[Closed] City Traders = Monkeys?

Its beenshown a few times this one - allthe myth about the "special skills" that thay have that mean they have to be given huge sums of money has been shown to be balderdash.

however they may well have rare personality traits only usually seen in broadmoor inmates

I think that's insulting to people suffering from mental illness actually TJ. 🙁

yes I saw that tv programme that said they were all just pyscopaths - hence the its just business line to describe acting in ana amoral way.

I am sure, like in all fields, there are some exceptional peole at the job but I susp[ect many are muppets / headless chickens just reacting to the latest market trends

Reminds me of the child fund we have for our child where they managed to turn £250 into £175 in one year and charged £12.50 for doing this.

so long as you're specifically looking at traders as distinct from other finance workers then, yes, pretty much.

Lewis attributed the bond traders' and salesmen's behavior to the fact that the trading pit required neither finesse nor advanced financial knowledge, but, rather, the ability and desire to exploit others' weaknesses, to intimidate others into listening to traders and salesmen, and the ability to spend hours a day screaming orders under high pressure situations. He referred to their worldview as "The Law of the Jungle."

Liars Poker, by Martin Lewis.
Highly recommended reading if you havent already. Also his later book "The Big Short".

Liar's Poker is a non-fiction, semi-autobiographical book by Michael Lewis describing the author's experiences as a bond salesman on Wall Street during the late 1980s.[1] First published in 1989, it is considered one of the books that define Wall Street during the 1980s

elf - i should have mentioned psychopathic traits which is not a mental illness

http://www.guardian.co.uk/science/2011/sep/01/psychopath-workplace-jobs-study

somewhere I saw one on city traders that suggested this was even more common amongst them.

Do you not remember the experiment Jeremy Vine conducted. They got a handsomely remunerated City Fund Manager to pick out his best performing shares and invested in them.

Then they picked another bunch of companies to invest in by throwing darts at a list of FTSE 100 companies

The ones picked by random darts consistently performed better

I am not completely surprised that a GUARDIAN reader was stood in a queue thinking that the other customers were thick as sh1t because they were buying a tabloid.

What a joke.

I'm not a trader, but it is necessary for me to read a huge volume of business information every day. The last thing I want to do out of the office is read some left/right wing nonsense spouted by an opinionated journalist for any so called broadsheet on the same topics as I have been reading about all day.

Thanks to work, newspapers become an out of date form of entertainment more than anything else. So I'll generally buy a magazine instead. How stupid would I have looked at that conference eh? buying a magazine about push bikes.

I can see the headline now:

"Peterfile in 'Reading is for Wimps' Shocker"

😀

The Guardian though? Seriously?

It's good entertainment, definitely. But it's somehow supposed to be an indicator of intelligence if you read it?

I am fairly confident broadsheet readers will be brighter than tabloid readers...runs off to google

elf - i should have mentioned psychopathic traits which is not a mental illness

Not all people in Broadmoor are psychopaths.

You should burn some copies of the Guardian. Then some books you don't like. Books are rubbish too. Especially lefty tosh.

BURN THEM!!!

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Seems a lot of people read the Guardian on here

elf - which is why I should have been more clear

In a study published by the journal Psychology, Crime and Law, Belinda Board and Katarina Fritzon tested 39 senior managers and chief executives from leading British businesses. They compared the results to the same tests on patients at Broadmoor special hospital, where people who have been convicted of serious crimes are incarcerated. On certain indicators of psychopathy, the bosses's scores either matched or exceeded those of the patients. In fact, on these criteria, they beat even the subset of patients who had been diagnosed with psychopathic personality disorders.

The psychopathic traits on which the bosses scored so highly, Board and Fritzon point out, closely resemble the characteristics that companies look for. Those who have these traits often possess great skill in flattering and manipulating powerful people. Egocentricity, a strong sense of entitlement, a readiness to exploit others and a lack of empathy and conscience are also unlikely to damage their prospects in many corporations.

http://www.guardian.co.uk/commentisfree/2011/nov/07/one-per-cent-wealth-destroyers?INTCMP=SRCH

I read the article and it is a load of bollocks. Very black and white, but then that is what sells newspapers. Yes a huge number of fund managers are actually pretty useless at their job and get paid regardless of whether they lose or make money for their clients.

Traders on the other hand, get paid according to their performance. Prop traders trade with the banks money. Do you think they still get paid if they consistently lose the banks money? The flipping a coin example is laughable. Having access to the most up to date information is a huge advantage that cannot be underestimated, but there is a huge amount of skill involved in making money long term.

Oh and I read the guardian 😉

I don't think he was talking about the Guardian specifically, just broadsheets in general.

Kudo - thats the myth - the reality is very different. its been shown many times but too many people buy into the myth. Like the emporers new clothes people cannot accept that the myth is wrong

"The results resembled what you would expect from a dice-rolling contest, not a game of skill." Those who received the biggest bonuses had simply got lucky.

Such results have been widely replicated. They show that [b]traders and fund managers [/b]throughout Wall Street receive their massive remuneration for doing no better than would a chimpanzee flipping a coin. When Kahneman tried to point this out, they blanked him. "The illusion of skill … is deeply ingrained in their culture."

It reminded me of a time, many years ago, when I spent my summer break at university working as a security guard at the Exhibition Centre in Glasgow. I rolled up to the newsagents one morning during a big business conference and queued up to buy my Guardian. As I stood there, I gradually became aware that I seemed to be the only person on the queue buying a broadsheet, as all the delegates seemed to have the Sun or the Daily Record tucked under their arm. That was something of an epiphany for me - the point at which I realised most of the people who run our country's economy are actually thick as sh*t.

or it could be because the Sun is 20p

39 senior managers and chief executives from leading British businesses

so nothing to do with traders then.

Traders on the other hand, get paid according to their performance. Prop traders trade with the banks money. Do you think they still get paid if they consistently lose the banks money?

Strawman of the day?

The point being made is that no special skills are required to be able to do the job.

stoner - read my quote above from the same piece - this has been shown many times.

They show that traders and fund managers throughout Wall Street receive their massive remuneration for doing no better than would a chimpanzee flipping a coin.

Kudo - thats the myth - the reality is very different. its been shown many times but too many people buy into the myth. Like the emporers new clothes people cannot accept that the myth is wrong

"The results resembled what you would expect from a dice-rolling contest, not a game of skill." Those who received the biggest bonuses had simply got lucky.

Such results have been widely replicated. They show that traders and fund managers throughout Wall Street receive their massive remuneration for doing no better than would a chimpanzee flipping a coin. When Kahneman tried to point this out, they blanked him. "The illusion of skill … is deeply ingrained in their culture."

The reality is, you have no idea about what goes on in the city, and don't know any traders or fund managers 😉

If you tried really really hard you could sound slightly more patronising. If you tried really hard

Would you like to pat us all on the head and tell us to run along now, as the grown ups are looking after the economy

Doing a great job BTW!

Yep.... tell us something we dont know.

In fact thats how I describe myself when asked what i do.

"I am a trading monkey"

And we get paid considerable amounts of money for something that has questionable worth.

Sorry about that, but when I was coming to the end of my A levels my school was very Uni focused, I didnt fancy that and wanted to get a job. So looked at the best paid and made my choice.

Anyone could have done the same.

TJ - I know full well the statistical analysis of trading success and luck. Ive read a fair bit on it.

But you just posted a big chunk of quotation about a psychotic behaviour comparisons and behaviour traits made of a completely unrelated cohort.

if you cant focus, leave the scatter gun at home.

A number of my friends are traders and fund managers in NYC. They would agree with you. The view that it requires a special skill to do what they do is complete garbage.

The point being made is that no special skills are required to be able to do the job.

I forget the members of STW know everything. Yes there are special skills that are required to be a good trader. It is a zero sum game, you win somebody loses and vice versa. You cannot hide from the numbers.

And on that note, I will leave you to argue amongst yourselves. 😆

Stoner - there are two separate but related points being made here.

traders performance is no better than luck

Psychopathic traits are common in business leaders.

Kudo - so once again all the oft seen real evidence is rubbish?

Rigorous statistical analysis shows that the performance of traders is no better than luck and has been shown to be so many times

I know there are two characteristics here, but it was you erroneously projecting them both onto traders in your first post TJ

Its beenshown a few times this one - allthe myth about the "special skills" that thay have that mean they have to be given huge sums of money has been shown to be balderdash.

however they may well have rare personality traits only usually seen in broadmoor inmates

There you go. It had to come. Consider yourselves all metaphorically patted on the head children

*doffs cap to the truly skilled members of our society*

Is it polite to refer to yourselves as "Masters of the Universe" again yet? Or are we still doing the Bob Diamond Faux humble hairshirt scam?

Let's have an STW trading competition then.

Given that there is no specialist skill involved, and most STWers are super intelligent because they read the Guardian, you guys should come out waaaayyyy on top!

Barriers to entry are minimal (retail forex, futures, speadbetting etc) so there's no reason why you guys aren't millionaires already?

Yep.... tell us something we dont know.

In fact thats how I describe myself when asked what i do.

"I am a trading monkey"

And we get paid considerable amounts of money for something that has questionable worth.

Sorry about that, but when I was coming to the end of my A levels my school was very Uni focused, I didnt fancy that and wanted to get a job. So looked at the best paid and made my choice.

Anyone could have done the same.Yep.... tell us something we dont know.

In fact thats how I describe myself when asked what i do.

"I am a trading monkey"

And we get paid considerable amounts of money for something that has questionable worth.

Sorry about that, but when I was coming to the end of my A levels my school was very Uni focused, I didnt fancy that and wanted to get a job. So looked at the best paid and made my choice.

Anyone could have done the same. Yep.... tell us something we dont know.

In fact thats how I describe myself when asked what i do.

"I am a trading monkey"

And we get paid considerable amounts of money for something that has questionable worth.

Sorry about that, but when I was coming to the end of my A levels my school was very Uni focused, I didnt fancy that and wanted to get a job. So looked at the best paid and made my choice.

Anyone could have done the same.

I agree with the questionable worth comment. I don't agree that anyone could have done the same. Sure many can hang on the coattails of others, but to be a truly great 'trader' is not something that everyone can do.

But Kudos - the performance is no better than random

http://www.bbc.co.uk/programmes/b014kj65

I assume he means this programme - it only mentions it in the last few minutes.
There is a genetic predisposition for being a psychopath [ may have been specific brain activity I forget sorry] . It can be mitigated by being in a loving family who teach you love and empathy.
Prisons are full of people with the gene/pattern are found disproportionally in the world of business - ie people who can behave like amoral bastards and then just shrug and say nothing personal its just business.

It is not a deep analysis of the later point at all and it only gets a cursory mention at the end

It is not a depp analysis of the later poit at all and it only geta s cursory mention at the end

And we get paid considerable amounts of money for something that has questionable worth.

Sorry about that, but when I was coming to the end of my A levels my school was very Uni focused, I didnt fancy that and wanted to get a job. So looked at the best paid and made my choice.

Anyone could have done the same.

I think you're missing the point a little - I'm not sure people are really blaming the traders themselves, just pointing out that the system that provides them with such massive renumeration is ridiculous.

You could also interpret it another way - the traders might actually be highly skilled but the unpredictability and complexity of the market mean those skills actually only make a very small difference (over random chance). Still if you're talking about billions invested then it all adds up, I really can't believe many traders (without good contacts at least...) last long if they consistently under-perform the market average.

Grums pretty hit the nail on the head. Is a city trader really worth that scale of renumeration compared to the rest of society?

Are you seriously trying to tell us that they individually make more of a contribution to our society and economy than John Terry?!!!

to be a truly great 'trader' is not something that everyone can do

What skills does it require that other hard-working intelligent people can not gain? Why is it so special? What marks you out over doctors, lawyers etc.?

I agree with the questionable worth comment. I don't agree that anyone could have done the same. Sure many can hang on the coattails of others, but to be a truly great 'trader' is not something that everyone can do.

There's an interesting Malcolm Gladwell piece about this, well worth a read of the whole thing...

http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm

One day in 1996, a Wall Street trader named Nassim Nicholas Taleb went to see Victor Niederhoffer. Victor Niederhoffer was one of the most successful money managers in the country. He lived and worked out of a thirteen-acre compound in Fairfield County, Connecticut, and when Taleb drove up that day from his home in Larchmont he had to give his name at the gate, and then make his way down a long, curving driveway. Niederhoffer had a squash court and a tennis court and a swimming pool and a colossal, faux-alpine mansion in which virtually every square inch of space was covered with eighteenth- and nineteenth-century American folk art. In those days, he played tennis regularly with the billionaire financier George Soros. He had just written a best-selling book, "The Education of a Speculator," dedicated to his father, Artie Niederhoffer, a police officer from Coney Island. He had a huge and eclectic library and a seemingly insatiable desire for knowledge. When Niederhoffer went to Harvard as an undergraduate, he showed up for the very first squash practice and announced that he would someday be the best in that sport; and, sure enough, he soon beat the legendary Shariff Khan to win the U.S. Open squash championship. That was the kind of man Niederhoffer was. He had heard of Taleb's growing reputation in the esoteric field of options trading, and summoned him to Connecticut. Taleb was in awe.

"He didn't talk much, so I observed him," Taleb recalls. "I spent seven hours watching him trade. Everyone else in his office was in his twenties, and he was in his fifties, and he had the most energy of them all. Then, after the markets closed, he went out to hit a thousand backhands on the tennis court." Taleb is Greek-Orthodox Lebanese and his first language was French, and in his pronunciation the name Niederhoffer comes out as the slightly more exotic Nieder hoffer. "Here was a guy living in a mansion with thousands of books, and that was my dream as a child," Taleb went on. "He was part chevalier, part scholar. My respect for him was intense." There was just one problem, however, and it is the key to understanding the strange path that Nassim Taleb has chosen, and the position he now holds as Wall Street's principal dissident. Despite his envy and admiration, he did not want to be Victor Niederhoffer -- not then, not now, and not even for a moment in between. For when he looked around him, at the books and the tennis court and the folk art on the walls -- when he contemplated the countless millions that Niederhoffer had made over the years -- he could not escape the thought that it might all have been the result of sheer, dumb luck.

Taleb knew how heretical that thought was. Wall Street was dedicated to the principle that when it came to playing the markets there was such a thing as expertise, that skill and insight mattered in investing just as skill and insight mattered in surgery and golf and flying fighter jets. Those who had the foresight to grasp the role that software would play in the modern world bought Microsoft in 1985, and made a fortune. Those who understood the psychology of investment bubbles sold their tech stocks at the end of 1999 and escaped the Nasdaq crash. Warren Buffett was known as the "sage of Omaha" because it seemed incontrovertible that if you started with nothing and ended up with billions then you had to be smarter than everyone else: Buffett was successful for a reason. Yet how could you know, Taleb wondered, whether that reason was responsible for someone's success, or simply a rationalization invented after the fact? George Soros seemed to be successful for a reason, too. He used to say that he followed something called "the theory of reflexivity." But then, later, Soros wrote that in most situations his theory "is so feeble that it can be safely ignored." An old trading partner of Taleb's, a man named Jean-Manuel Rozan, once spent an entire afternoon arguing about the stock market with Soros. Soros was vehemently bearish, and he had an elaborate theory to explain why, which turned out to be entirely wrong. The stock market boomed. Two years later, Rozan ran into Soros at a tennis tournament. "Do you remember our conversation?" Rozan asked. "I recall it very well," Soros replied. "I changed my mind, and made an absolute fortune." He changed his mind! The truest thing about Soros seemed to be what his son Robert had once said:

My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is bullshit. I mean, you know the reason he changes his position on the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm, and it?s this early warning sign.

what is the turenover of staff then? Evey day month year 50 % of them will be below average - is there a huge turnover of staff?
Obviously there must be 50% each year who are below average do they all get sacked?

Ex-City here. Traders I don't have much time for but Fund Managers are ****ing smart people. Many people seem to be mixing the two up.
Anyway, if it's so easy TJ why not start trading or managing a small portfolio and generating returns above benchmark?

Just for the record, I am not pro capitalist and think that the banking system is a shambles. I just don't agree with the notion that 'traders' are no better than monkeys with darts. Some perhaps, but to tar everyone with the same brush is silly. A bit like saying the chinese are evil because of the actions of a few.

And yes many who work in the city are psychopaths, hence why I don't work there. The fact the industry is soul destroying and contributes bugger all to society and the world in general is another factor.

of course renumeration has nothing to do with social worth. Never has done. Unfortunately its not even fair market pricing either, for this reason I favour a boom in the number of proprietary trading banks being formed.

the problem is that there is too much "money" out there (beyond inflation, huge economic growth means there's substantially more wealth out there needing a home than there was even 20 years ago) swelling individual trade sizes to such an extent that transaction fees can be both relatively [i]de minimus[/i] and absolutley huge at the same time. £100ks fees on £bn trades barely feature in the rounding.

There are many sayings in the City

"Sell in May and go away" "Dead cat bounce" etc etc

One reads

Better to be lucky than good.

"but to be a truly great 'trader' is not something that everyone can do."

You've missed my point... The basic premise of the OP was traders are monkeys, how come they get away with it.

I was just pointing out that anyone could have a go at it. Stop moaning about the choices in life you took.

IT....WAS....THE....DUKES....IT....WAS...THE...DUKES.
Monkeys. FACT.