Warren Buffett famously said: "You only learn who has been swimming naked when the tide goes out."
True enough. But consider this: The receding tide also makes it easier to spot the few hardy souls who remain standing - or even kneeling - while most of their fellows lie motionless beneath the surface.
That's your answer if you're wondering how we managed to find the following nine firms, individuals and job-market sectors to list as "winners" (in no particular order) in a miserable year like 2008.
The "last man standing" among the group formerly known as bulge-brackets, in 2008 this institution made good on the cliché, "Find opportunity in adversity." JPMorgan snapped up Bear Stearns for a song in March with backing from the Federal Reserve, then picked up Washington Mutual's branch network from the FDIC for a mere $1.9 billion in September. While its financial results haven't been immune to the meltdowns in various asset markets, JPMorgan has suffered relatively less damage than its major rivals, both European and American.
It might seem downright cynical to label these professionals "winners" in a period when most of their clients suffered grievous financial losses. From a career standpoint, however, private banking is standing tall. Both Credit Suisse and UBS continue adding private-client relationship managers, while slashing thousands of jobs in other business units. Evercore Partners also hired several wealth managers recently. A survey by London headhunter Armstrong International suggests competition for talent between global banks and boutique wealth management firms will cushion private bankers' compensation, even as other bankers earn half or less than they earned last year.
Retail Brokers (A.K.A Financial Advisors)
Late in 2008, bank mergers ignited a recruiting war among institutions and headhunters aiming to lure brokers away from Merrill Lynch, Wachovia and other acquired firms. Top-tier producers, who bring in more than $1 million in annual fee revenue, reportedly were offered up to 100 percent of a year's production to stay put. Meanwhile, rivals dangled "transition" awards of as much 200 percent to brokers to jump ship.
Rep. Barney Frank
The House Financial Services Committee chairman long pressured Fannie Mae and Freddie Mac to weaken their balance sheets by guaranteeing more loans to less credit-worthy borrowers. Yet, the mortgage meltdown he thereby contributed to, followed by the November election results, has handed him more power than ever. Look for Robin Hood politics to influence the handling of bailout funds in the new administration.
In the 1980s, George Soros gained fame as "man who broke the Bank of England." This year, hedge fund manager John Paulson (no relation to the Bush Treasury Secretary) made profits and headlines for shorting shares of four of the UK's biggest banks. That's just one in a string of winning bets made by Paulson & Co. over the last two years - starting with being one of the first funds to take sizable short positions against sub-prime mortgage instruments.
Vilified for raining on stock promoters' parades and for borrowing (or sometimes failing to borrow) shares they wish to sell, these hardy pessimists were just about the only fund managers to make money for clients in 2008. Their bearish bets struck paydirt after Lehman Brothers' mid-September bankruptcy sent equity and debt markets into a tailspin. Short-selling was one of just two (out of 13) hedge fund strategies posting positive returns through the first 11 months of 2008, according to the Credit Suisse/Tremont Hedge Fund index series. "Dedicated short bias" funds returned 16.8 percent year-to-date, compared with a 19.0 percent loss for the overall index covering all fund strategies.
A year ago, some feared the sub-prime crisis would sink the reputation and status of risk professionals. Instead, it seems to have boosted their job prospects. That might be partly due to churn, since many institutions did sweep out policy-level risk officers and overhaul their departments. While bonus expectations and packages offered to risk-management pros switching firms tumbled during the year's second half, job security nevertheless looks a tad better for this group than for most other Wall Street departments.
When things go wrong, hire more cops. That explains why these in-house rule enforcers continued to gain influence, headcount and compensation in 2008. No longer denigrated as a back-office function, compliance is inching its way up Wall Street's power structure, in tandem with risk management. Scandals and taxpayer-funded bailouts are driving a move toward new, tougher regulations - which will boost demand still more in 2009 and beyond.
Don't regulators bear much of the blame for tolerating the excessive leverage and rampant speculation that greased the path to the mess we're now in? Yes, but... Some of the same agencies that failed to head off problems last year are now being asked to step up oversight. That requires additional bodies. From a career management standpoint, more important than the number of openings is that for the first time in memory, a stint with a regulatory agency is likely to burnish rather than darken a front-office pro's resume. The latest evidence: The New York Society of Security Analysts is planning a Government Career Fair for next spring.