his money to fund computational biology research, which he's passionate about. At the end of the day, I guess scheming to extract wealth from the productive segment of society gets kinda' boring, eh? Why not do something interesting with your life?
Dude everyone and their mama knew that MBS were risky securities. The difference between MBS and an individual mortgage is like the difference between a stock index and an individual stock. The index is still risky, but less so than an individual stock with a beta of 1.
Good post, only quoting first bit to not clutter thread too much.
Pfft, his post is a tattered collection of malformed stereotypes. In particular his characterization of Silicon Valley as being far more merit based than Wall Street is cliched and inaccurate, especially when it comes to trading. Your Harvard degree isn't going to get you a job a Jane Street - the application is far more Darwinian and skill based than most tech jobs.
All hail TheKing.
For the best perspective behind the causes of the financial crisis which goes well beyond the finance industry (not that it doesn't share a large part of the blame) read the book Fault Lines by Raghuram Hajan.
The housing sector was in a bubble, everyone involved was at fault. There will be finger pointing and buck passing for the next hundred years, but I'll sum up the current stigma facing the financial industry: most banks walked away scott-free while people, industries, and entire countries not even participating in the housing bubble got FUCKED [shame on anyone who argues this, I'm serious]. However, the financial industry was only part of the equation, so do not believe: * anyone making it all Wall Street's fault - they are only a part of the mechanism that is capitalism * selfish, irresponsible people who blame the gov't for everything - grow up. Seriously, I'm tired of hearing it. * people who blame only homeowners - people who took good loans and paid them are underwater because of this. Bubbles happen, everyone tries to get their cut of the action, and then everyone becomes an asshole and blames everyone else when shit hits the fan. I'm no angel, I made a few bucks and lost a few bucks on the whole thing, so I'm just calling a spade a spade.
Moving along
There are other reasons for the stigma: * long hours that don't leave room for development in other facets of life - your family will rarely see you * people who don't like business in general * the open endorsement of greed that is the calling sign of Wall Street * fear, ignorance, and misunderstanding of what it is finance actually is * fear, ignorance, and misunderstanding of the real world * negative steroetypes created by people with vested interests contrary to the financial industry's interests * YES - the recent housing blowout. For what it's worth, there's a LOT of people who WORK in finance don't like some of the shit that happened [yes, we have a concience] * proliferation of hard driving workaholics, not all of whom are selfish assholes - but a lot are [I'm one, get over it] * ^ workng in finance long term WILL make you like this * jealousy * jealousy * jealousy * jealousy
The jealousy thing is huge, and have seen this many times up close and personal. Many people are pissed off that they work, and often work hard despite what finance types think, and spend a lifetime accumulating the wealth that you can make in finance in a few years on Wall Street.
Also present is the extremely negative behavior of some, repeat SOME, high profile financial figures. To be completely candid, it sounds like it was far worse in the 80's [or more fun, depending on your viewpoint]. 2002-2006 were out of control as well, because Wall Street figured that with Bush on their side, they could do whatever the hell they wanted. Turns out they can't. Live and learn. Hollywood is far worse, and most parents cringe at the thought of their child ever going near the cesspool of misconduct that is LA for example.
In most cases these fears are overblown because the truth is that the overwhelming majority of people in finance, front office OR back, are simply young adults with some cash to throw around [FO obviously more] and they do things that young people do: drink too much, fuck around with random people, try drugs, formulate their own opinions of life, etc.... You know - stuff old people don't like.
You might also be around unsupportive people. Personally, most of my family and friends are excited to see me work here and I'm actively helping them get a toehold in the industry as well, so my experience is very positive.
The interesting thing about the financial crisis is that everybody...politicians, wallstreet, and mainstreet were all acting in their own best interests at the time.
"Your Harvard degree isn't going to get you a job a Jane Street - the application is far more Darwinian and skill based than most tech jobs."
So, how exactly do you know if a trader is skilled? It's obvious when a biochemist or an engineer has what it takes: chemistry and engineering are (at a macro scale) totally deterministic. Either you know how to make stuff work or you're a fraud. But trading is dominated by randomness. If you track, say, mutual fund managers over an entire career, few of them actually beat boring-old index funds. And those that do rarely do well enough to cover their costs. And then, it isn't clear to me if the small set of "elite" traders remaining are distinguishable from the null hypothesis.
If basic statistics tells you that it's hard to separate skill from luck when watching someone trade for DECADES, then how the hell do you demonstrate your superior skill when you traipse down to Jane Street for the big interview? Is it simply that pedigree and attitude are used as proxies for these elusive and highly over-rated skills?
Traders are not mutual fund managers. A good trader is someone who makes money, doesn't blow up his book and only breaks his phone. To paraphrase Napoleon: in the absense of observable skill, one must search for the element of frequent luck in a general. Equity returns are unknowable a priori, but not truly random. The real question for traders is whether one can identify a successful trader before one trades, a question beyond the scope of my abilities.
Mutual fund returns have an easier explanation than some bastardized EMH bullshit. Mutual funds track benchmarks. Fund managers and analysts get fired if they miss drastically and keep their jobs if they're within a margin of error. Combine that with a large number of holdings and you get index-level returns. Incentives in everything, go figure.
Perhaps you ought to let down some of your stereotypes. We're not all Patrick Bateman. Yeah, most young iBankers on this forum are tools. Most of any group is horrid.
Most Silicon Valley entrepreneurs make second-rate hanger-on products the world forgets about in 3 years tops. One of the big reasons for the explosion of Silicon Valley noticed by even Matt Taibbi, finance hating schmuck he is (ilu Matt), is the availability of IPO money (guess their motivations were to get rich quick with OPC). The exceptions in software become all-consuming monopolies and in hardware become...Intel. Want to see adding little value to society? Chipset instructions. Want to see a douchey level of self-congratulatory behavior? Talk to a person who works for Google.
Hahaha you lost all credibility when you compared Jane Street to a mutual fund.
"Hahaha you lost all credibility when you compared Jane Street to a mutual fund."
Um, no you just don't understand the relevance. Fundamentally, successful investing can be mapped to one of only three approaches:
I have great respect for options one and two. However, option one is exceedingly rare, and it is virtually impossible to distinguish it from option three. You would need to look over the span of many decades to do so, thus my reference to longitudinal mutual fund studies.
Or am I just really missing something? Enlighten me...
Look, there's a negative stigma with every single profession out there. Choose the career you want because you enjoy it and for your own reasons - forget what other people think about your chosen profession, because it doesn't matter and no matter what career you choose, there's always going to be haters.
Bankers = nihilistic douchebags
Lawyers = cynical anal retentive bores
Doctors = self-righteous and arrogant
Accountants = yawn zzzzzzzz.......
Any corporate job = yawn zzzzz..... snore
Consultants = bullshitters, superficial know-nothings
Back office = couldn't hack it in the front office
Engineers = socially inept geeks
Entrepreneurs = delusions of grandeur
Priests = pedophiles
Teachers = socialist complainers
Cops = thugs with badges
Real estate agent = slime
Any sales/bus dev job = slime
Athlete = dumb as rocks
Actor = emotional wreck
Do what you want. If there's a negative stigma on bankers/finance types, so what? There always was and always will be, just as there is for any job out there.
You know, I have to eat my own words. You can take the difference in the expected values of the good and bad decks, and place a bet to the tune of 50% that you get the bad deck. You can get a 100% return against an adversary. You can cover the expected outcome via induction or make an argument about what the worst-case game should be (red/black alternating), but good luck proving it across all potential games in thirty minutes. You're going to have to do a proof by contradiction inside a proof by induction inside an adversary argument (a proof by contradiction in and of itself). And there's a lot of stuff you have to be careful about inside a proof by contradiction. This is really a homework question rather than an interview question. Without the formal proof, and the interviewer telling you 100% is wrong or having seen something like this before, this is actually a fairly easy inductive problem. I still like the marbles better.
You don't need to do any expected values. Just backwards induction. Let R(r,b) be the minimum return you are guaranteed to make on the remainder of the deck when there are r red cards left and b black cards left (you know this from the cards revealed so far). Then since
R(0,1)=2, R(1,0)=2, we have R(1,1) = 2, R(2,0) = 4, R(0,2) = 4. These are obvious. The first non-trivial result from backwards induction:
R(2,1) = min[(1+y)R(1,1), (1-y)R(2,0)] where you choose the y the maximize this equation. This boils down to letting (1+y)2 = (1-y)4 => 2+2y = 4-4y => 6y = 2 => y = 1/3. So you bet 1/3 on red, which guarantees
R(2,1) = (1+1/3)*2 = 8/3.
Keep on backwards reducing [use excel], and you get that the solution for R(26,26) is 9.081333333.
This was absolutely an interview question, though I won't reveal which firm asked it.
My point is: generalizations about finance requiring no skill are not fair.
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