On a sticky summer morning at the end of the Eighties, 19-year-old Jason DeSena Trennert-a bright, unconnected Georgetown undergrad with big dreams and an even bigger power tie-set out for Wall Street. Mustering the perceived panache of the bigwigs, he burst through the doors of America's oldest financial firms.
He was roundly rejected. And entirely undeterred.
Trennert accepted a position as a cold-caller and charged ahead with the blind zeal of inexperience, finding in the process a genuine affinity for the customs and history of his work. Clinging to his dream from humble beginnings in financial sector Siberia-Morgan Stanley's Brooklyn outpost-and enduring the vilification of a respectable profession across two boom-bust cycles, he opened his own boutique company, now one of the world's leading research firms.
Part memoir, part love letter to an institution popularly viewed as a necessary (or as just plain) evil, My Side of the Street delivers the long-overdue defense of the investment banking industry critiqued by Michael Lewis and others, illuminating the ethical and decent majority who take the subway, worry about mortgages, and keep the entire enterprise on its feet. Introducing the general reader to captains of finance, famous on The Street but invisible to outsiders, Trennert lays on display the absurdity and unbridled joy of big business-a comic tale of unlikely success in America's most notorious industry.
|Publisher:||St. Martin's Press|
|Product dimensions:||5.50(w) x 8.30(h) x 1.00(d)|
About the Author
JASON DESENA TRENNERT is the founder, Managing Partner, and Chief Investment Strategist of Strategas Research Partners and CEO of Strategas Securities LLC. A graduate of Georgetown and Wharton, he is the author of New Markets, New Strategies (McGraw Hill, 2004). A regular guest host on CNBC's Squawk Box, he appears frequently on network news programs and writes for The Wall Street Journal, The Financial Times, and Investor's Business Daily. He lives in Manhattan with his wife and two children.
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My Side of the Street
Why Wolves, Flash Boys, Quants, and Master of the Universe Don't Represent the Real Wall Street
By Jason DeSena Trennert
St. Martin's PressCopyright © 2015 Jason DeSena Trennert
All rights reserved.
WELL, IT'S A START
Although I sought to go to the best schools, or at least the most prestigious ones, I have come to the conclusion that where one went to college is at best a poor predictor of future success, and at worst, completely inconsequential. When we seek to hire people for my company today, the quality of the college from which they graduated—or even if the candidate ever graduated from college—is never discussed. Life on Wall Street, mercifully, doesn't demand the kind of academic talent that might be required of a brain surgeon or an astrophysicist; it merely requires hustle, commercial aggressiveness, a genuine interest in the business, and—if one wants to stick around for a while—a sense of ethics and camaraderie that might help you survive the lean times.
But I didn't know any of this when I entered Georgetown University's School of Foreign Service in the fall of 1986 with the vague hope of becoming a foreign service officer or a CIA operative. It was exciting to be in Washington in the 1980s and my period of self-discovery was at times unsettling and painful. To the considerable consternation of my unionized public school teacher parents, I remained a Democrat for precisely one semester. The hurly-burly of then-mayor Marion Barry's Washington, DC, seemed so much more depressing and hopeless than President Reagan's view of America. Mayor Barry, I thought, saw the poor as a means to acquire political power, while Reagan saw poverty as a potentially temporary condition in a country built on the dignity of the individual. Georgetown's few rebels and revolutionaries seemed unnecessarily angry about the wrong things and were often spoiled kids who wouldn't ultimately have to worry all that much about getting jobs after graduation anyway.
My career ambitions shifted with my political beliefs. I soon realized that the chances of my cheerfully processing passport applications in Mali after graduation were zero. To start, I was too big a fan of Western civilization and, perhaps more important, I hated roughing it. As far as the CIA was concerned, I had virtually no ability to keep a secret, a serious liability for someone who was almost perpetually suntanned. I was never going to be the guy who could "blend."
Nowadays, it seems that most people anticipating a career in business line up a series of ever more prestigious internships from summer to summer, but in those days, many of us still needed to work regular jobs either for reasons of economic necessity or parental insistence. Internships existed in those days of course, but they were far less ubiquitous and regimented than they are today, and most of us—at least in the summers after our freshman and sophomore years—felt no need to get fancy posts in preparation for our future careers in business. We all felt perfectly comfortable waiting tables or tending bar or caddying or doing any number of other pay-by-the-hour jobs when we weren't in class. There was absolutely no shame in it. You didn't feel as if you were falling behind your peers, and there was something oddly liberating about performing tasks where—in contrast to our studies—success was often measured by one's ability to show up on time and do an honest day's work for an honest day's pay, and where, if you were doubly lucky, that pay was also off the books. Summer jobs instilled in me this particular brand of work ethic and, more than that, a basic appreciation for my work and pay. That these things carry over to my generation's work, on Wall Street as in other sectors, seems to me an important thing to bear in mind.
It is almost a cliché for older generations to bemoan the weak work ethic and faulty sense of pride in the waves of youth that follow them. Still, if there is one development I could point to that has contributed mightily to the sense of entitlement and narcissism so apparent in new college graduates from elite universities today, it is the demise of the summer job, a position that might require punching a clock, wearing a uniform, and accepting the taunts and orders of those who never went to college and were often proud of it. There are lessons to be learned in finding, getting, and keeping these jobs that don't come from having your father finesse you an internship at Goldman Sachs.
The most important of these lessons, one I learned in the years I spent borrowing my mom's Jeep to deliver papers, driving a campus shuttle bus, or waiting tables in wedding clothes at the Scotto brothers' Fox Hollow Inn, was how lucky I was to be attending college in the first place. Without an education, those jobs might have been a necessary means to pay the bills as opposed to a choice. There is dignity in all work, but it's always better to have options. As a college kid, I greatly enjoyed the fact that my time after work was my own, and the freedom and thrill that came with receiving a paycheck. Today it is not uncommon for me to interview recent college graduates whose work experience consists solely of what one might call the ethereal internship—posts that couldn't be more impressive in terms of status but that also completely inoculate the student from anything remotely resembling real life. I've interviewed kids who spent their summers as "special assistants to the secretary general of the United Nations," or worked in the White House, or roamed the halls of the British Parliament, or spent time—improbably but nobly— helping the poor souls visiting Lourdes.
These are the kinds of wonderful experiences we all wish our kids could enjoy. If these positions present a challenge for those who attain them, it's that they rarely expose the person holding them to unfair treatment, or require them to encounter those whom life has treated poorly. As a result, the holders of such sinecures fail to see that great endeavors often start with learning to complete small, routine tasks; scut work has lessons to teach. Once these tough, thankless summer or part-time jobs ended, I was happy to go back to college, grateful for a chance one shouldn't trifle with. Most of my classmates did the same thing and felt the same way. There were of course traces of the monster that has become the youthful self-esteem cult of today, but such traces were then faint. For the most part, we were happy to be in college and just as happy, with the benefit of time to reflect on them, to have had tedious jobs full of lessons, not the least of which is that many intelligent people, including immigrants and first-generation Americans, had few other options than those jobs we took for granted.
Nevertheless, at a certain point in everyone's life, you realize that your future employers might want some sense that you have a passing interest in the industry of your choice. But three years into school, I still hadn't settled on my industry of choice. In the summer following my junior year at Georgetown in 1989, after spending the first few weeks of summer break at home drinking with my high school buddies and unsuccessfully pursuing the girl who worked behind the counter at Sinatra's pizza on Veterans Highway, I started to piece together something that looked like a résumé, replete with misplaced self-confidence and delusions of grandeur.
For some reason, I was still holding on to the idea that I could use my education in "diplomacy" in the private sector. While it was clear that I wasn't cut out for a career in foreign service or a national security agency, I still had an intense interest in both history and current events. Designed to train diplomats in the aftermath of World War I, the School of Foreign Service at Georgetown has an intense curriculum that requires the completion of courses in political science, history, and economics. A degree from the school also requires proficiency in a foreign language in addition to the university's core curriculum, which included classes in English, theology, and philosophy. Somewhere in this humanities-intensive course load, I discovered that I had a real affinity for macroeconomics. Being able to pair this newfound interest with a real job sounded like a great compromise. Without any real sense of the absurdity of what I was proposing, I listed my career objective as political risk analyst—without really any idea about what such a job might entail—made twenty copies of my résumé on heavy stock paper, and took the Long Island Rail Road into Manhattan to seek my destiny.
I had no set appointments, just a list of companies and their addresses. I walked from Penn Station in my yellow power tie and my ill-fitting suit from Jos. A. Bank, a wonderfully aggressive haberdasher that had held a dress-for-success seminar on campus in the spring semester. I intended to visit the remnants of the great industrial conglomerates of the 1970s; I imagined that Philip Morris, Colgate-Palmolive, ITT, and IBM, among others, might be able to use a guy like me for their far-flung operations. Of course, I never got past the security guard or the receptionist, but I remember that nearly everyone was sympathetic—the way people are with those who seem hopelessly naïve.
My last stop was to visit my cousin Lynn, a loan officer at Republic Bank on Madison Avenue, a welcomingly kind and familiar face after a long day. I went back home and had chicken cutlets and a beer with my dad. I was beat but he seemed proud, perhaps relieved, that I actually had plans to move out of the house upon graduation and to be gainfully employed. He was a kind man who judged people almost solely on their motives and character. A poet, he was a romantic at heart and saw the nobility in those who strive—no matter really what for. I waited for what I hoped would be a series of phone calls from high-powered executives smoking cigars in chalk-striped double-breasted suits who would be certain to yell out to their secretaries something like "Get this kid Trennert on the blower. He might be able to help us with our problems in Johannesburg!" But the calls never came—except for one from a head greenskeeper who needed some extra help at IBM's private country club in Westchester. It is still a wonder to me how my résumé got from Madison and Fifty-seventh to Poughkeepsie, but I was grateful just the same.
My dad urged me to take the job, vaguely referencing what he saw as the start of my own Horatio Alger story in corporate America. I was tempted, too, for I knew the money would be good and the job would put off the reality of coming to terms with my future. But I knew the days of summer jobs with lots of laughs and little responsibility were over. I needed to get something down on paper that demonstrated that I had the "fire in the belly" that so defined the business ethos of the 1980s. So I set my sights a little lower, deleted the pretentious political risk analyst objective from my CV, and set off in my mom's forest-green Cherokee to drop off résumés at the varied brokerage firms that lined Broad Hollow Road in Melville.
There was a lot less security at these firms and it was possible in almost every case to talk to a human being who wasn't so far removed from someone who could hire me, so I felt as if I had a chance. My hit ratio wasn't much better than it had been in Manhattan, but I did receive a call from a broker from Smith Barney: Paul, who needed a cold caller and was willing to give me a chance. Paul was a smart guy who knew what he was doing as best I could tell at the time. He represented much of what most of us strived to be and to have in the rollicking 1980s: in his late twenties, he drove a BMW and was, I later discovered, teaching his gorgeous sales assistant Stephanie to count ceiling tiles in the supply room a few days a week. I was to be paid $200 a week to work Monday through Friday from nine to five, with a fifty-dollar bonus for each new account I opened. I had access to an empty, windowless office, a phone, an enormous Dun and Bradstreet directory of public companies and their top executives, and, finally, to a short script that talked about the "growing opportunities in asset arbitrage" among America's public companies. This was still near the height of the merger boom, and I was expected to make eighty calls a day.
And a strange thing happened, however improbable it sounds to anyone who's worked as a cold caller: I loved it.
I loved the challenge of getting past the secretaries, of pitching new business, of developing some completely apocryphal rap about the market. I loved swapping my Reeboks, khakis, and button-down shirt for a jacket and tie, an ersatz Gordon Gekko in training. Now, looking back at it, the whole idea that I was allowed to call clients unsolicited is shocking to me. But Paul was teaching me the basics and gave me my first copy of Understanding Wall Street by Little and Rhodes, still probably the best primer on the stock market available today. In simple terms, it explained the theory of the corporation and the importance of the financial markets in the capital formation process. I developed a new romantic vision of the great industrialists that made America. Few things match the excitement of the young experiencing new endeavors for the first time. I was absolutely thrilled with the idea that I could order my lunch first thing in the morning from a local deli that would deliver it personally to me at lunchtime. I was similarly excited about what would become a staple later on in my life—the after-work watering hole, where brokers and secretaries would imbibe Absolut Citron by the gallon.
There was no voicemail in those days, which in retrospect was a blessing because only the most cynical and experienced secretaries wouldn't take a message if you had the right phone manner and overall demeanor. I can't remember my success rate exactly but my best guess is that perhaps I'd actually be able to talk to three or four "live" prospects for every eighty calls I made, fifty prospect calls being the absolute minimum for a cold caller at the time. One prospect a week might actually take a meeting with Paul. Ultimately, I never received a bonus for actually opening an account, and I was far too stupid to realize that it would be virtually impossible to do so within two months of an introductory phone call. It was a numbers game, pure and simple, and a brutal one at that. What sustained me was learning about the great game of Wall Street and imbibing its lore from both the older brokers and my increasingly expensive desire to read anything I could about the subject.
Wall Street proved a case of love at first sight, perhaps incongruous for me, the son of two public school teachers who had never owned a share of stock in their lives. The pages of my Little and Rhodes book became dog-eared and I wouldn't go out with my friends until nine o'clock on Friday nights for fear of missing Louis Rukeyser's Wall Street Week, a precursor—and a better one at that—of the explosion of financial media that would follow it. Physically, he bore some resemblance to George Washington and he possessed the breezy erudition and humor of the quintessential Yankee. It wasn't hard to imagine Lou being the lovable chairman of the board of a company in some black-and-white motion picture. He understood that the little guy could like the stock market, too, and that given the economic circumstances of the 1970s and '80s, many of the topics discussed would naturally straddle both finance and public policy.
The retail brokers assembled at the Smith Barney offices at 445 Broad Hollow Road ran the gamut from serious lifetime agents of their clients' best interests to short-time fraudulent hacks. Back then the process of the media blowing everything completely out of proportion—which would reach its zenith in 1999 during the dot-com era, and again in real estate speculation in the following decade—was in its infancy.
The culture of Wall Street was correspondingly more sober. There were more than a few Vietnam vets in the Broad Hollow office, all serious men at a time when the country was still trying to come to terms with the physical and emotional casualties of America's involvement in that ill-fated war. By far the most unique broker in the office was a Japanese guy named Akio who, through some sort of sick, weird love-hate relationship with his clients, often managed to browbeat them into buying and selling stocks. It wasn't unusual to see him standing on his desk, the spiraled telephone cord taut from his excited ministrations, screaming, "You no buy three hundred shares! You buy a thousand shares, dummy!" at the top of his lungs. There are few style points in the brokerage business. Yet somehow it worked—he was a big producer.
Excerpted from My Side of the Street by Jason DeSena Trennert. Copyright © 2015 Jason DeSena Trennert. Excerpted by permission of St. Martin's Press.
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Table of Contents
Prologue: Nights at Rothmann's 1
1 Well, It's a Start 15
2 A Little Luck 32
3 Players Travel Light 48
4 "B" School 71
5 Big Hat, No Cattle 90
6 The Customer Man's Two-Front War 102
7 9/11-The Day Everything Changed 116
8 Pundit, Poet, Drinker, Diner 122
9 My Own Shop 138
10 America, the Greatest Show on Earth 155
11 Other People's Money 175
12 Conclusion-For the Love of the Game 190
Epilogue: A Quiet Night at Rothmann's-September 11, 2013 196
Autumn 2014 201
Appendix I Great Wall Street Books 203
Appendix II Great Investment Books Worth Reading in a Time of Financial Crisis 206
Appendix III Wall Street Movies Worth Watching Closely 209