-by Anonymous, MBA Finance, CFA, MS Computer Science. Previously our guest blogger was a portfolio manager for a global fixed income insitutional money manager with a specialization in structured products.
As a member of the Wall Street community for 10 years, I have learned my fair share of what capital markets mean to the world. I traded asset-backed securities (ABS) for the clients of my firm, I gave presentations to clients about the risks and rewards of investing in commercial mortgage-backed securities (CMBS), and I sat in investor meetings for collateralized debt obligation (CDO) deals. I made a decent salary compared to the average American, and according to most I would have been labeled as “successful” for being able to navigate such an industry, making good money, while firmly holding onto my position. So why did I quit?
I have always been one to try to minimize an answer. Break down any problem to its fundamental parts and explain things simply. And then if someone wants to understand the complexity of the answer the details would follow. So my simple answer? Purpose.
As the years went by in finance, I began to ask myself, “What is my purpose here?” The knowledge I have gained during my financial career is invaluable. Capital markets are a fantastic innovation in modern day finance. How else do you accumulate the collective wealth of the planet and match investors with borrowers? I say to those that are anti-Wall Street, how do you think you came across that credit card in your wallet, how do you think that financing becomes available for you to purchase that car or that home, how do you think that department store or supermarket that you frequent for your food and clothes was able to supply it all for you at such a great price? You might want to think twice and thank the invention of capital markets for the quality of life that it has given to you.
I left the financial industry with a great appreciation for the ingenuity of smart financiers who were able to come up with creative structures and risk profiles to match the needs of the investing community. Unfortunately, the implementation of the financial system has many flaws, and similar flaws are found in the political system. Conflicts of interest abound and the haves do their best to keep the club a private one.
As someone who stepped outside of the finance community, do I think the US government should have bailed out Wall Street? That’s a tough one. What I do know is that if they didn’t, the “recession” that we are facing would have been a lot worse. Our economic position at any given moment in this country is highly dependent on the strength of liquidity and capital markets. The OWSers should educate themselves before misdirecting their angers at Wall Street. Although if Wall Street isn’t regulated to ensure that their collective risk doesn’t bring our quality of life in question like this again, what’s there to say that we won’t repeat the same mistakes? How much regulation is optimal? I think the answer is one that is continually evolving, and which starts by us collectively asking ourselves “What is our purpose?”