Working on Wall Street – The occupational hazards

All occupations have hazards. An occupational hazard of the Internet columnist, for instance, is that he becomes the sort of person who says whatever he thinks will get him the most attention rather than what he thinks is true, so often that he forgets the difference.

The occupational hazards of Wall Street are more interesting — and not just because half the graduating class of Harvard still wants to work there. Some are obvious — for instance, the temptation, when deciding how to behave, to place too much weight on the very short term and not enough on the long term. Or the temptation, if you make a lot of money, to deploy financial success as an excuse for failure in other aspects of your life. But some of the occupational hazards on Wall Street are less obvious.

Here’s a few that seem, just now, particularly relevant:

— Anyone who works in finance will sense, at least at first, the pressure to pretend to know more than he does.

It’s not just that people who pick stocks, or predict the future price of oil and gold, or select targets for corporate acquisitions, or persuade happy, well-run private companies to go public don’t know what they are talking about: what they pretend to know is unknowable. Much of what Wall Street sells is less like engineering than like a forecasting service for a coin-flipping contest — except that no one mistakes a coin-flipping contest for a game of skill. 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.

— Anyone who works in big finance will also find it surprisingly hard to form deep attachments to anything much greater than himself.

You may think you are going to work for Credit Suisse or Barclays, and will there join a team of professionals committed to the success of your bank, but you will soon realize that your employer is mostly just a shell for the individual ambitions of the people who inhabit it. The primary relationship of most people in big finance is not to their employer but to their market. This simple fact resolves many great Wall Street mysteries. An outsider looking in on the big Wall Street banks in late 2008, for instance, might ask, “How could all these incredibly smart and self-interested people have come together and created collective suicide?” More recently the same outsider might wonder, “Why would a trader rig Libor, or foreign exchange rates, or the company’s dark pool, when the rewards for the firm are so trivial compared with the cost, if he is caught? Why, for that matter, wouldn’t some Wall Street bank set out to rat out the bad actors in their market, and set itself as the honest broker?”

via Occupational Hazards of Working on Wall Street – Bloomberg View.

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