Morning Coffee: How to avoid banking and still make a fortune in finance. Impressing the most important man at Goldman Sachs
If you're 40 years old and still struggling to earn the fabled big money in finance, maybe you're doing it all wrong? Maybe you have an MBA from a top school? Maybe you've been rising slowly on the updrafts at an investment bank? Maybe you've developed a strategy to trade against satellite data from retailers' car parks? What if you could simply have spent your career as the logistics manager of a Target store before ferociously shorting the VIX?
This is the path Seth Golden has trod. The New York Times reports that Golden, whose self-appointed title is "chief market strategist" after a "20 year career in retail" and a Bachelors of Science in "English Education" from Florida University, has made a small fortune doing little more than betting that the VIX, or so-called "fear gauge", will keep on falling. “The nature of volatility is that it desensitizes over time,” Golden tells the NYT. “Which is why the index has been tracking down for so long.”
With this simple strategy Golden claims to have multiplied his net worth from $500k when he was aged 35 to $12m now that he's aged 40. The implication is that he accumulated wealth at the rate of $25k a year during his 20 years in retail and $2.4m a year during his five years shorting the VIX.
Even better, Golden says investors have "been pounding on his door" to invest in his new VIX-shorting fund and have offered $100m so far. 40-year-old traders earning £180 ($233) an hour, eat your hearts out. Golden's great success doesn't seem to have stopped him having a side-business, however: his LinkedIn profile shows that also he's spent the past two years trying to patent some kind of cooling system for the consumer goods industry.
Separately, the man of the moment to impress at Goldman Sachs is Marty Chavez, the new(ish) CFO. And what better way to do that than to read the books that Marty is reading? A white-toothed Chavez has made his end of summer recommendations on Goldman's own site. If you want to get in with him, you should leaf through Homo Deus: A Brief History of Tomorrow, by Yuval Noah Harari, and Strangers in Their Own Land: Anger and Mourning on the American Right, by Arlie Russell Hochschild.
Chavez describes the first book as a "provocative speculation on the future" (which he doesn't entirely agree with.). He says the second book explains, "why people who might benefit from liberalism instead reject it."
How to start an FX business with a £1.4bn ($1.8bn) turnover when you're 24 years old and have no money. (Business Insider)
Forget the quants. The average equity hedge fund has gained 7.7% this year. Quant equity funds have gained only 4.9%. Quant “macro” funds, which invest across markets, have lost 1.4%. (Financial Times)
Structured credit (specifically synthetic CDOs) is making a comeback at BNP Paribas, Citigroup, Goldman Sachs , J.P. Morgan. and Société Générale. (WSJ)
Based on the $4.5m Jean-Laurent Bonnafé earned last year for running BNP Paribas, the eurozone’s biggest bank by assets, it would take the French banker over 15 years to earn as much as the Goldman boss did in 2007 alone. (Financial Times)
French and Italian Masters in Finance students still love London. (Financial Times)
Wanted: Google employees who feel hard done by. (Vanity Fair)
New reasons not to work in Silicon Valley: the 2.15am commute. (NY Times)
Companies are using email traffic flows and calendar metadata to establish who's happy at work and who's not. (HBR)
Beware positive thinking: Positive thinking can make us feel better in the short term, but over the long term it saps our motivation, preventing us from achieving our wishes and goals, and leaving us feeling frustrated, stymied and stuck. (Aeon)
HSBC private equity analyst shaves hair and becomes Buddhist nun. (Economic Times)