The Cave Man

Why is it that men devolve into cavemen whenever things get stressful at work/school/etc.   My boyfriend, G.I. Joe, is about to graduate from his MBA and he is looking for a job.   This is a summary of the last 5 weeks:

  • Denial
  • Then, one day he placed a call that essentially shoved a snowball down the slope
  • The snowball started to pick up velocity and mass
  • He got overwhelmed and coped with matters by going into his deep, dark cave
  • There is no room for women in his deep, dark cave…but there is room for xbox 360 and Call of Duty

I really don’t understand why men insist on spending time in their caves.  Good psychology tells us that people deal better with stress when they share their burden with someone else. That’s the whole point of a partnership or even a friendship. Luckily, my caveman will sometimes yell from the cave so that I know he’s in there….that helps, a little.

This isn’t the first time that I experience the cave. My former boyfriend did the exact same thing when he started contemplating his next job move.  For a long time I thought he was a freak, but now I’m starting to realize that maybe all guys revert to the cave whenever their livelihood is in question.   I would love to hear what other people think about this.


Goldman—Market Maker or Sleazy Salesman?

This is a quote from the front page of today’s  New York Times:

“Our investigation has found that investment banks such as Goldman Sachs were not market makers helping clients,” Mr. Levin said. “They were self-interested promoters of risky and complicated financial schemes that were a major part of the 2008 crisis.” Wall Street firms, Mr. Levin said, were “all too often betting against the financial instruments that they sold, and profiting at the expense of their clients.”

I originated CMBS at a bulge bracket bank. In October of 2007, my team along with the head of credit for all of fixed income new damn well that Goldman had shorted its mortgage portfolio. “Brilliant,” I said.  “Unbelievable. It’s like they had a motherfucking crystal ball,” said the head of credit.

This bulge bracket bank knew that Goldman shorted its portfolio and could have mimicked the strategy if they had wanted to. Sure, the shorts were more expensive in October than when Goldman bought them a few months prior, but in Wall Street you can buy anything you want so long as you have the appetite for it. This bank clearly lacked the appetite.

As for the quote, that vilifies Goldman for shorting products it hawked to investors.  I’ve already wrote about this before, but the traders that make and sell securities are legally prohibited from talking to the traders that take positions for the bank.  This would have insider scandal written all over it if the two teams could talk and note that those are words that no one has used yet.

Goldman was a market maker. Now, perhaps HR should reassess the incentives these traders get.  Perhaps pegging bonus’ to a % of sales leads to reckless behavior.  Instead, Goldman should tie compensation to sales and credit losses.  Just an idea.

Sleazy salesman or market maker…you know what I think


I posted the following (paraphrased) on my Facebook:  

Don’t know where I land re: Goldman. On the one hand, Goldman is a market maker and has always sold securities that some investors hold while others short. On the other hand, Goldman shorted its own mortgage portfolio in 2007 yet willingly sold securities to investors knowing they were on the wrong side of the bet. I think it comes down to whether investors could have known that Goldman shorted the CDOs it sold. If this was public information, then you can’t blame investors for running towards a fire that others were clearly fleeing from.

Since then, I’ve talked to my buddy at Goldman and confirmed that the prop desk that takes positions on for Goldman is legally prohibited from sharing notes with the desk that designs and sells the securities. That makes a lot of sense since Chinese Walls are the only way to prevent insider trading.  Interestingly, even though it’s true that Goldman’s short position against the Abacus securities were relatively insignificant relative to the firm’s larger positions, the bet did jump to CEO Lloyd Blankfien’s attention.   I imagine that the trader ordering the short was was called into Lloyd’s office:  

Lloyd: Why the fuck are you taking a $3B position against the mortgage industry

Trader: Sir, all of my research and experience tells me that shit is about to go down

Lloyd: Then why are all of our competitors still buying mortgage securities

Trader: Because they have inferior information.  I’m willing to best the soul of my first born child on this one

Lloyd:  Alright. Go ahead and short our mortgage portfolio, but, if you’re wrong it’s your ass that’s on the line

I am 100% positive that Goldman’s CEO knew the firm was shorting securities that another desk was going out and selling. However, that in itself is neither illegal nor wrong. His job is NOT to share arbitrage opportunities with investors at large.  His job is to ensure that there is a marketplace for securities and that’s exactly what he’s done. I personally absolve Goldman for shorting the mortgage industry although I would never vouch for something that I myself am trying to get rid of.

On the other hand, if its true that the creators of the Abacus security knew that it was comprised of XYZ collateral but told investors that it was comprised of ABC collateral—well, that’s plain old fraud.

Warren Buffett
March 2, 2010, 11:25
Filed under: Market Trends, MBA

It is no secret that I love Warren Buffett. He just published his latest letter to Berkshire’s shareholders, and as always, it is an amazing piece of factual yet entertaining finance writing.  I will comment on it as soon as I get the chance.  sigh.

Rubber Band Update
February 8, 2010, 11:25
Filed under: Gender Fights

It’s been one week and it seems like the Rubber Band Theory was accurate.  G.I. Joe withdrew, had lots of man time, and then came back.  He hosted a superbowl party and was completely fine with lots of PDA.  Lots of good conversation the last few days.  I’m back in the inner circle in terms of what’s concerning him at the moment, etc.

Go figure.

Democrats need to take Marketing 101

I am about to graduate from business school with a degree in marketing.  Now, many of you “financier” MBAers may look down on my marketing degree, but it is actually quite useful once you realize that every institution on earth needs to do one thing to survive: Sell.

The Catholic Church needs to sell its ideology, Goldman Sachs needs to sell its financial services, and Banana Republic needs to sell clothes.    The rest of this post will assume that the Democratic party (and all political parties in general) need to sell ideas to gain support and votes.

There is one crucial framework that marketing 101 that the Democrats are only recently getting wind of:  STP, which stands for segmenting, targeting and positioning.  Any institution worth its salt knows which consumer segments exist in its market, then  it does its homework to identify target  “customers” that are most likely to buy its goods, finally the institution develops a position that will appeal to its target customer.  Duh.

The #1 mistake that rookie institutions make is that they ignore STP and try to be all things for all people.  That is exactly what the Democrats have done for too long. Perhaps we should define the Dems as being cautious liberals or are they quirky conservatives? I’m not sure. I don’t think anyone is sure, and that is exactly why the Dems are having an identity crisis at the moment.

I’ll drive my STP point home with a simple analogy: clothing retail.   Sears was once the King of Retail. No retailer on earth sold as much to as many customers as Sears.  They grew and tried to be all things to all people.  Sears started selling clothes, then appliances, then eye glasses and car repair services. Sears even had a pest control service at one point in time.  This strategy seemed to work until more sophisticated retailers joined the party and focused on a specific segment then targeted them with a unique market offering/position.

If you look at the following chart as the spectrum of needs retail customers look for, you can safely place Sears smack dab in the middle.  There they are, trying to be all things to all people.  Competitors entered and made sure to meet specific customer needs.  Sears found itself straddling the market and was unable to fully meet the needs of their customers.  I mean, why would you shop at Sears and try to find something you like if you could find exactly what you want at the other stores? They lost share. They’ve lost sales. They are in trouble.

The Democrats lost Massachusetts because they “Pulled a Sears.”  They are straddling voters and coming out empty because they can’t fully satisfy the liberals nor can they compete with Republicans who are doing a better job of satisfying the conservatives.   The Democrats need to do some serious STP analysis.

Segment:  All voters ages 18+

Target:  Start with all voters that are not conservatives and then get much more specific than that.

Position: The political party best suited to accomplish _________________  (meet a need that the target audience wants met)

  • Stabilize the economy
  • Create incentives that help new industries (and jobs) develop so that the US remains competitive in the future
  • Restructure public services so that constituents receive higher value at lower costs (i.e. Health Care, Social Security, etc)
  • Etc, Etc, Etc

The point is that they need to define a position and try to execute a few things very well and not trying to solve all problems under the sky.

I must end this post by congratulating President Obama for having the cojones to tell the party exactly what my favorite Marketing 101 professor told us:  Focus, Specialize and Act Decisively.

President Obama recently said ““I think the natural political instinct is to tread lightly, keep your head down and to play it safe…don’t play safe.”  He’s right. The Dems cannot afford to play it safe, they need to focus and be unquestionably Democrat in rhetoric and action.

The Rubber Band Theory

I hate self-help books because they’re cheesy.  Then,  a few years ago, the cheesiest self-help book of all landed on my lap:  Men are from Mars, Women are from Venus. The analogies are excessive, but quite a few of the theories in the book seem  applicable to my own life.  The theory that most applies in this very instant is—The Rubber Band Theory.

The theory states the following: Men have an “intimacy cycle” where they get close to their girlfriend, enjoy the intimacy, and then need to back away and get some man time. They eventually become saturated with man time and come in for more intimacy.  It’s a cycle.

Women respond to this cycle in one of three ways:

1) They get it and relax during the stretch part of the relationship because they know things will be okay on average

2) They freak out and chase after him, which only makes him pull away even further to get the man time he wants. Sometimes the chasing/pulling away gets so extreme that it sours the whole relationship

3) They get angry and promise to not make the first move. This works as it gives the dude his space, but, the woman doesn’t enjoy it and can become bitter/jaded.  This is the bucket that I always land in.

G.I. Joe (my boyfriend) is a man’s man. He’s also a teddy bear.  I have always appreciated this juxtaposition but never connected it to the Rubber Band Theory until right now.

Teddy Bear: I have never dated anyone quite as affectionate as him.  He is the first to say that he wants to stay in and just hang out with me…”I’m in a you mode,” he’ll say.  He doesn’t care what people think and is never shy about public affection when we’re at school (I’m getting my MBA, remember?).  He lets me in on his crazy stream of conscious thoughts.  When he’s like this it becomes abundantly clear that I am his favorite person.

Man’s Man: Loves xbox. Loves playing  Rugby with the boys. Loves working out and lifting weights.  Loves his beer. Loves watching sports on his huge TV.  When he goes out with the boys (I’m usually there with other people…it’s a small town = not many bars) I notice that he’s just talking in a corner with his 4 buddies drinking beer.  He’s a veteran for Christ’s sake and literally made a living blowing things up.

Right now, he’s in man’s man world.  I was getting really f-ing angry about this until I remembered the rubber band theory.   I like the teddy bear in him, but the only reason that teddy bear part exists is because he balances it out with man’s man time.  Also, one of the draw backs of dating in business school is that you see your partner all the time. There is no space which must have an accelerator effect on normal relationship behavior.

Crap. I’m sounding like one of those cheesy romantic self-help books but it’s true, I’ve had this epiphany and I wanted to share it.

Lets see how it goes…I have lots of homework to do anyway and lots of plans set up this week.  I’ll make this lady week and reevaluate in 7 days to see how tense/lax the rubber band has become.