where have i been? honestly, i have no idea. i mean, i know where i've been physically. but otherwise? no clue.
work is work. my rotation in the consumer bank is proving to be pretty much what i expected. it's less frustrating than past rotations. my hours are much better. i have less investment banking posturing to deal with. there can be a lot more bureaucracy and i think things would be more rewarding if i was close enough to the business to effect change. sometime over the next few months, i'll get an idea of where in the bank i'll land permanently. after the last two years, the relative calm of the last few months is a more than welcome change.
a few weekends ago, the gf and i went up to do some research for the wedding. we have the venue for the wedding, reception, and rehearsal dinner; we've tasted the food and wines and settled on a menu; we've picked officiant, photographer, DJ, and florist; and we've blocked off a good portion of our rooms. i guess ths is what happens when a risk manager and lawyer get married. due diligence and planning? yes, please. kudos to the gf for spearheading a lot of this. it appears that her love for maps is only a subset of her love for logistics.
otherwise, life at the toque has been fairly quiet, which is why i've been posting so little. there have been Yankee games and concerts. beer and grilling. saturday outings and nights in with takeaway and Netflix. but otherwise, there isn't much going on, either in my calendar or in my head. if i ever get around to posting about the 300+ items i've marked "to read" or thinking relatively thinky thoughts again, this'll be the place to find them. until then, try me over at tumblr or twitter. it seems that 140 characters or a link to a video is about all i can handle these days.
Saturday, June 20, 2009
Thursday, May 28, 2009
Sunday, April 05, 2009
weekend update
• on work: not much to say here. i started a new rotation when i got back to NYC. it's in the consumer bank (i.e. credit cards, mortgages, personal loans, etc), not the investment bank, which is where my three previous rotations had been. the hours are much better. the work is moderately interesting. the people are not offensive. after this rotation's up in August, i'll have to pick which area of the bank i want to settle into for at least two years. i haven't yet made up my mind where that will be, but if it ends up being consumer banking, it'll be poetic in a "full circle to find the truth" way. my first job at a bank was in the fall of 1998. it was retail, consumer, "let me open a chequing account for you" style banking. who knew i'd still be here, over ten years later.
• on vacation: the gf and i took our annual Spring Break for Grown-Ups™ trip in March. this year's destination: the great state of Texas. we spent two days in Houston before heading out to Austin for the South by Southwest Music Conference. at some point, i'll recap the trip, but the highlights were (obviously) the barbecue, the beer, and the bands. it was a good week away, a good experience to cross off the list. but you know you're borderline too-old-for-this-shit when you bust out the earplugs at an afternoon concert and think about how you might like to attend the nerdy, learning type Interactive Conference the next time around.
• on entertainment: since coming home to NYC, i've been awash in forms of entertainment and have been working hard at catching up on everything i put on pause six months ago. i finally finished the backlog of The Economist that had been piling up. i watched most of the Supernatural and Life episodes that were on the DVR. and i finally, finally finished watching Battlestar Galactica's last season.
• on freedom: this is the first spring since forever where i haven't had to study for an exam, academic or professional. it's a wonderful feeling to actually have a life in April and May and early June instead of reading about how to value cross-currency swaps, or working through stochastic calculus, or memorizing the assumptions of the CAPM. instead, i can pick up new tv shows (Southland is in the rotation, Kings is probably not), or a new/old comic i've been meaning to read all the way through for years (Queen & Country) because i know i'll have time to stick with it. i can actually hang out with the Bizarre Love Rhombus™ when they're in town instead of making excuses for why i have to stay at home. i can wake up at 8a on a Sunday and read the paper, and have coffee, and write. the gf and i have a busy social calendar over the next eight weeks - plenty of brunches, and concerts, and Yankee games, and after-work drinks, and possibly even a bbq or two at our place. all in all, this whole not studying thing? totally made of win.
• on work: not much to say here. i started a new rotation when i got back to NYC. it's in the consumer bank (i.e. credit cards, mortgages, personal loans, etc), not the investment bank, which is where my three previous rotations had been. the hours are much better. the work is moderately interesting. the people are not offensive. after this rotation's up in August, i'll have to pick which area of the bank i want to settle into for at least two years. i haven't yet made up my mind where that will be, but if it ends up being consumer banking, it'll be poetic in a "full circle to find the truth" way. my first job at a bank was in the fall of 1998. it was retail, consumer, "let me open a chequing account for you" style banking. who knew i'd still be here, over ten years later.
• on vacation: the gf and i took our annual Spring Break for Grown-Ups™ trip in March. this year's destination: the great state of Texas. we spent two days in Houston before heading out to Austin for the South by Southwest Music Conference. at some point, i'll recap the trip, but the highlights were (obviously) the barbecue, the beer, and the bands. it was a good week away, a good experience to cross off the list. but you know you're borderline too-old-for-this-shit when you bust out the earplugs at an afternoon concert and think about how you might like to attend the nerdy, learning type Interactive Conference the next time around.
• on entertainment: since coming home to NYC, i've been awash in forms of entertainment and have been working hard at catching up on everything i put on pause six months ago. i finally finished the backlog of The Economist that had been piling up. i watched most of the Supernatural and Life episodes that were on the DVR. and i finally, finally finished watching Battlestar Galactica's last season.
• on freedom: this is the first spring since forever where i haven't had to study for an exam, academic or professional. it's a wonderful feeling to actually have a life in April and May and early June instead of reading about how to value cross-currency swaps, or working through stochastic calculus, or memorizing the assumptions of the CAPM. instead, i can pick up new tv shows (Southland is in the rotation, Kings is probably not), or a new/old comic i've been meaning to read all the way through for years (Queen & Country) because i know i'll have time to stick with it. i can actually hang out with the Bizarre Love Rhombus™ when they're in town instead of making excuses for why i have to stay at home. i can wake up at 8a on a Sunday and read the paper, and have coffee, and write. the gf and i have a busy social calendar over the next eight weeks - plenty of brunches, and concerts, and Yankee games, and after-work drinks, and possibly even a bbq or two at our place. all in all, this whole not studying thing? totally made of win.
Friday, March 06, 2009
Sunday, February 15, 2009
reading roundup
it's been a really, really long time since i did one of these, and even now that i'm finally getting around to one, it's kind of a cheat. the following were already posted on my tumblr, in one form or another. figured i'd aggregate them here as well in one post. at some point i'll do a proper roundup and clear the 300+ items on the delicious tagged "toread".
• this might actually qualify as a 're-blog'. i first blogged about this fantastic Business Week article way back in 2006. i bookmarked it too. i knew i’d want to re-read it when the proverbial shit eventually hit the fan. since it’s hit, many in the industry have fallen back on excuses of “no one saw this coming” and “this was unprecedented”; nice ways of saying “don’t blame us”. and yeah, maybe no one could have forecasted the exact number to represent how bad things would get. but there were tons of people out there who saw that things didn’t smell right. that things just didn’t make sense.
sure, one of the things we'll have to learn from this crisis is how to more accurately forecast the number to represent the badness. but one of the more important lessons is not going to come from better models or refusing to sell CDOs again. it has to come from the people with decision-making power in this industry learning to ask for contrarian opinions and oftentimes, listening to them. ignoring information because no one wants to be the first one to pull out is not a strategy. i get that this is a very basic, very naive maxim, but in order to change the culture, those of us who work in finance can’t afford to be adolescents that go along with the crowd until we get caught and then hide behind excuses and hope everyone forgets. we have to take ownership of our actions, be accountable, and be independent. otherwise, we’ll just end up here in 5 years wondering, yet again, “what went wrong?”.
• from the New York Times, a run-down of what finance executives will have to do in order to live on the $500,000 salary cap that's been handed down from Washington. last year, before the shit truly hit the fan, a fellow risk manager asked me why i was always so cynical about people’s motivations. my reasoning was exactly what they lay out in this article. that for many of these executives, they are expected to keep a certain lifestyle in order to maintain their social and professional status. and keeping this lifestyle means that every time they face a marginal deal, they have to calculate the odds that the deal will blow up against the fact that they’re putting out $16,000 next month for a one-week family vacation. in fact, the question in their minds is no longer: “will this deal blow up?”, but “will this deal blow up before i get paid?”.
a large part of the solution to the crisis will have to be a fundamental shift in the culture. the agency problem is not going away anytime soon, but i’ve worked at firms where extravagance was frowned down upon and the difference in behaviour is remarkable. when the collective focus was not on ‘how much do i need to make in order to cover my bills this month?’, people thought more about ‘is this actually a good deal for our clients? for our firm?’, and accepted/rejected ideas on that basis instead.
• the Wall Street Journal this time, on the proposed pay packages often paid out to retain top brokers. i’ve never quite understood this rush to pay brokers to keep them. i hear the arguments from the banks (“we have to keep our top producers”). but producers of what? how do they segment brokers and decide which ones to keep and which ones to toss? it seems that there’s only really one criteria that they use: who brought in the most revenue.
as far as i'm concerned, this is sheer lunacy. revenue from short-term account churning or from blowup-prone derivatives is only revenue until it's a write-off. real, ongoing, fee-based revenue should be the main consideration. if there’s no better way to determine which brokers to retain and which to toss than revenue, fine. but at the very least, these banks need to get an understanding of the economics of what they’re paying for and get their brokers to accept that not all revenue is created equally, and so, not every dollar necessarily merits payment.
• finally, some neuro-cognitive-behavioural stuff for you from Neuron, via Scientific American. apparently for gamblers, “near misses" (getting two cherries out of three at a slot machine) significantly increases the desire to keep gambling. there's an attraction both to keep going because nothing has happened, and a sense that the system must be under control since nothing has happened. i couldn't help but see the current financial crisis in this research.
over the last few years, a lot of risk managers mistook the fact that “nothing has happened” to mean “we made sure nothing happened”. i run across risk managers all the time who are excited because “our VaR is the same as last month!”, or (even worse) risk managers who say “well, VaR is lower than last month, so we can go ahead and put on more trades”.
this is completely the opposite of risk management - it's risk-seeking behaviour. if there’s been no negative consequence to what they’ve been doing (i.e. increase in VaR, blowup on the desk, etc), managers interpret that to mean that they’re necessarily doing a good job at managing the risk, even if the lack of incident has nothing to do with them whatsoever. this is a completely false and dangerous attribution. measurement does not equal management; the lack of a disaster does not equal disaster-prevention.
risk culture across the Street needs to have this point drilled into their (our) heads and it has to come from the very top: just because the world didn’t end today doesn’t mean that you saved it.
it's been a really, really long time since i did one of these, and even now that i'm finally getting around to one, it's kind of a cheat. the following were already posted on my tumblr, in one form or another. figured i'd aggregate them here as well in one post. at some point i'll do a proper roundup and clear the 300+ items on the delicious tagged "toread".
• this might actually qualify as a 're-blog'. i first blogged about this fantastic Business Week article way back in 2006. i bookmarked it too. i knew i’d want to re-read it when the proverbial shit eventually hit the fan. since it’s hit, many in the industry have fallen back on excuses of “no one saw this coming” and “this was unprecedented”; nice ways of saying “don’t blame us”. and yeah, maybe no one could have forecasted the exact number to represent how bad things would get. but there were tons of people out there who saw that things didn’t smell right. that things just didn’t make sense.
sure, one of the things we'll have to learn from this crisis is how to more accurately forecast the number to represent the badness. but one of the more important lessons is not going to come from better models or refusing to sell CDOs again. it has to come from the people with decision-making power in this industry learning to ask for contrarian opinions and oftentimes, listening to them. ignoring information because no one wants to be the first one to pull out is not a strategy. i get that this is a very basic, very naive maxim, but in order to change the culture, those of us who work in finance can’t afford to be adolescents that go along with the crowd until we get caught and then hide behind excuses and hope everyone forgets. we have to take ownership of our actions, be accountable, and be independent. otherwise, we’ll just end up here in 5 years wondering, yet again, “what went wrong?”.
• from the New York Times, a run-down of what finance executives will have to do in order to live on the $500,000 salary cap that's been handed down from Washington. last year, before the shit truly hit the fan, a fellow risk manager asked me why i was always so cynical about people’s motivations. my reasoning was exactly what they lay out in this article. that for many of these executives, they are expected to keep a certain lifestyle in order to maintain their social and professional status. and keeping this lifestyle means that every time they face a marginal deal, they have to calculate the odds that the deal will blow up against the fact that they’re putting out $16,000 next month for a one-week family vacation. in fact, the question in their minds is no longer: “will this deal blow up?”, but “will this deal blow up before i get paid?”.
a large part of the solution to the crisis will have to be a fundamental shift in the culture. the agency problem is not going away anytime soon, but i’ve worked at firms where extravagance was frowned down upon and the difference in behaviour is remarkable. when the collective focus was not on ‘how much do i need to make in order to cover my bills this month?’, people thought more about ‘is this actually a good deal for our clients? for our firm?’, and accepted/rejected ideas on that basis instead.
• the Wall Street Journal this time, on the proposed pay packages often paid out to retain top brokers. i’ve never quite understood this rush to pay brokers to keep them. i hear the arguments from the banks (“we have to keep our top producers”). but producers of what? how do they segment brokers and decide which ones to keep and which ones to toss? it seems that there’s only really one criteria that they use: who brought in the most revenue.
as far as i'm concerned, this is sheer lunacy. revenue from short-term account churning or from blowup-prone derivatives is only revenue until it's a write-off. real, ongoing, fee-based revenue should be the main consideration. if there’s no better way to determine which brokers to retain and which to toss than revenue, fine. but at the very least, these banks need to get an understanding of the economics of what they’re paying for and get their brokers to accept that not all revenue is created equally, and so, not every dollar necessarily merits payment.
• finally, some neuro-cognitive-behavioural stuff for you from Neuron, via Scientific American. apparently for gamblers, “near misses" (getting two cherries out of three at a slot machine) significantly increases the desire to keep gambling. there's an attraction both to keep going because nothing has happened, and a sense that the system must be under control since nothing has happened. i couldn't help but see the current financial crisis in this research.
over the last few years, a lot of risk managers mistook the fact that “nothing has happened” to mean “we made sure nothing happened”. i run across risk managers all the time who are excited because “our VaR is the same as last month!”, or (even worse) risk managers who say “well, VaR is lower than last month, so we can go ahead and put on more trades”.
this is completely the opposite of risk management - it's risk-seeking behaviour. if there’s been no negative consequence to what they’ve been doing (i.e. increase in VaR, blowup on the desk, etc), managers interpret that to mean that they’re necessarily doing a good job at managing the risk, even if the lack of incident has nothing to do with them whatsoever. this is a completely false and dangerous attribution. measurement does not equal management; the lack of a disaster does not equal disaster-prevention.
risk culture across the Street needs to have this point drilled into their (our) heads and it has to come from the very top: just because the world didn’t end today doesn’t mean that you saved it.
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