Morning Coffee: The most bizarre banker story of the summer. Childhood trauma makes you better at finance
This is weird. We won’t mention names here, because it’s quite possible that the whole story will turn out to be rubbish, but if you want to check out who’s involved, you can go over to Bloomberg (or to Zerohedge which has the court documents), or to a local newspaper in Greenwich, Connecticut, that seems to have broken the story. Anyway, it’s a banker’s version of “I Know What You Did Last Summer”.
Because in August 2018, according to news stories at the time, the wife of a prominent and public figure in the world of fixed income sales & trading who lives in Greenwich, was traumatically assaulted by her personal trainer, who then effectively kidnapped her in her own home. The personal trainer was arrested three months later in North Carolina, and spent eight days in jail there (plus another two after transfer to Connecticut) before being released. There seems to have been some difficulty in proving what happened even at the time, though, as the charges were all dismissed last December.
One summer later, the personal trainer has brought a lawsuit – which has been filed in the Connecticut courts system, but which hasn’t been served on anyone named in it, so their lawyers aren’t commenting. The lawsuit claims that the personal trainer in question wasn’t even in the USA that week as he was celebrating his birthday with a moonlight camel ride in Morocco. Also on the camel ride, he says, was the self same banker’s wife, with whom he was having an affair. The lawsuit claims that when the fixed income guy found out about the relationship from social media photos, the couple decided that rather than divorcing, they would work through their issues by concocting an elaborate conspiracy with a local policeman, who is also being sued, to invent the kidnapping and assault.
There are lots of questions raised here, not least “who on earth would Instagram their illicit affair, for heaven’s sake?”. On the face of it, this doesn’t seem like the sort of thing that could be passed off as a misunderstanding; either someone’s committed a pretty serious perversion of the course of justice, or someone’s made up a bizarre fiction in the hope of squeezing some cash out of a rich banker. The mature thing to do would be to refrain from speculation until the facts are established. Unfortunately, fixed income trading floors aren’t always renowned for their maturity and we would imagine that, win or lose, this banker is going to be fending off hilarious remarks for quite some time to come.
In actual fact, salacious news stories about your personal life aren’t always career killers. If you’re considered to be good at calling the market, people are prepared to ignore a lot. There’s an element of showbiz to the sales and trading industry, and while it’s not true that absolutely any publicity is good publicity, getting your name in the headlines at least reminds the clients you exist. Even by the standards of summertime rumours, though, this one is pretty extreme.
Anyway, in other matters, it appears that childhood trauma makes you better at investing. Or at least, according to a study carried out at Cambridge University, U.S. fund managers who experienced parental divorce or death when they were between the ages of 5 and 15 tend to adopt a much more conservative investment style than their peers who avoided family tragedy. In particular, they tend to sell the shares of companies with high CEO turnover. (In the investment banking sector, this personality trait would have led you to go long JP Morgan and short Deutsche Bank, which would have been a pretty good trade in retrospect).
It’s hardly surprising that people’s childhood affects their personality, or that personality is reflected in an investing style. It’s maybe a bit more surprising that childhood events affect investment choices in such an obvious and predictable way; are we really meant to believe that fund managers are driven by their inner child to find the stability in their stock portfolio that they lacked when they were in high school? And this study only considered American investors – do British bankers do different things if they went to boarding school? It seems a bit too trite to be true.
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Colorado’s “Mile High Labs”, not necessarily the most compliance-friendly name for a CBD manufacturer, is opening up its first London office this year, run by two Danish twins who have previously worked for UBS, Morgan Stanley and Citi. (Evening Standard)
Pivoting from one career to another – it’s becoming more and more common among young professionals, although this article also covers commodities traders moving into manufacturing bicycle wheels. There’s a whole industry consulting people on how to do it right. (Bloomberg Businessweek)
Careful with the side-hustles – a former Deutsche trader has been arrested in Germany on suspicion of having been involved in €145mn of carousel fraud, based on charging VAT on fictitious transactions in carbon credits (City AM)
The Wall Street Journal thinks, based on quantitative research into incumbent and challenger firms’ ratings of CMBS securities, that “soft” ratings of the sort that fuelled the last financial crisis are being made again (WSJ)
Talk about awkward starts to a new job – while still on leave before becoming Governor of the Central Bank of Ireland, Gabriel Maklouf has had to write a letter to the finance minister explaining his role in a scandal which affected his previous job in New Zealand (Bloomberg)
In an otherwise pretty terrible industry, there are still some niches of investment management that might still be able to generate asset growth, fee income and therefore well-paying jobs (Institutional Investor)
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