The Problem
I was 21, living in LA and I was hungry for a job. Having just graduated from the University of Chicago with a degree in English Literature my options weren’t exactly wide open. Up to that point, the sum total of my knowledge of the U.S. capital markets came from playing Millionaire on my parent’s Apple IIe. But I was going to be a titan in the financial world. I just hadn’t figured out how.
The reality of moving in to my first apartment with no help from my parents and being off of the meal plan at school meant that I had to make some money. I decided that it was probably smarter to make a lot of money rather than a little. But a problem arose – English majors have very few jobs to choose from and even fewer that pay a real wage. Why not just enter the financial world? I was just as smart as anyone in it, I could do it too. So that became my goal.
Opening the phone book, I found the numbers for the major brokerage houses in Los Angeles – I called the ones that advertised during college football games. You know, Paine Webber, Merrill Lynch, Bear Stearns. The first one I called was Paine Webber. They asked me if I wanted to be an “Associate Investment Advisor,” and I said yes. I wasn’t quite sure what that was, but I knew I wanted to work in the financial world and these guys were in it. They asked me to come on down for an interview that day.
The Hook
Wearing my best (and only) suit, I walked in to the Beverly Hills Office of Paine Webber – it was dazzling. The cars in the parking were all expensive and gleaming; the men walking in and out of the firm were good looking, well dressed and exuded refinement, wealth and success. The walls were adorned with art and the couches in the lobby were soft leather. On the coffee tables were glossy brochures extolling the virtues of certain funds and showed graphs of all shapes with the same message – your money will grow and be safe with us. A receptionist asked my name and before I knew it, I was whisked back in to the office of the manager.
The manager was tall and animated. He spoke quickly and with purpose.
“Here is how it works, if you do well in this interview, then you take a test. You do well on the test, you have a job here. Then you will begin your apprenticeship here. Then you’ll sit for your 7, 63 and 65 and then you start making me money. Got it?”
I nodded.
The interview was brief, I don’t remember the ‘get to know you’ questions, but I suspect there were very few. But I do remember this exchange very clearly. This was my first hint that the brochures, clothes and couches might be a façade.
“So, Jesse, do you want to be rich?”
“I want to be comfortable and I want a career that is fulfilling” I thought I was giving the right interview answer.
“Bullshit. Do you want to be rich, I mean filthy rich?”
Sensing what the right answer is, I stammered “yes.”
“Yeah, how rich?”
A 21 year old kid doesn’t know what money is. I didn’t know what my expenses were going to be that year, let alone what it is to be married, own a house, pay for car insurance, pay for private schools, pay medical bills. “Really rich” I answered.
“What kind of car do you want to drive?”
I just smiled, I thought he must be kidding. He wasn’t.
“Come on kid, what make and model car do you want to drive?”
“A Porsche?”
“You asking me or telling me?”
“A Porsche.”
“That’s a good starter car. Now go take this exam, you pass and you got the job.”
The exam was a dumbed down version of the logic section of the LSAT. Questions like ‘if the roads are always slippery when it rains and the roads are slippery, is it necessarily true that it has rained?’ It was just a simple if P then Q type of question. I was always a great test taker. I passed.
Then the second red flag went up. As I got the news that I passed the exam, the manager turned to me and said, “Well, are you coming to work for me?”
“Do I have to decide right now?”
“Yes.”
I didn’t have to think too long. He was selling what I was buying. I was going to learn about the capitalist system here in our great country and I was going to get rich doing it. Done and done.
The Apprentice
I drove a Jeep in those days; it was beat up and ten years old. What I liked about it was that it had no top. Not that it was a convertible (it was), but I didn’t own a top for it. So when I was driving to work at 5:30 in the morning, it was cold. One needed to be at work long enough before the market opened to be get up to speed on anything a client might ask you. What I learned on my first day was that one doesn’t just go to work as a broker, one needs to be registered with the Securities and Exchange Commission as well as the State of California. Those are the aforementioned 7, 63 and 65.
The Series 7 is a six hour, 260 question nightmare, but before you can even sit for the Series 7 exam, you have to apprentice at a brokerage house for six months. During those six months, we were expected to do two things; help with the daily sales meeting and be prospecting slaves for one of the more senior brokers in the office…….to be continued
Just wondering if any active traders are starting to trade the ETFs? After reading the book by Larry Connors – High Probability ETF Trading – I switched and I would say overall my results have improved but there are fewer trading opportunities because of the small number of ETFs he writes about. ETFs seem to be a little less erratic in their price movement so that’s good but some of them have poor results using the systems he describes in the book.