My views on politics are pretty simple: I dislike politics. That is why I generally stay away from any political disputes and discussions.
That said, the recent protests about the excesses of Wall Street have piqued my interest due to some amusing ironies as well as the revelation that we are in a finance jobs depression.
On the ironic side of things, why is the building of the NYSE in lower Manhattan being protested when the real NYSE exists today in a data center in northern New Jersey? The floor of the NYSE is basically a museum these days.
And why aren't tech company CEOs, who are rapidly joining the 1% club via IPOs, the subject of the populist ire toward the 1%? Does Groupon really provide a service that's better for society than a hedge fund manager who invests in a biotech company working on a cure for cancer?
I don't have the answers to the above questions, which is why I stay away from such discussions. What I do know is that Wall Street has seen the most job losses in more than a generation. The protestors are protesting to no one. Where were they in 2006 during the boom days? Wall Street is one financial crisis away from looking like I Am Legend.
What does this mean for you? Well, if you are 40 years old and are a specialist in packaging home loan pools into CDOs, then you might want to reconsider your chosen career.
But for the rest you, it means you have to be a bit smarter if you want to land a job on Wall Street. I actually think now is the best time to start a career on Wall Street, but maybe that's the contrarian value investor in me speaking.
In this article we will explore the finance jobs depression and how you can best position your job search for success. Among the things we will tackle include:
- How to put the Wall Street job losses into perspective.
- How to broaden your perspective to increase your chances of success.
- Explore where the opportunities lie and what areas to avoid.
- How to harness the proper mindset to overcome your competition.
- When to have a backup plan (or know when to fold 'em).
Financial jobs Armageddon, here we come …
Wall Street Job Losses in Historical Context
A wise investor once told me that people only ever remember the most recent business cycle, which means they forget about the cycle before that.
The most recent recession has seen mass layoffs everywhere. No segment of the economy has been spared, but financial jobs have been hit exceptionally hard. The entire business of structured finance has all but evaporated. The impaired credit environment makes it hard for companies to do business and grow, which has meant follow-on effects such as the need for fewer investment bankers.
Add to that the natural reaction of regulators cramping down on the banks after bailing them out, and you don't have a very good environment for growth.
Of course, people seem to forget about the prior cycle. While much of the economy was reeling from the TMT bubble bursting (Pets.com anyone?), the structure finance market that was born in the 1990s continued to grow and eventually took the place of the tech IPO machine as Wall Street's growth engine.
Finance jobs haven't had a downturn since the early 1990s, the end of the Liar's Poker era. In classic reversion to the mean, this downturn is clearly making up for the lack of a downturn in the early 2000s.
Think a little about history for a minute to help put things into perspective: Do you think the people on Wall Street during the Great Depression had an optimistic view about the future of finance jobs? Considering people were throwing themselves out of windows at the time, I doubt it.
Instead, remind yourself regularly that everything is cyclical. In fact, some of the best investments are the ones made when the crowd has reached maximum bearishness. Who knows, the post-Lehman era just might be that time as finance firms restructure to become safer, more stable companies. Well, at least until they invent the next new, new thing to make money.
But I Want to Do Equities in Dallas!
I'm always amazed at how job candidates early in their career “know” exactly what they want to do and where they want to work. Of course, I had the same preconceived notions when I was just starting out as well. Chalk it up to youthful ignorance.
Ask yourself some of these questions:
- If you have never worked in a certain industry/job before, how do you know you don't like it?
- If you have never lived or even visited a city before, how do you know you won't like living there?
The answer to both is you don't. People are so afraid of the unknown that they will often tell little lies to themselves that they won't like something just to avoid facing the unknown.
It's OK to be scared of the unknown. It's how humans have managed to stay alive as a species all these years. Of course, you aren't merely looking to stay alive but to thrive as a big shot financier.
It's a big world out there with lots of opportunities. Open your eyes and look around a little more. Be open to new ideas, new jobs, new cities, new countries … you never know what you might find. There is a place for you out there somewhere – go find it.
Find the Opportunities
Another preconceived notion held tightly by job seekers is the idea that they can only work for a certain company. Typically a bulge bracket firm.
News Flash! It sucks to be at a bulge bracket right now. Prop desks are being dismantled. Capital ratios are going up. Employees are being let go.
It's time to drop this notion of prestige and that you have to work at the most prestigious firm. Just who are the prestigious firms these days anyway? No one was spared from the post-Lehman storm. Your job now is to find the green shoots sprouting from the aftermath. Find the firms that are growing and stop the Quixotic quest of throwing yourself at the bulge bracket firms that aren't hiring.
Believe me – there are firms hiring. Whenever I'm on the road or out at events (ahem, networking!) I ask people if their firms are hiring. I continue to be surprised at the number of up-and-coming firms that are growing and hiring. These are the firms that lived in the shadows of the big companies for years and now are asserting names for themselves.
It's called creative destruction. Stop fretting about it and embrace the opportunity.
Join the 1% - Be Insanely Great
There's a joke that involves two people who are out camping in the wilderness. The first guys asks what the other guy will do if a bear comes into their camp. The second says he'll just run away. Flabbergasted, the first guys reminds the second that bears can outrun humans. To which the second guy replies, “I don't need to outrun the bear, I just need to outrun you.”
We've heard a lot about the 1% and how evil they are. Well, it's time for you to start your path to becoming part of the 1%: the top 1% of job candidates. If you put yourself in a better position than 99% of your peers (read: competition), you will win job offers.
Steve Jobs used to motivate his employees by saying that merely great products were not good enough. They needed to make insanely great products. You need to become an insanely great job candidate.
The insanely great job candidates don't earn their insanely great status by sitting at home reading Deadspin or playing Angry Birds or Black Ops or trolling social media. They earn their credentials by going out everyday and improving a little bit more.
Don't have a good GPA? Time to start get better grades starting this semester. Do your homework a little but better, study a little harder, ace your exams.
Don't have any experience? Go find it. Ask a professor to help you start an investing club, find a mentor, find unpaid internships, take part in competitions.
No network? Start attending alumni events. Join the local CFA society and rub elbows with some real investment managers.
Does this all sound like a lot? Well, it is. Nothing comes easy. Insanely great doesn't happen overnight. If you really want to be a Wall Street big shot, it's time to start acting like one. Go and crush the competition by working a bit harder than they do everyday. Small improvements will add up over time. Think of it like the miracle of compound interest.
Career anxiety got you down? I've always found the best way to combat anxiety is to face the fear. In this case, what would you do if you couldn't find a job or you end up stuck in your current sh*tty job?
It's time to formulate a realistic plan B. This will be different for every person. Job search anxiety is caused by the fact that the status quo cannot stay the same forever (e.g., you will eventually graduate, your company will downsize you, your boss will never give you a raise, etc.).
If you plan for the unexpected, bad case scenarios, you will find comfort that you can handle any crap that life tries to throw at you.
FIFO or LIFO?
One final word of encouragement. If we are at the end of one business cycle, that means we are at the beginning of the next.
Would you rather be the first one hired at the start of a new cycle or the last one hired at the top of the cycle? Companies typically follow a LIFO policy when it comes to downsizing. Break into the business now and you could be looking at a nice, long career.
Stay positive and crush the competition.