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Posts Tagged ‘Wall Street’

How much money is enough?

In behavior, business, culture, life, men, Money, US, work on January 21, 2014 at 12:39 am

By Caitlin Kelly

Interesting, if scary, essay in The New York Times recently, by a former Wall Streeter — who once sneered at his $3.6 million bonus as insufficient:

After graduation, I got a job at Bank of America, by the grace of a managing director willing to take a chance on a kid who had called him every day for three weeks…At the end of my first year I was thrilled to receive a $40,000 bonus. For the first time in my life, I didn’t have to check my balance before I withdrew money. But a week later, a trader who was only four years my senior got hired away by C.S.F.B. for $900,000. After my initial envious shock — his haul was 22 times the size of my bonus — I grew excited at how much money was available.

Over the next few years I worked like a maniac and began to move up the Wall Street ladder. I became a bond and credit default swap trader, one of the more lucrative roles in the business. Just four years after I started at Bank of America, Citibank offered me a “1.75 by 2” which means $1.75 million per year for two years, and I used it to get a promotion. I started dating a pretty blonde and rented a loft apartment on Bond Street for $6,000 a month.

I felt so important…The satisfaction wasn’t just about the money. It was about the power…

Still, I was nagged by envy. On a trading desk everyone sits together, from interns to managing directors. When the guy next to you makes $10 million, $1 million or $2 million doesn’t look so sweet.

If you live — as we do — in an area filled with seriously wealthy people, some of whom attend the same church as we do, or sit beside us on the same commuter train, it’s disorienting to realize what “enough” looks like to those of us whose annual incomes are a puny fraction of theirs.

My first husband, a physician, earns in one month what I make in a not-great year writing.

A new film, The Wolf of Wall Street, is a true-life story of a former trader whose life defined greed. Cate Blanchett should get an Oscar nomination for her role in Blue Jasmine, Woody Allen’s latest film, about a New York woman who tumbles from tremendous wealth into poverty.

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And here’s a stunning bit of new data, from Oxfam -- 85 people own nearly half the world’s wealth.

Here’s a sobering list of how much money you’ll need for retirement — if you need or want $4,000 a month, your stash needs to be $666,000. Very few people can ever manage to save that much, especially when battered by multiple recessions and a weak economy.

People who live nowhere near NYC have no idea how insanely expensive it is or why we put up with it — for some of us, it’s where we need to be professionally; my husband spends more than $5,000 a year just to get to his office, between train, cab and subway. There’s no practical way to cut that fixed cost, a stupid number to many of you, I know.

But moving an hour or two further away from the city to save on housing costs also means an even longer commute, (which costs more), and sharply diminishes the time and energy to spend on its cultural, social and professional opportunities — fine for some, not for others.

Let alone the time one has to see one’s family, relax or have a life; one of my favorite books is the classic, Your Money or Your Life, which makes clear that’s the tradeoff many of us make, with only 24 hours in every day.

One writer I know profitably pounds the drum of endless productivity — a very American obsession — with books like 168 Hours.

What the point of making huge bank if you’re working all the time and/or too exhausted to enjoy your personal interests, (or even have any!), let alone nurture intimate relationships with anything beyond your computer screen or phone?

Credit Suisse recently made headlines by suggesting its junior bankers take Saturdays off.

I come from a family with money, some inherited, some earned, but will never enjoy a lavish life like theirs, which is sometimes a little depressing after watching them spend freely on jewels, furs, limousines, property, cars, travel and antiques. You develop a taste for the best, with extremely limited ability to buy it yourself.

So what’s really “enough”?

For us, at the moment, it’s having decent retirement savings and adding to them every year, no matter how much immediate fun it costs us.

It’s my husband’s job that he still enjoys and which, thank God, offers a pension.

Above all, it’s good health — without which billions in the bank means damn little.

How much money is enough for you these days?

No can do — sorry!

In behavior, business, journalism, Media, news, work on April 7, 2013 at 12:04 am

I never used to say no.

When you work freelance, you memorize the phrase “No problem!” when asked to tackle something you’ve never done in your life but pays. If you say no to everything outside your comfort zone, you’ll starve. Nor will you grow your skills and client list.

So when an editor suddenly emailed me with a 24-hour turnaround — to profile Bruce Heyman, nominated as the U.S.’s new ambassador to Canada — I said O.K. The money was awful, $600 for 1,200 words. But I figured I could do it within five or six hours, and keep my usual rate of $100+/hour.

But, within two hours of starting work on it, I called the editor, (a former colleague in Canada,) and said: “Nope. Not going to happen. Sorry.”

Why?

— I called Goldman Sachs, where Heyman works. I emailed and called several PR people there, using sources shared by a Wall Street reporter who’s a friend of a friend, explaining my urgent deadline. I could tell this was not a priority. The PR woman called me back at 5:00 p.m. that day – a mere eight hours after my initial call.

– The one live person I got at Goldman in PR kept saying “I don’t know him. I just got off a plane from Brazil.” Chill, dude.

English: Goldman Sachs Tower, Jersey City, New...

English: Goldman Sachs Tower, Jersey City, New Jersey (Photo credit: Wikipedia)

– I started Googling Heyman. He likes to drink green tea. That was about the extent of it. Not a good sign.

— I started calling the University of Chicago to reach former White House staffer David Axelrod, since Heyman is a big Obama fundraiser. After five mis-directed calls, I was told that the university has no public relations department (!?). I was told  they’ve never heard of him or the policy institute there he is supposed to be heading.

Senior advisor David Axelrod during a meeting ...

Senior advisor David Axelrod during a meeting in the Oval Office, May 29, 2009. (Official White House Photo by Pete Souza) (Photo credit: Wikipedia)

– I started looking at the names of his fellow Chicago-area fundraisers. Billionaires, every one. Would they take a call from some Canadian wire service freelancer? As if.

I weighed the stress and bullshit of chasing all these people all day long — for $600 for a story no one I know in the States would read. Not worth it.

The editor was grateful I let her know right away.

Have you ever ditched a paying gig, and quickly?

How did it turn out?

Action — Meet Consequence! Why Our Decisions Matter

In behavior, business, children, life, Money, politics, work on November 9, 2011 at 1:40 am
"View in Wall Street from Corner of Broad...

Wall Street...Image via Wikipedia

There is a profound disconnect between what some people understand as their ability or right to take action (or fail to, equally powerful in many cases) — and the very real, direct, life-altering consequences of those choices on others.

Doctors know it. Teachers live it. Mechanics see it. Builders create it.

But for too many people, their actions are invisible, while their consequences wreak utter, public havoc.

Two U.S. national news stories make this (again) clear, the ongoing recession (partly caused by much greed and recklessness of Wall Street professionals) and the Penn State abuse scandal now making headlines:

This is not a case about football, it’s not a case about universities, it’s a case about children who’ve had their innocence stolen from them and a culture that did nothing to stop it or prevent it from happening to others,” Frank Noonan said.

“What happened here was ‘grooming,’ where these predators identify a child, become mentors … then give them gifts, establish trust, initiate physical contact, which eventually leads to sexual contact,” Noonan said.

Jerry Sandusky, a former defensive coordinator on the college’s storied football team, faces charges that he abused eight boys. A grand jury’s report details his alleged sexual assaults of children as young as 10 in his home and in the team’s locker room showers.

In a recent issue of The New York Times, economist Nassim Taleb argues that bankers should not receive bonuses, as they reward excessive risk-taking — whose consequences the actors never directly feel:

The promise of “no more bailouts,” enshrined in last year’s Wall Street reform law, is just that — a promise. The financiers (and their lawyers) will always stay one step ahead of the regulators. No one really knows what will happen the next time a giant bank goes bust because of its misunderstanding of risk.

Instead, it’s time for a fundamental reform: Any person who works for a company that, regardless of its current financial health, would require a taxpayer-financed bailout if it failed, should not get a bonus, ever. In fact, all pay at systemically important financial institutions — big banks, but also some insurance companies and even huge hedge funds — should be strictly regulated.

Critics like the Occupy Wall Street demonstrators decry the bonus system for its lack of fairness and its contribution to widening inequality. But the greater problem is that it provides an incentive to take risks. The asymmetric nature of the bonus (an incentive for success without a corresponding disincentive for failure) causes hidden risks to accumulate in the financial system and become a catalyst for disaster. This violates the fundamental rules of capitalism; Adam Smith himself was wary of the effect of limiting liability, a bedrock principle of the modern corporation.

Bonuses are particularly dangerous because they invite bankers to game the system by hiding the risks of rare and hard-to-predict but consequential blow-ups.

I’m exquisitely aware of the effects of my actions as a journalist and author of two non-fiction books.  I know that every single time I turn in an article or a book manuscript, I hold other people’s lives, words and reputations — both personal and professional — in my hands. This is serious stuff! (In the 20 years I’ve been writing for The New York Times, freelance, I’ve never had a correction published.)

When “Malled ” was completed, two lawyers read it over carefully. We excised certain elements, shaded others, and I learned a lot about libel law. I also bought liability insurance in case anyone I wrote about — under the amusing delusion I’m wealthy — decides to come after me.

I recently wrote about a man who runs a wilderness survival program, that I took and described in the Times. I wondered why I hadn’t heard back from him. He was so swamped with new students and interest from across the country that he only wrote this week to thank me. I’m delighted that my skills (and the platform of a major newspaper) have brought his work, skills and passion to a wider audience. This is such a privilege my work affords me!

I’ve known for decades that my actions have consequences, for good (yay!) and for ill.

I wish more people really understood this.

Here’s A Real Horror Film! “Inside Job” Details The Financial Meltdown

In behavior, business, Crime, entertainment, History, Media, men, Money, news, politics, US, work on December 8, 2010 at 5:25 pm
NYSE

Image by brian glanz via Flickr

Go see this movie. Right now!

“Inside Job” is a film that is so utterly horrifying, so enraging, so depressing that you can’t leave the theater unmoved.

Nor can you shrug it off as “just a movie.”

This amazing documentary, all two hours of talking heads and graphs, is a totally compelling explanation of how the recession came to be, and the men who so skilfully engineered it, raking in billions as they did.

Writes Felix Salmon, of Reuters:

No financial journalist could have made this film: we were all far too close to the people and events depicted in it, which turn out to have really needed an outsider’s perspective. This is surely the first and last piece of financial journalism that Ferguson will ever make and it’s much more effective for it.

As Bob Mondello says on NPR:

“pretty much any 30 seconds of interview footage in Inside Job will make you want to throttle the nearest banker, broker or economic analyst.”

You’re Overpaid! Mott’s Squeezes Hourly Workers Even Harder

In business, food, work on August 19, 2010 at 12:34 pm

You have to love a company that makes it abundantly clear to workers — you’re overpaid! At $19 an hour, those employed at an upstate New York plant making Mott’s apple juice have been told they earn too much.

This, in comparison to other area production workers near Rochester, many of them desperate for work after layoffs by Xerox or Kodak, former corporate behemoths.

The company is doing just fine.

It’s not in bankruptcy, or struggling, or cut to its knees by competition from China or India. No, they posted $555 million in income for 2009, compared to a $312 million loss the year before.

They just want more profit! Because…they can.

So, in a gesture almost touching in its quaint futility — sort of a whaling captains’ convention — the workers went out on strike in May. They’re still there, reports The New York Times’ terrific labor reporter Steven Greenhouse.

The company cut its annual picnic and holiday party — but also wanted a $1.50/hour wage cut, pension freeze and other concessions.

The plant, of course, is running with scab labor. In this economy, they can certainly count on finding willing bodies happy to make sure the plant’s workers have little leverage.

Read “The Big Squeeze”, Greenhouse’s depressing, powerful analysis of where the American worker has ended up: with little to no power, forced into wage and benefit concessions, scared and angry. Published in 2008, it is nothing but prophetic.

If it doesn’t wake you up, you’re not paying attention.

Few reporters even bother to cover “labor” anymore, instead preferring business profiles about CEOs or Wall Street analysts.

Workers? Not so much.

Now that corporate executives earn 300 times their lowest-paid workers, when — exactly — is enough profit enough?

From The Times’ story:

“Companies have asked for concessions throughout the history of the labor movement because they’ve faced hard times and needed help to survive,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, which represents the Mott’s workers. “Dr Pepper Snapple is different. They don’t even show the respect to lie to us. They just came in and said, ‘We have no financial need for this, but we just want it anyway because we figure we can get away with it.’ ”

Negotiations have not been held since May, and Dr Pepper Snapple says it has no intention of resuming them. The company has continued to operate the plant using replacement workers and says that production of apple juice and apple sauce is growing each day. Union officials say production is one-third of what it was before the walkout.

The Mott’s workers voted 250 to 5 to strike, walking out on May 23. They were furious about the company’s demands to cut their wages by about $3,000 a year, freeze pensions, end pensions for new hires, reduce the company’s 401(k) retirement contributions and increase employees’ costs for health care benefits. Dr Pepper Snapple said it was merely seeking to bring its benefits more in line with those of its other plants.

I’m not swallowing Motts’ arguments.

Nor a drop of any of their products.

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Women And Money: We Earn Less And Invest Poorly (If At All)

In behavior, Money, women on April 24, 2010 at 11:45 am

Today’s New York Times offers a helpful look at several new books and a website, LearnVest.com I blogged about a few weeks back, all designed to help women better invest and manage their earnings:

The real issue, experts say, is that many women, despite strides in education and in the workplace, simply aren’t as confident and knowledgeable about financial matters as men. This problem persists even as women handle many of their families’ routine money management duties, like paying bills and making many purchasing decisions.

“Research has shown that women, even professional women with good jobs and successful careers, tend to be less financially literate than men,” said Annamaria Lusardi, an economics professor at Dartmouth College who has studied the issue. “The gap in financial literacy between women and men is large not only among older people, or those 50 and older, but also among young adults, an age group where women are more likely to have a college degree than men.”

That’s similar to what Eleanor Blayney, a financial planner who focuses on middle-age women, said she found when she gave a speech to her fellow alumnae at Mount Holyoke College a few years ago. “At the end, the hands went up, and they were all stuck at the very beginning of my speech,” said Ms. Blayney, who has a new book on the subject, “Women’s Worth: Finding Your Financial Confidence” (Directions). “They were scientists, professors, municipal elected officials. These were women with brains and jobs, and they were just at a loss to even know where to begin.”

Not all women lack financial skills, of course, and many may simply lack time. But studies show that women don’t find money and investing as interesting as men. Women also prefer to learn about money in person or in groups with others in their situation, as opposed to curling up with a book (the jury is out on whether pink covers help).

According to a 2007 study on gender differences by Tahira Hira of Iowa State University and Cäzilia Loibl of Ohio State University, women are still less likely to be socialized in financial matters, and they are more likely than men to find investment decisions stressful, difficult and time consuming. The study also found that it often takes a life event, like getting married, to prompt women to save and invest, whereas men were more likely to start investing gradually.

I evangelize on this subject — likely to a boring degree — because it is essential. Women work hard for their incomes and trying to park their savings safely means wading into an intimidating, unfamiliar  sea of acronyms, ADRs, ETFs, NASDAQ, CDOs (oh, them, the most toxic of all!) It all too quickly feels like we’re being pulled by a vicious riptide, whether too-high management fees or “money managers” who speak to us very slowly in words of one syllable and just piss us off.

The last time I sat with an advisor from my investment company, I suggested she look at RIM, which anyone anywhere in that business should know immediately is the (very successful) Canadian company that makes the Blackberry. She did not recognize the name.

Not very confidence inspiring.

I once simply gave up on an investment my ex-husband had made for me, an annuity that withdrew every month from my paycheck to save for it, because I didn’t understand it. I’m not stupid or lazy. The financial advisor who’d sold it to my ex was an arrogant jerk who spoke to me with condescension every time I called to ask “What is this thing?” After I lost a job I did not realize that they simply kept funding the thing using my own savings, in effect cannibalizing my own savings to “save.”

What a scam.

I had stopped opening their envelopes because I knew it was bad (and, yes I was a moron) didn’t want to know how bad. I had lost a ton. Not even enough to buy a cheap new car, but my damn money.

Finally, I closed it, took the hit. Never again!

I survived the last Wall Street meltdown because I was mostly in cash. I have read many personal finance books, even those so highly recommended, and they still make my eyes glaze over. I need to fully understand P/E ratios and a bunch of other metrics before I wade in. I read three business sections every day and I also read many financial/money magazines. It doesn’t, frankly, make me any more eager to risk my money.

Women, for all sorts of reasons, earn less than men; these stats from Time are interesting.

If I make 77 cents to a man’s full dollar, maybe I’m 23 percent less likely to blow it in some lousy investment. I get it, no risk, no reward. Risk remains a real four-letter word to me, and to most women.

African American women make 68 cents to the dollar, and Latinas 58 percent. No wonder we clutch our wallets so tightly.

Look at Goldman Sachs and ask yourself why.

Testosterone + Money + Pressure For Profit = Too Much Risk. Time For Women To Run Wall Street?

In behavior, business, men on March 23, 2010 at 4:10 pm
An assortment of United States coins, includin...

Image via Wikipedia

This week’s New York magazine has an interesting piece by ex-Portfolio staffer Sheelah Kolhatkar asking “What if Women Ran Wall Street?”:

Despite what we’ve been led to believe, the market isn’t rational or efficient at all—it’s all about feelings. The major plot points of the crisis largely turned on emotion: Dick Fuld was too egotistical to sell Lehman Brothers when he had the chance, so his pride drove it into the ground; Bear Stearns hedge-fund managers lost huge sums of money on subprime mortgages despite the fact that they suspected the worst (“I’m fearful of these markets,” Ralph Cioffi e-mailed a colleague back in 2007); Merrill Lynch was the “fat kid,” as the investor Steve Eisman has put it, so desperate to be like Goldman Sachs that it barreled into every dumb investment imaginable and had to be bailed out by Bank of America. Almost every single bank chief doubled down on mortgage junk at exactly the wrong moment. Emotions led otherwise intelligent men—because, let’s face it, all of them were men—to make terrible decisions.

According to a new breed of researchers from the field of behavioral finance, Wall Street’s volatility is really driven by our body chemistry. It’s the chemicals pulsing through traders’ veins that propel them to place insane bets and enable bank executives to make risky decisions—and those same chemicals tend to have the same effect on everyone, turning them into a herd of overheated animals. And because the vast majority of these traders and finance executives are men, the most important chemical in question is testosterone.

Here are a few things we know about testosterone: Both men and women produce it, but men make fifteen times as much of it as women, on average… Behaviorally, it does all the things that one would expect: It is linked to increased aggression and dominance, confidence, hostility, violence, sensation-seeking… One of the most fascinating things about testosterone is the way it can be influenced by the environment.

The link between risk-taking behavior and high(er) levels of testosterone has been posited before.

How much worse — or better — could women make it?

A Pedicure, a Car-Wash, Some Fancy Honey. I Did My Bit Today for the Economy. How About You?

In business on August 19, 2009 at 3:12 pm
A picture of a wallet.

Image via Wikipedia

Get out your  wallets! If you don’t, the American economy isn’t going to recover any time soon. It relies on us consumers to keep it humming. So say all those beleaguered retailers. Buy something, damn it.

Funny thing, frugality. It means spending very little. Living within or below your means. Totally alien behavior for the past decade and so, so annoying to all those companies who need to us spend money, even if we actually don’t have it.

Today, with a payment finally in hand, I treated myself to a few of the micro-luxuries I can still afford, not put on a credit card and see immediate pleasure from. I blew $30 (plus $6 tip) on a pedicure and caught up with Helena, still fighting with her freshly-divorced husband and still sharing the house they can’t sell. Spent $6 getting the car washed and $1 to vaccum it; sorry, Wall Street, we’re not buying a new/used vehicle any time soon. Enjoyed a Chinese lunch for another $7 and blew the big bucks, $42.99, across the street at our local gourmet store, run by Hassan, a lovely, charming former commercial photographer who always presses tastes of cheese and candied walnuts and slices of ham into your weakly protesting hand. I spent my money on small, reliable, delicious pleasures, quickly and easily shared and savored — and spent my money within the boundaries of my suburban town. Tomorrow I’ll take in a bag full of shoes to Mike, the Russian man who runs our local shoe repair shop, and chat about life, and St. Petersburg, where he’s from.

What these endless doom and gloom macroeconomic reports leave out is exactly the sort of micro-level spending I bet many of us are still doing: local, personal, low-key. I loathe chain stores and malls but I still need stuff and I’m happy to put my hard-earned cash into the hands of people whose faces and names I know, whose personality andenergy and skill make my town a haven, and keep our local storefronts filled and functional. Call me old-fashioned, but I really treasure face-to-face, personal commerce. A chance to chat, be social, slow down and make an exchange not only of cash, but a smile, a hug, an idea, a memory.

I’m the consumer driving people like Home Depot mad because, a homeowner who loves projects, I’m not even buying hardware or paint these days. The only major purchase planned for late fall is a new terrace door, the cost of it equaled by the cost of the labor to install it by Michael, our trusty carpenter. But until I’ve lined up the entire cash cost of that purchase, $700, it’s not happening.

So this endless whining that we’re not spending is getting old. Probably like millions of Americans — out of work, underemployed, scrambling for freelance clients in a recession, fearful our still-employed spouse or partner can (and might) get laid off any time without warning — I’m trying to be smart, frugal and cautious. Paying down the credit card debt as fast as possible, since Amex just tossed me and many other loyal (hah) long-time cardholders out of the calm 9.9% fixed APR pool into the sharkpond of 15%+ variable.

Beyond gas and groceries, what, these days — if anything — are you buying or planning to buy?

Look Out Lance, Here Comes Evelyn!

In sports, women on August 9, 2009 at 9:05 am
Evelyn Stevens wins @Battenkill

Image by jdanvers via Flickr

As a jock since childhood and a formerly nationally ranked saber fencer, I love stories about female athletes.

Evelyn Stevens, who’s been working on Wall Street for an investment fund, is a young woman now considered one in a million with her newfound aptitude and talent for competitive cycling. She’s in a race today, the Route de France, she might even win, a six-day race facing the world’s top females. The photo here is of her recently winning the Tour of the Battenkill, the country’s largest one-day sanctioned race.

A former collegiate tennis player at Dartmouth, she’s been cycling competitively less than a year.

Here’s Reed Albergotti’s Wall Street Journal profile of 26-year-old cycling phenom Evelyn Stevens.

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