Being a trader for an investment bank has never been a stress free job. Besides the usual demands to generate profit, you are either looking ahead at your next opportunity, or over your shoulder to see if an axe is heading your way. It is not uncommon for some firms to over-hire in the good times, then conduct mass layoffs when things eventually turn sour. This time around, everyone is a little more tense and still waiting for someone to sound a horn signalling all clear.
There have been two rounds of layoffs at the firm where I work, both were very frightening experiences. Investment banks are run a littke bit differently compared to a typical business, so here’s a rundown of what a layoff day is like in my world:
7:15am: Arrive at work as usual, begin preparations for the day.
7:45am: Quick team meeting announced. In the boardroom we learn that “things will go down today” and to keep your head down and focus on your work.
9:20am: The trader to your left gets a phone call asking them to go upstairs. You don’t notice him leave. He is never seen again.
9:35am: You notice the trader to your left is missing. Shit.
10:15am: You take a moment to stand up and look around the trading room. You see empty chairs and wonder if people are on vacation or cut.
10:30am: People start talking about the day’s casualties, everyone wonders if it’s over yet.
11:10am: Your Managing Director walks around announcing who is no longer with the firm.
11:11am: The responsibilities of the departed are spread around the desk, on a temporary basis.
2:40pm: Discussions begin on who will permanently cover now vacant jobs. This is your only opportunity to be proactive and try to increase your value (and hopefully save your job down the line).
4:00pm: Trading day winds down. Training begins on any new roles you’ve added to your job.
6:00pm: Go home and have a stiff drink.
Repeat this time-table for every round of layoffs. Obviously, for those who are left, priorities become very different. Very few people are looking ahead to new opportunities. Very few people are that concerned what their bonus will look like. Everyone is happy to still be employed. They are, however, conscious that as a survivor, their stock has gone up. The time will come, eventually, when traders again will look ahead to the next opportunity and realize they are in a better position than before.
Many individual investors are completely unaware that some of the industry’s most powerful and meaningful tools are available free online. One of those tools is bank written economic reports.
While most financial research written is intended for client use only, economic reports tend to be public. One of the major driving factors behind this is media exposure. Business journalists need access to economic reports to write stories and quote authors. The more an economist is quoted in the media, the more credible they become.
The payoff is that the bank can then bring their oft quoted on tv/radio/print economist to client meetings and leverage them one of the benefits of doing business with the bank.
While individual investors won’t get any face time with economists, they can still read the reports that are published online regularly. The information contained, while somewhat bland, often yields nuggets of perspective that can be beneficial on analyzing future expectations.
Below are links to the economic publications of Canada’s big 5 banks. If you have time this weekend, take a few minutes to go over the weekly reviews published every Friday. It’s time well spent.
Econ Reports:
- Bank of Montreal
- Scotiabank
- Canadian Imperial Bank of Commerce
- Royal Bank of Canada
- Toronto Dominion Bank
Very busy on the desk today.
Just found an interesting article on foreclosures and the Condo market.
A couple of years ago I remember seeing a documentary on people waiting in line for days to buy Condos in Florida. It was absolute madness. It was the top of the market.
This article has me thinking that if I had the capital, maybe it would be a good idea to buy some prime real estate in a sunshine state. I could rent it out to vacationers and stay for free when I need a break from the cold. If only….
Quote of the day:
“[Citigroup] is so deep in a black hole that even renown physicist Stephen Hawking could not help the ailing company” – Banking analyst Meredith Whitney (via NY Post)
Ouch!
Some curious US economic numbers were released this morning. April’s retail sales fell 0.2%, however, when excluding auto sales the number becomes an increase of 0.5%, beating forecasts calling for a 0.2% rise.
The first curious observation is that retail sales were up, even with the recent drop in consumer confidence numbers. This can partly be explained by strong sales in defensive retailers like Wal-Mart and Costco that were reported for the same period.
The second curious observation is not that car sales dropped, as that has to be a no brainer given gas prices and the auto industry’s snail pace at responding to changing market conditions. It is that sales at filling stations also dropped. One would think that it would be very difficult to produce lower sales when your product is in-elastic and at record prices. This has to be the most compelling evidence that people are changing their driving habits. Specifically, they are driving less. Car companies should take note, as less driving will undoubtedly lead to even lower sales.
When I first got interested in markets I thought technical analysis was a great tool. It was easy to learn, made logical sense and most importantly, appeared to work.
I was fooled by this cunning, seductive mistress. Technical analysis is the fools gold of finance. It is an illusion that is as real as Michael Jackson’s face. But to quote Levar Burton’s Reading Rainbow: “You don’t have to take my word for it”. Read more
Microsoft is turning into quite the hussy. Shortly after breaking up with Yahoo! before they even officially dated, Microsoft has been seen holding hands with Facebook…. and they might even kiss.
I never liked the proposed Yahoo merger. This one, however, might have legs.
Firstly, lets ignore the $15 billion valuation that Facebook claimed to have in October. That number is just silly. Facebook is still a new kid on the block, they’re still working on a business model that will work in the long run.
Although it is still growing like vile weed, I have noticed that fewer and fewer people on my Facebook account update their profiles in a regular basis. Facebook could just be an Internet trend. A flash in the pan. Not a $15 billion dollar company.
Microsoft could bring a lot of help to ensure that Facebook becomes a long term juggernaut on the Internet. They have the reach, the knowledge, the experience and most importantly, they are just as evil.
Facebook has built a reputation for having poor privacy controls and whoring out users to advertisers. Microsoft has a reputation for whoring out user’s rights to media lobbies. Together they can ruin your online experience and share it with the world.
Seriously though, these two firms would benefit from each other. Microsoft would gain a growing Internet database of consumer information, Facebook would get a grownup to steer it in the right direction.
I say go for it!
Not too many people pay attention to contrarians. They often remind me of the kids in school who ate paste. Sitting in a corner by themselves, ostrasized by their peers. Loners. What you forget is that these kids are often the ones who grow up to do great things. Their minds are complex and cavernous, sparkling with nuggets of information that every investor should pay attention to.
Contrarians are not the ones shouting from atop desks, playing silly sounds and acting like crazed lunatics when discussing the stock of the day. In fact, one could argue that a contrarian is the exact opposite of Jim Cramer. Read more
I’m out of the office today, but I’ve written this special feature about choosing a stock broker instead.
For many people, navigating the world of investment products and services is a daunting task. A stock broker can be a great way of saving time and effort by having a professional do the research and look after your finances. The process of selecting this individual can become as stressful and daunting as choosing a house or planning that perfect trip. You’ve worked hard for your money and you want it treated right, so read on and enjoy the tips!
“Google Inc. blew past Wall Street expectations this quarter, posting revenue of $5.19-billion (U.S.), a 42 per cent jump over the same period in 2007 and 7 per cent higher than the previous quarter.
Net income – adjusted for generally accepted accounting practices – for the first quarter was $1.31-billion compared to $1.21 billion in the fourth quarter of 2007. Earnings per share amounted to $4.12 on 317 million diluted shares, compared to $3.79 for the fourth quarter of 2007.” Via [Globe & Mail]
I find this a bit curious. Very interesting.
Google’s bread and butter is advertising, it’s their only real source of revenue. They have made a killing doing the best job and using the brightest people. I think its great.
What’s curious and interesting is this unexpected increase. Usually in a economic downturn, marketing and advertising are the first costs to be cut. Firms would rather trim those budgets than fire workers. It’s much easier to later increase spending compared to training new staff.
So now in the midst of all this economic doom and gloom, here’s feisty Google posting up some big numbers. So is the doom and gloom over exaggerated? Or is Google just that good? Very interesting…..
