To save Wall Street, start with better parenting.

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by Brooke Allen 

This past February, I retired from finance. Although I intend to continue to study the markets and write about them, I have no intention of ever working in the securities industry again. This makes it easy for me to talk to you about what I think is going on and what needs to be done.

I worked at Merrill Lynch as a computer consultant in the mid-1980s, and from 1986 through 1992 I was an employee—first doing research and later creating and running trading desks in New York and Japan. After a brief stint at Credit Suisse First Boston in Tokyo, I returned to the US in 1993 to work as a consultant to a couple of large Wall Street firms. In 1995, I built and ran a statistical arbitragetrading desk for the US branch of a medium-sized Canadian securities firm.

This February, at the age of 61, I retired from that job of 18 years. I can honestly say my time at that Canadian firm was the best of my entire working career and unlike anything I experienced at any other Wall Street firm. At first I could not put my finger on the difference, but at a Christmas party an elderly co-worker from South America I’ll call Eduardo told me he’d been wondering about the same thing. “I have figured it out,” he said, “The word is ‘decent’ and my theory is that in Canada they raise their children to believe that it is more important to be decent than to be rich.”

Although I’m US born-and-bred, both of our sons went to college at McGill in Montreal. That gave me an opportunity to meet plenty of Canadian young people, and if I suggest Eduardo’s theory to their parents, a typical response would be, “Of course I want my children to be decent; who wouldn’t?”

Real engineers understand ethics in a way financial engineers do not

Andrew Lo was the keynote speaker at the 2010 annual meeting of the International Association of Financial Engineers. Lo heads theLaboratory for Financial Engineering at MIT and his talk was titled: “WARNING: Physics Envy May Be Hazardous to Your Wealth!” He explained that a mistaken belief that financial markets can be treated the way physicists treat the natural world leads economists and financial engineers to a false sense of precision that can have disastrous consequences. You will find a very watchable version of his talk here, and if you love equations then you will find plenty in his 71-page paper here.

I came ready to ambush Lo, and after his talk I held up a slide rule and said, “Despite the fact that I brought my slide rule and my pocket full of pens, and that I’ve been using math in this industry for three decades, I know I’m not an engineer. And I know people who are engineers–some of my best friends are engineers–and I don’t think there are any engineers in the world of financial engineering.” I said the distinction between us and real engineers is that we don’t take responsibility for our actions and hold ourselves to the same ethical standards. I asked, “How come the other engineers don’t say, ‘What are you doing to our name?’?”

Continue reading “To save Wall Street, start with better parenting.”

How to give me a negative reference on LinkedIn

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By: Brooke Allen (you will find my LinkedIn profile here.)

Be aware that on LinkedIn you cannot give me a negative reference unless I approve it.

This is bad news because if it is impossible for you to say something negative, then the positive things I might allow you to say must be taken with a grain of salt.

I want you to give me a fair and balanced reference so others can have an accurate picture of who I am, and I want you to let me know what I’m doing wrong and how I can improve.

But before you give me a negative reference let us establish a few ground rules. Let’s begin with:

Motivation – Why do you want to say what you do? Why do I want to hear it?

Familiarity – How well do you know me and my work?

Rationality – Are you basing your statements on facts and valid reasoning?

Let’s analyze each in more detail…

Continue reading “How to give me a negative reference on LinkedIn”

Give us your tired, your poor, your overly-automated.

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Deborah Branscum just wrote an article in Medium Backchannel: Our Hiring Process is Broken. Can a Hackathon Fix It? It talks about her experience of a new approach to hiring that my partner, Noah Goldman, and I are pioneering that we’re calling Staffup Weekend. You can see a photo of the attendees, a report on the event, and a video of Deborah here.

This story appears to be a hit because my inbox is flooded.

People writing appear to fall into a few categories that we list below (along with the response you should expect as soon as we can get to it):

  • I have an opinion. (Noted.)
  • I have a complaint. (Noted.)
  • I want you to help me get a job. (Give us time to work on a story offering advice for the masses and then if that doesn’t do the trick then please write again. In the meantime, please: Read my advice for job seekers on my website, follow me on twitter, check out our company (BetterWorkWorld.com), and go to Staffup Weekend where you can sign up for our newsletter and learn about future events.)
  • I want you to help us hire better. (Let’s schedule a call ASAP.)
  • I want to make money doing what you do. Can you help me be a competitor? (Absolutely. If enough people do what we do then we don’t have to do it. Tell us more about yourself.)
  • I want you to look at our software that makes everything easier so people don’t have to get involved. (Maybe later. Please read our response to one such a software developer below.)

Hope this helps. More later.

Brooke

BrookeAllen.com

Here is my response to a reader who wrote: “I invite you to visit our website and get a general feel for what we are about.  Essentially, we offer a software solution backed by solid Industrial Organizational Psychology and vast experiences working with high performance clients.”

Thank you for writing. 

I have copied Noah, my partner in Staffup Weekend. He might have time to evaluate your software. Right now, because I am the only one of us mentioned in the article, I’m busy fielding requests from people who want us to help them hire rather than help them develop product in competition with us. Continue reading “Give us your tired, your poor, your overly-automated.”

Want passion? Look for something that makes you angry

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Whenever I speak at colleges I begin by asking, “Why are you here?”

This catches the students off guard and after batting the question around for a bit someone says, “To find my passion.” The rest agree and they imagine they are done with the topic.

But I am not done with them.

I ask them to define “passion” because if you cannot say what a word means then you are shooting the shit rather than answering a question.

So they discuss that for a while longer and eventually settle on some variant of, “I don’t know what passion is but I’ll know when I have passion for my work because I won’t have to motivate myself to do it.”

“Really?” I say, “Where I come from we have a word for that, and it is ‘like’ as in ‘I like my job.’ But I know I am passionate when I do something even though I hate every second.”

“Why would anyone do a job they hate?” someone asks.

I want to say, “It might be because you have bills to pay and you don’t want to live off your parents or the state.”

But, instead I say, “I don’t know. Why did my dad lie about his age so he could enlist a year earlier than allowed by law to become a paratrooper and jump out of airplanes while the Japanese shot at him? That was something he hated to do, but he did it anyway, and he did it because of something called passion.”

At this point the class looks flummoxed but intrigued. Continue reading “Want passion? Look for something that makes you angry”

How to hire good people instead of nice people

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Usually, employers rapidly scan the resume of each job applicant looking for relevant education, skills, and work experience. They select 10 candidates for telephone calls, invite three in for interviews, and hire the one they like the best.

This is a bad way to hire because at best it gets you nice people.

You don’t need nice people.

You need good people.

Good and nice are not the same thing. The opposite of good is bad. The opposite of nice is unlikeable.

Nice people care if you like them; good people care about you. Nice people stretch the truth; good people don’t. If you tell a nice person to do something evil, they might do it because they do not want to upset you; a good person will refuse to do it.

You might think you are a good person, but you are fallible, so if you want to avoid inadvertently doing something evil you must surround yourself with good people, not nice people.

How do you separate the good from the nice? If you do what I do, it will be a piece of cake. Continue reading “How to hire good people instead of nice people”

You do not need permission to do the right thing. No one can give you permission to do the wrong thing.

I went to college in 1970. By 1974 I had a degree in mathematics and experience hitchhiking  to every state of the union except for Alaska and Hawaii; perhaps 30,000 miles in all.

I learned more about how to live from those experiences than anything I learned in a school. Here is the story of what I learned from a man in the pick-up truck who took my girlfriend and me from central Minnesota to just west of Fargo, North Dakota.

Had I not learned this lesson my life would have been very different; not only would I have been much less inventive I would not have had the courage to stand up to some of the shenanigans I saw during the 30 years I was on Wall Street.

I’ll call him Jeb. I don’t remember his name, but during Prohibition he used to bootleg whisky, so Jeb sounds like a good bootlegger’s name, don’t you think?

He said the pay was good and it was exciting work because the cops were always chasing you, but it wasn’t very intellectual. The only creative thing he learned was the Bootlegger’s K-Turn. He left the Interstate for a side road to show us how it is done. I’ll draw it for you: Continue reading “You do not need permission to do the right thing. No one can give you permission to do the wrong thing.”

I Insist We Call Each Other Perchildren

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To be clear, this is a call for humor when dealing with a serious subject.
I do not mean to offend. Seriously.

I was born a male with a female name

You cannot believe the kind of childhood trauma I went through and the only way for me to avoid post traumatic stress is for you to change your ways.

In order that you not trigger unfortunate emotions in me I must insist that:

  • You must refer to me as a perchild and I will do the same for you.
  • Rather than use MR (for “mister”) and MS (for whatever that stands for) we must henceforth use PC (for perchild, of course).
  • You must use the pronoun FF when referring to me in the third person because I do not self-identify as binary but rather nothing less than hexadecimal.

I will explain these terms but first I will explain why I insist that you change for my benefit and for the benefit of all the other miserable perchildren who suffer in ways you cannot fathom.

My Horrible History

I was bullied as a child.

You have no idea what kind of wounds can be inflicted on you if an adult imagines you were bullied as a child. When I was young the children I had fun with made fun of my name because I dressed like a boy and my name was Brooke.

My parents called this “teasing” and they said they were having fun with my name, not making fun of me.

I believed them then.

Today, I am enlightened and see that my parents were in cahoots with the bullies. Now, Continue reading “I Insist We Call Each Other Perchildren”

How to write if you cannot concentrate.

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Jack Rieur was the most wonderful teacher I ever had and perhaps the best teacher anywhere on the planet and for all time. I first met him in 1963 when he was my 6th grade teacher and we have kept in touch ever since.

Sure, he covered the state mandated syllabus, but what he really taught was that the world was something we go out and live in and not read about in the classroom. And learning was fun; the most fun you can ever have. And if you pay attention you can learn from life itself and the point wasn’t that there was a test at the end of the semester but later in life you had to teach others because the human race is not a race to the finish but a relay race where near the finish line we must pass the baton.

For example, he taught geography not from the book but from the slides he took personally when he visited all the places in the book. Here is a picture I took of him back when he was a spry 89-year-old in front of the 79,662 slides he used in practicing his craft and that have since been digitized and stored by the Archives at the Consortium Library. I have been to more than 40 countries so far and have set up housekeeping in a few (and I’m no where near done). Had I not had him I might have run the risk of having gone to Canada once and seen a few other countries for a few hours each on a cruise.

He died this last August but his spirit lives on in me. For example he came to my rescue just now when I was stuck writing one thing and I got unstuck by writing something else.

Mr. Rieur’s other name was Jack but he insisted his sixth grader’s call him Mr. Rieur. It was not a matter of respect for age but of class. You only got to call him Jack if you became a teacher too. Well I have approached raising my children and managing my businesses and all my writing as a teacher, and so I think I have earned the right to call him Jack posthumously. However if you have done none of those things then please call him Mr. Rieur out of respect.

How to write if you cannot concentrate.

People tell me that they cannot concentrate long enough to write anything coherent that isn’t trite or a cut-and-paste job of things off the web, which doesn’t count anyway.

I say, “So?” Continue reading “How to write if you cannot concentrate.”

I owe EVERYTHING to some funny symbols.

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The only thing I’ve ever been expert at is programming in a language called APL that requires a special keyboard just to type the weird symbols that it uses. This is how it  happened…

In the Fall of 1972 I took a class that introduced me to APL two weeks before the semester ended at which time the computing center took the language off the mainframe rather than pay $5,000/month to IBM in licensing fees. But I’d fallen in love with the language and I really wanted to continue learning so I wrote to Ken Iverson who invented APL and who had just published a high school algebra text using the language. I asked if I were to round up 10 students for a free summer course using his book would he give me 10 copies. He sent 11 and a note saying I’d forgotten to ask for one for myself.

It only took a day to find 10 students to give me their summers so next I asked IBM if they would waive the license fee. They did and then I told the computing center they were the only missing piece and so they let me use their computers for free. That is how I began learning APL one chapter ahead of a bunch of high school students.

That landed me a student work-study job at the computing center in the spring and later when my boss left I got her full-time job in the fall of my senior year. I worked for a pittance at the university for nearly four years after graduating and it was by maintaining code and teaching classes that I became good enough to land a job in operations research at American Airlines. When they moved headquarters from New York City to Dallas I took a job with a small systems house where I got to see the inner workings of a few businesses. When I completed an MBA at NYU I was a middling student but an awesome programmer.

When Merrill offered a full-time job at Merrill Lynch in 1986 it was to write programs, not to build a career in trading or management. Everything I’ve done since has involved APL including all the software I wrote to support the trading desk I built and ran for the last 18 years. APL has made me rich.

So, if you want to become expert in the only thing I learned really well then do what I did and – lucky for you – today it will take half the time and cost virtually nothing. Simply download the APL Manual for free and get yourself a cheap copy of the language interpreter. Get to work using it for 7-10 hours a day for the next four or five years and see where that takes you.

Before you whine that you will only do all that work if you know where it is going then you must know that the only way I got to where I am today is because I wasn’t afraid and I didn’t care where I was going. I learned APL because I could not help myself – it was that cool.

How my life was changed when I began caring about the people I did not hire.

Ask yourself this question, “What do employers owe the people they do not hire?” I asked myself that question more than a decade ago and it changed my life forever.

On Sunday, January 18, 2004, I ran a help-wanted ad in the New York Times that read in its entirety, “Programmer – Will train, enjoyment of mathematics a plus” followed by an email address. I was heading a statistical arbitrage trading desk and I needed help maintaining all the code I’d written.

 

I was surprised to get more than 300 resumes and because nobody had experience in the language we use (APL), and I could not gauge learning potential from a resume, I sent everyone a link to a 500-page manual (latest version available here), and I suggested applicants try their hand at a half-dozen puzzle questions they could easily answer in this language.

openhouse07Thirty-eight people answered the questions so I invited them in for an open house. I had them sit on our trading floor for a bit where they played a game I’d written called BF Game that simulated an information market. We talked about the technology and the nature of our work and then I asked them what they thought I should do next.

Twenty-seven of the applicants suggested I teach them all first and then make a hiring decision, so I ordered tables and chairs that arrived the next day. And the day after that we built a classroom. Continue reading “How my life was changed when I began caring about the people I did not hire.”