Tag: Wall Street

Something Bigger than You or Me

The author reflects on a lesson learned during their early career at American Airlines, emphasizing the paramount importance of passenger safety over profits. They contrast this with experiences in the finance sector, highlighting a lack of integrity. The piece ultimately warns that the safety concerns surrounding Artificial Intelligence could pose an existential risk to humanity.

Artificial Intelligence has made a lesson I learned in 1977 relevant to every one of us.

In May of 1977, I began working for American Airlines as a computer programmer in the Operations Research Department. My first day was spent in Human Resources learning about policies, procedures, and benefits.

At the end of the day, when I met with the head of HR for the entire firm, I had one thing on my mind: the unlimited free systemwide travel privileges that came with the job.

“I want to welcome you aboard and give you this American Airlines lapel pin to wear with pride while on duty,” he began.

He handed me the pin. I tried to take it, but he would not let go.

“It is important that we both touch the pin while you listen to what I am about to say,” he continued.

“You need to know that there is one thing more important than profits. In fact, it is more important than everything else. It is more important than you, and it is more important than me.

Continue reading “Something Bigger than You or Me”

To save Wall Street, start with better parenting.

Boy in amazement holding money on white background
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 the Laboratory 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 used to be able to find a very watchable version of his talk here but it has been removed for some unknown reason. However the last time I searched for it, you will find his 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.”