Wall Street Stinks!

I just read about one of the worst things to ever happen on Wall Street, the Bernie Madoff Ponzi scheme, which I discussed in a piece about evil people. I grew up as a strong believer in capitalism and always thought Wall Street was a good thing. Well, it may be a good thing, but it appeals to greed a bit too much. I visited it in August when I was in NYC, and I don't hate Wall Street. I do, though, worry about it.

I am a Wall Street veteran. It was kind of funny how I got there and the route I took. I was always a stock guy from the age of 13, when I received a Bar Mitzvah gift from a friend that was a stockbroker: 1 share of Pepsi. I could probably write a book on all that I learned from that gift alone!

From age 13 through college, I drew stock charts. This was way before the internet, which now has those charts at a click. As much as I was fascinated by stocks, I did not realize then that one can work in an industry that manages investments, including stocks. During college in Evanston, I traded stock options.

I graduated college in three years due to a program that Northwestern had, where it offered select students the option to finish more quickly. I liked my classes, but the opportunity to work seemed better. What was I going to do, though? I had no idea!

While I suffered a traumatic brain injury in 2022 (fully recovered!), I can remember crisply my first job interview in 1985. I was living in an apartment, and I was getting ready to go to the Northwestern campus to meet with Andersen Consulting, then a part of accounting firm Arthur, Andersen. It is now separated and named Accenture. The part I remember best is that I cut myself shaving ahead of the interview, and my chin was still bleeding when it was conducted. As much as I remember that part and recall not really liking the interview, I do not recall if I got a job offer, though I think I did.

I had heard of Wall Street firm Kidder, Peabody, but I did not know the company well. It was born 100 years before me in 1865. I was contacted by its fixed-income unit, and I went to NYC for the interview. I had been to NYC once before to look at Columbia University with my parents, and I did not like it initially. I could not imagine moving there, but, for a good job out of college, I would consider it.

I was not at all impressed by the interviews, and I can recall calling my mother on a pay phone from the airport. I was crying! Later that week, I received a letter from Kidder, Peabody, and it was offering me a job. I called the person who signed the letter, Ed Cerullo, the guy who was running fixed-income, and I thanked him but told him no. He was kind of surprised and asked me why. I explained to him that the interviewing process turned me off. He listened to me and said that the problem was that I did not have fun. He promised me a good time if I would return for another visit, which I agreed to do. He delivered! I am almost embarrassed to admit this, but it was the dinner and drinks that got me - yummy Mexican food and lots of margaritas.

So, at age 20 (almost 21), I had my first job out of college. Well, I was not yet out of college. The job that I was hired to do involved coming to NYC in the summer after I graduated to be part of the training program for its fixed-income unit, where I would learn to be a trader. First, though, the company needed help at the Chicago Board of Trade, and I started on St. Patrick’s Day in 1986, having just turned 21.

My job at the CBOT was to be a runner. The CBOT was a cool place, but my job was not cool at all! The traders all stood in the pit, and the runners were at standing desks surrounding the pit. My job was to answer the phone and use my hands to relay trade instructions to the traders. I was about to graduate, and I was taking classes at NU while I was working. My job was over about 3 P.M., and I took classes in the afternoon and evening.

The worst thing that happened to me as a runner was that I received a call to share some information with a trader, which I did. The problem was that I yelled this information to him. He left the pit and punched me in the face! He told me to never reveal the name of a client, like I had done. While I understood what had happened, I had never been instructed. Hitting me was wrong. It was not the last time that I got slugged on Wall Street!

After I graduated in June, I moved to NYC, renting a studio apartment in Chelsea. It was not a popular part of Manhattan yet, but I really liked it. I lived on 23rd Street at 7th Avenue. As much as I enjoyed the apartment, I really liked my next one located in Tribeca. This, too, was not yet a popular part of Manhattan, but my 1BR was awesome! It was in a new building, and it was a nice place at a great price for Manhattan. My wife, when we first started dating, liked it a lot, especially the roof, which had a view of the Hudson River and New Jersey. We had wine and cheese up there pretty regularly. Ahead of our marriage in 1990, we rented an apartment on 8th Avenue and 52nd Street, which continued my trend of moving to parts of Manhattan that were not yet popular. We were right next to Hell’s Kitchen, and this apartment was fantastic. The closet in the bedroom was huge, and we had a balcony with an unobstructed view of the Hudson River and New Jersey. I could see the George Washington Bridge in the distance. When I was in NYC in August, I walked by all three of these former apartments and more.

I ended up staying with Kidder, Peabody until 1992, a total of six years, but there was an interruption. I figured out one morning that my boss, Ira Saferstein, had taken some bonds that I had bought for our trading account out of the account, selling them to himself at a discounted price. After I turned him in for embezzlement and securities laws violations, I had to take a leave of absence. This was way ahead of the times when whistleblowers would be rewarded! 

I started training to become a NYC realtor, which was a good course but which would have been a bad career choice. I ended up spending my time making my best investment ever: developing my relationship with the woman I would marry (and who would later become my superhero!).

When I returned to Kidder, Peabody as a salesperson ahead of my wedding in April 1990, I met a few days later a newly-hired outsider, Steve Shaw. Steve left DLJ, which is no longer in business, and he came from Drexel, Burnham. I have found the people who worked at Drexel, Mike Milliken's company, to be hard workers and smart. My initial impression was not good at all, but he became and remains a dear friend of mine. I last saw him when I went to New York City in April 2023 for my son’s wedding. He escorted me to a cannabis industry conference. My relationship with Steve taught me something important: Sometimes the first impression can prove wrong!

I left Kidder, Peabody in 1992 to work at First Boston Asset Management, a part of Credit Suisse then and later renamed, while I was there, Credit Suisse Asset Management. I was its fixed-income trader, working with a few portfolio managers. I was glad to move from the “sell-side” to the “buy-side” and to be involved in investing rather than the back and forth of securities, but it was not really a great experience for me. One of the salespersons covering our account asked me if I would move back to Houston. I told him yes, but only because I knew my wife wanted to do so, though she was not pressuring me at all. I ended up getting a job as a portfolio manager in 1994 at a firm called Criterion Investments, which was managing $10 billion of fixed-income when I left four years later.

I called myself a veteran at the start of this piece, but I would never say that I work on Wall Street now. Not only do I live far from it in Houston, I was not a big fan of it. I am discussing my own experience from a long time ago, and it may not be as bad today as it was when I was there in the 80s and early 90s. I found people to be very greedy. Plus, it was not exactly open to women then. The worst part for me is that people who did bad things got away with it. If they left their firm, others would rush to hire them.

Like every other firm at which I worked, Kidder, Peabody is gone, crushed by disasters. Right after I joined, GE purchased the majority of it, the 15th-largest broker at the time, for $602 million in 1986. It was acquired by Paine, Webber in 1994 after I had left. Paine, Webber was bought by UBS in 2000. UBS in 2023 bought the firm I joined after leaving Kidder, Peabody too, Credit Suisse. Credit Suisse had bought DLJ in 2000.

For those who work on Wall Street, you are working in an important area. Do it right! I may not have loved Wall Street, but I am glad that I worked on it.