Friday, September 26, 2014

Things We Read Today, September 25, 2014

Michael Lewis stares into the abyss.   This is a glimpse into the psychology of those who willingly sell their souls in 2014.

The last few years, Silicon Valley has grown in its appeal to top Ivy League graduates.  But working for a tech start-up can't quite match the allure of the financial markets: "[E]ntrepreneurship doesn’t offer the sort of people who wind up at elite universities what a lot of them obviously crave: status certainty."

It's a mistake to believe your values can survive any ordeal you put them to.

People like to think they have a “character,” and that this character of theirs will endure, no matter the situation. It’s not really so. People are vulnerable to the incentives of their environment, and often the best a person can do, if he wants to behave in a certain manner, is to choose carefully the environment that will go to work on his character.

Remember, kids, it's a statistical reality that no one can really pick stocks.  No one beats the house.

To succeed in this environment you must believe, or at least pretend to believe, that you are an expert in matters where no expertise is possible. I’m not sure it’s any easier to be a total fraud on Wall Street than in any other occupation, but on Wall Street you will be paid a lot more to forget your uneasy feelings.

... the people who work inside the big Wall Street firms have no serious stake in the long-term fates of their firms. If the place blows up they can always do what they are doing at some other firm -- so long as they have maintained their stature in their market. The quickest way to lose that stature is to alienate the other people in it. When you see others in your market doing stuff at the expense of the broader society, your first reaction, at least early in your career, might be to call them out, but your considered reaction will be to keep mum about it. And when you see people making money in your market off some broken piece of internal machinery -- say, gameable ratings companies, or riggable stock exchanges, or manipulable benchmarks -- you will feel pressure not to fix the problem, but to exploit it.

Addendum, or a reminder to myself: Dave McKenna did a piece at Deadspin about prep-school lacrosse players willingly being held back in school for a year to gain a competitive advantage in their sport. All because of Malcolm Gladwell. One factoid from the Duke lacrosse controversy from a few years back is that the majority of Duke lacrosse players, literally 70% or so, will go on to jobs on Wall Street. I think the trade-off here is, the family pays an extra $30,000 or so in prep-school tuition, to gain a place in top-flight NCAA lacrosse, which is a golden ticket to becoming one of Tom Wolfe's Masters of the Universe.