Lesson 4: Watch your back…

A difficult lesson for me to learn was that the financial world is disturbingly competitive and doesn't always adhere to the same ethics as, say, central Utah. I will attribute this lesson to Brett Gr.

As a relatively new person at Bear Stearns I began to realize that I had to distinguish myself in some unique way. Success and big bonus checks were not doled out simply because you showed up to work.

My initial strategy was to develop niche areas of expertise on issues relevant to trading and valuing mortgages. This would make me indispensable to the sales force and I would facilitate a lot of mortgage trades. To demonstrate my expertise, I reasoned, I would write interesting research reports and circulate them to the sales force to help them stimulate interest with their customers. As an academician I felt comfortable with my ability to write and I had already had a few papers published in refereed academic journals.

The first paper that I wrote was on a recent statement by the Financial Accounting Stand.ards Board, FASB 91. (I remember this because I recently found a copy of this report.) As intended, this paper was circulated among the sales staff and it did, indeed, generate a bit of interest and helped increase my profile among my colleagues. (As I have stated elsewhere, increased profile means that you are selected to be on more ad hoc transaction teams.)

I can remember feeling a bit proud the day that my report was first circulated. It prominently featured my name at the top, as author, and a copy of the paper was placed on the desk of every trader and sales person on the trading floor along with the other daily handouts. Although the paper was on a fairly obscure topic, it immediately generated some buzz and for the first time, traders and sales people from the floor came and looked for me and asked me questions. This helped to position me as credible on certain aspects of FASB 91 issues and afterwards I was occasionally called on to explain to customers what the various income effects could be as prepayment assumptions changed about mortgage prepayments.

I felt that this was a moderately successful start, so I began another paper. I worked on it for about six weeks, as I recall, in my “spare time” when not doing little chores for Anthony Zioudas. I created some financial models, ran several iterations of different bonds, and had organized my thoughts into a second draft – ready to polish off and send out to the printer.

At this point I want to digress a bit and explain how things worked there at Bear. You see, in my mind I was a very valuable guy; I had a PhD, I had really good quantitative skills and I was creative. I carried in my mind the esteem that is bestowed by grateful students to their learned professors for granting them enlightenment. My ego led me to believe that I was now just on the cusp of conquering the financial world and I was sure that every one of my colleagues respected me and, yes, they admired me because of my abilities (albeit unproven as yet, but that was merely a technical matter).

As a contrast, I saw around me several young, almost childish “kids” right out of school, some not even having any graduate training. In my academic snobbery I thought of them as inconsequential, lower in rank than even teaching assistants you have help you grade papers. They were of little real concern to me in my pursuit of “serious” matters.

One such clique of “kids,” right out of their undergraduate studies, was typified by a young guy named Brett and a young girl named Jody. Jody, it seemed, enjoyed a “special” relationship with Blaine Roberts (who was the head of our financial analytics and structured transactions group). Jody and Brett and their little clique would chat and giggle through much of the day. They would give each other little back-rubs and just behaved, you know, like college kids. They would go out and party at night (with Blaine I supposed) and generally took life much less seriously than I did. I would have barely been aware of their existence, but Brett was given the seat just to the right of mine on the trading desk. Their giggling and chatting would sometimes spill over into my space at the desk, but I learned to tolerate the disruptions.

I had often wondered how Brett had landed a job in this financial analytics group at Bear Stearns. Brett, you see, had no quantitative expertise, no graduate training in business or accounting. He was a journalism major. But, I reasoned, he was a friend of Jody’s, and Jody had that “relationship” with Blaine… It somehow didn’t really matter that much to me, but I thought of the bonus pool being diluted by these kids that largely wasted their time - and how that Blaine had his own personal reasons for keeping all of them happy, especially Jody.

Since I reasoned that their relationship with Blaine made them “untouchable” I simply tolerated their childishness and did my best to ignore them. It was best for me to just concentrate on my “serious” business.

So, returning to my narrative, I had completed the second draft of my second paper at Bear, and I was looking for a bit of free time to polish it off and get it printed. I kept a hard copy of the document in my desk drawer (about the only personal space that one has on a trading desk).

To my surprise one day I came into work, and there on my desk, along with the other materials distributed through the night, was a published version of my paper. However, at the top of the paper my name was completely absent. Instead it said that the author was the person sitting next to me. I was incredulous – absolutely dumbfounded. How could this be?

When that person came in and sat at his desk that day, I looked at him with complete incomprehension.

“What did you do?” I asked. “This is my paper…”

“Oh,” he said, “I’m a journalism major. I saw you working on the paper and thought that it needed to get out. I’ve been hired to make sure that the writing of our research reports is of a professional quality, so I went through and edited your grammar and sentence structure.”

When I pressed hem for why my name was totally absent from the byline, he simply shrugged and said, “Oh, don’t worry about it. We both work for Bear Stearns.”

I have often wondered since if I handled this the right way. I realized that I had left myself completely vulnerable to this act. I had simply trusted my things to be undisturbed in an unlocked desk. What was I thinking? This was New York, man, not Provo, Utah. I felt so naïve, so embarrassingly naïve.

I never said anything to Blaine about the paper. In fact, I changed my entire strategy for distinguishing myself. Writing was too easy. I went for technology.