Todd Harrison, founder of Minyanville.com, is one of the few financial commentators worth reading…as you can see his bio is impressive:
Todd Harrison, founder and CEO of Minyanville, has eighteen years of experience on Wall Street. After graduating from Syracuse University with honors (1991), he spent seven years on the worldwide equity derivative desk at Morgan Stanley (vice president).
In 1997, he became a managing director of derivatives at The Galleon Group. Three years later, he joined $400 million hedge fund Cramer, Berkowitz as partner (head of trading) and was President from January 2001 until January 2003.
And the cool thing is he’s willing to share a lot of his Wall Street experiences with an 18-part e-book…I like them so much, I just gotta paste the individual articles two at a time (see originals broken up HERE and HERE) below:
Chapter 1: Inmates in the Asylum
It was the turn of the century and change was afoot.
As Y2K fears swept the Street and the stock market scaled the wall of worry, Wall Street was flush with newfound wealth and irrational exuberance.
It was an exciting time to be a trader as money magically meandered overhead like some sort of magic carpet ride. If you weren’t cutting a rug, you were missing out. And everyone from taxi drivers to stay-at-home moms were wearing dancing shoes.
I was already a veteran of my chosen profession, having honed my skills at Morgan Stanley (MS) for seven years before managing the derivative portfolio at a multi-billion dollar New York hedge fund.
At 30 years old, some said I achieved a level of accomplishment in a world filled with grizzly old timers. But there was plenty to do and more to make, a self-serving motivation that drove me to the next best trade.
I knew Jim Cramer and Jeff Berkowitz for many years, having covered their hedge fund while climbing the corporate ladder at Morgan Stanley. I respected them both, as people and professionals, and we established a symbiotic relationship over time.
We swapped ideas, shared insights and traded billions of dollars worth of stock, blazing separate yet similar paths. It was a period of discovery and unbeknownst to us at the time, it was the genesis of a relationship that forever changed our lives.
As 1999 drew to a close, our circles began to overlap with increased frequency. I was ready to take the next step in my career and Cramer Berkowitz was ready to transform its trading desk from an execution platform to a legitimate revenue generator.
They already had the intellectual capital in house and the performance to prove it. Our imminent marriage would lift us to the next level and establish our fund as a force to be reckoned with.
The courtship was seamless as we took the necessary steps to consummate the relationship; I would join the firm as a partner and run the entire trading operation. I asked for full autonomy on staffing decisions, commission direction and risk management systems. Each and every request was granted.
As we uncorked several bottles at Gramercy Tavern, the deal was struck with hugs and handshakes. The trading operation would be mine to mold and after ten years on the Street, I finally had an operation to put my fingerprints on. I tendered my resignation at The Galleon Group and took the first cab I could find to 40 Fulton Street.
I was hungry yet humble, excited yet nervous, enthusiastic yet measured.
The existing traders had been with Cramer Berkowitz for years, executing the vision and vibes of Jim, Jeff and research director Matt Jacobs. I was schooled a bit differently and believed the trading process could be additive and accretive to profits derived solely from the research functionality.
I assumed my position at the head of the desk and committed myself to quietly observe the people who would become my professional family for the next three years.
But as I would quickly learn, my role at Cramer Berkowitz would be far from quiet and anything but normal.
Just the way I like it.
The Purpose of the Journey is the Journey Itself
I didn’t always want to be a trader. In fact, it’s a small miracle I found my way to Wall Street and beyond.
I struggled whether to share this story as I didn’t know if anyone would be interested in my lot in life. As I weaved my way through the many mazes in my mind, I decided to put pen to paper and recount my steps.
If not for you, for me, but with a larger lens on the immediate gratification conspicuously consumptive society we lived in. Some might say I bowed to the false idolatry of money and perhaps I did. I was conditioned to believe that success was measured by a bottom line and validation could be found in a bank account.
Everything you’re about to read is true, as seen through my eyes. I share it without vice or virtue and with all due humility. Lou Manheim said in the movie Wall Street, “Man looks in the abyss, there’s nothing staring back at him. At that moment, man finds his character. And that is what keeps him out of the abyss.”
I’ve stared into a few black holes during my career and emerged each time with newfound passion and incremental resolve. The ability to turn obstacles into opportunities is one of life’s best-kept secrets and the greatest wisdom is bred as a function of pain.
As with any journey, the path we take is more important than the destination we arrive at. My particular route included climbing the corporate ladder and chasing the trappings of success. Once I got to where I thought I wanted to be, I realized net worth and self-worth were entirely different dynamics.
That was distinctly different than what I was programmed to believe as a child and it facilitated a professional and spiritual rebirthing. In life, as with the markets, the big picture is made up of many smaller pictures.
To fully appreciate where I was, we must first understand how I got there.
Bagel Boy
My parents divorced when I was three years old. Looking back, their marriage was doomed from the start, a fast-tracked union facilitated by the Vietnam War during a time of extreme geopolitical uncertainty.
We moved from New Jersey to Great Neck, Long Island and lived in a small apartment overlooking a park. My brother and I shared a room and adapted to life without a father. Our mom took a job in Manhattan and her income allowed us to enjoy a solid middle-class existence.
We lived in an affluent town, though we weren’t in the wealthiest of neighborhoods. Great Neck was a place where children measured each other by the logo on their shoes and labels on their shirts. That was my first taste of money, having some, but seemingly never having enough.
When I visited friends on the other side of town, I marveled at the sprawling lawns and fancy cars. I asked my mother why we lived with such modest means, unaware of how painful it must have been for a single parent with two young boys to field such questions. Her response was always the same—“If you want more money, get a job.”
It was the single best piece of advice she ever gave me.
At the age of 13, I began working at the local bagel shop. I awoke at 5:00 AM on Saturdays to prepare for the mad rush of customers, many of whom were the families I aspired to emulate.
I never forgot the symbolism of that counter, a divide representing the chasm between the “haves” and “have nots” as money changed hands for goods and services. Little did I know that I would experience life on both sides of that cash register.
Coming of Age
My father moved to California and our interaction was limited to infrequent visits and occasional summers. I used to stare at the phone on my birthday waiting for it to ring, looking for a semblance of normalcy or an inkling of paternal acceptance. It rarely, if ever, did.
My dissatisfaction manifested in many ways. I gained weight, got into fights and lashed out at whoever got in my way. I was the child who looked for validation at the bottom of a milkshake and acted out to get attention.
My mother had the foresight to harness my aggression and guide me towards sports as a positive outlet. I excelled as an athlete and thought I finally arrived and conquered my demons. How wrong I was.
High School is a vicious place, particularly in Long Island where you’re measured by possession. My self-esteem was fragile as a function of my father’s abandonment but I continued on a productive path. I held several jobs, following the advice of my mother that if I wanted to get ahead, I had to work for it.
My grandfather Ruby was my best friend but the void left in my father’s wake was powerful. I began to communicate with him to understand why he left and how I played a role in it. I decided to find out what the man was all about and moved to Woodland Hills, California at the beginning of my junior year of high school.
My father’s energy vacillated from one day to the next. Every encounter was random—one moment we were tossing a baseball, trying to recapture lost time and the next, I tiptoed through the house because he was so angry I didn’t want him to hear me. I thought he was moody but would find out years later that something entirely more disturbing was afoot, something beyond his control.
He worked as a post-production executive and seemingly found his calling. One evening, he pulled into our driveway in a flashy red Ferrari and announced he had been promoted. I’ll never forget how much he loved that car—he washed, waxed and incessantly detailed it as if it, alone, was symbolic of his success. I would witness that stretch for status many times over when I eventually arrived on Wall Street.
I also bought a car, a red Nissan 200SX, as I was anxious to emulate him. My father co-signed the loan with the understanding that I would be responsible for the monthly payments. I worked several jobs to make ends meet. On weekends, I traveled to Simi Valley and picked weeds for $50 per day. My mother’s advice played often in my head. “If you want money—get a job.”
I missed playing sports but was willing to make the sacrifice if it meant having wheels. California was a lot different than New York and if you didn’t have a car, you were socially disadvantaged. It simply wasn’t an option.
One night, my father walked into my room and said he was fired from his job and sold the Ferrari. He told me he needed my car to go on interviews but I still had to make the payments. If I didn’t like it, he said, I could move back to Great Neck. I agreed to help, hoping to help him get back on track.
When I graduated high school in 1987, I returned to the east coast and worked as a short-order cook in Times Square. I watched the well-dressed professionals as they paid their way and rushed to work while rarely, if ever, making eye contact. As I readied for a fresh start in upstate New York, it was hard to contain my excitement.
My lone goal was to be on the other side of the cash register.
R.P.
Chapter 2: Animal House
I walked on to the Syracuse University campus knowing nobody but excited for a fresh start. There were a few familiar faces from Great Neck but no one I would consider a friend. That changed the opening day of school when I attended my first class.
Sociology 101 was held in Maxwell Auditorium in a fishbowl-style classroom. I was on a work-study program and made a commitment to myself that I was going to take my studies seriously.
As I sat in my first college class, my eyes drifted toward the shaggy-haired kid with a Zeta Psi hat sitting in front of me drawing a picture-perfect Tasmanian Devil. “That has to be traced,” I offered as we gathered our books. “Nope, it’s freehand.” he said with a smile, “I’m Kevin Wassong, sophomore—damned glad to meet you.”
We walked out of the building and continued to talk as I watched him exchange pleasantries with other students. He had a way about him, an infectious energy somewhere between Andy Dufresne in The Shawshank Redemption and Kevin Arnold from The Wonder Years. He was instantly likable.
Our friendship grew that semester, and I pledged his fraternity in the spring. The following year, we lived together and continued to build our bond. When he graduated in 1990, he headed west to work at Creative Artists Agency. His passion was entertainment, and he set out in search of his dream.
While he was at the Newhouse School of Communication and I studied business, we used to talk about one day going in to business together. 20 years later, we would do just that.
Spring Training
I edged my way through Syracuse University but wasn’t sure which career path to pursue. I enjoyed accounting, but finance was entirely more exciting. I reminded myself that if I wanted to make money, I needed to stand near the cash register.
The deepest drawers were on Wall Street, I knew, but I didn’t have blue blood or any means of infusion.
I was a solid student and took my academic career seriously despite an active commitment to collegiate hedonism. I was competitive — perhaps because I felt I had something to prove — and when I began to view my course load as a contest, I excelled in kind. I was obsessed with success and the empowerment that came with it.
Dean’s List felt good, so I kept making the grade. After waiting tables my freshman year, I took a bartending class over the summer and worked at several bars before landing a job as a bouncer at Harry’s, one of the more popular hangouts on the hill. I had no interest in standing in the Syracuse chill, but it was an opportunity to get my foot in the door and I grabbed it. That, too, would be repeated throughout my career.
One night, when the regular bartender called in sick, I was asked to fill in. Under the watchful eye of the owner, I was “high ring,” putting more money in the till than the older, more experienced pourers. I joined the rotation, and with each successful night, was given more latitude. In a few short months, I had my choice of shifts.
There I was—bartending at my favorite pub as I excelled in school, enjoyed fraternity life and did the sorts of things college kids should be doing. I had it all, yet I wanted more, the fatal flaw of a classic over-achiever.
The Ace of Spades
During my junior year, I aced my finance midterm and blew the curve. Pride would have been the appropriate reaction but I studied my few wrong answers and loathed the lack of perfection.
That was my style—set the bar too high so if I missed, I was still ahead of the crowd. It wasn’t the healthiest approach; while it pushed me to bigger and better things, it never allowed me to feel a complete sense of accomplishment.
After that midterm, the professor called me to his office. I allowed myself a rare moment of satisfaction as I rushed across campus to accept some praise. When I arrived, he grilled me with questions and after a few minutes, I realized what was happening.
“You think I cheated?” I asked, humbly at first but then with increased agitation, “I busted hump for this class and you’re going to accuse me of cheating?”
Following an intense discussion, the conversation eased into a healthy dialogue. He ran the Department of International Programs Abroad (DIPA), and there were several internship opportunities overseas that summer—most of which were geared to MBAs—and he began to gauge my interest.
I asked him what was available and he listed them in kind. Manufacturer’s, Hanover. Saatchi & Saatchi. Morgan Stanley (MS).
“Morgan Stanley?” I asked, recognizing the name of the biggest cash register on the Street. “If you can get me the job at Morgan, I’ll gladly hop the pond for the summer.”
London Calling
When I accepted the internship at Morgan Stanley, I had no idea it was the only paying position. That’s good news for a young kid living abroad and staring at tens of thousands of dollars in college loans. I packed my bags and headed to London for the summer of 1990 between my junior and senior year.
I was placed in Operations Control and was the kid who told the producers on the trading desk there were errors in their accounts. As an intern, I was low man on the totem pole. Given that I worked in Ops Control, I was low man on the lowest totem.
I lifted weights in college and had the muscles to prove it. That was helpful in the bar but provided little utility in business. I felt very small when I stepped onto the trading floor each day and wove my way through the verbal barrage. It was scary yet exciting, unlike anything I had ever experienced.
By the time August arrived, I was physically drained, emotionally spent, intellectually challenged and completely sold. Yes, it’s safe to say that by the time I returned to the states, accounting was no longer an option.
I didn’t want to crunch the numbers. I wanted to create them.
The Relationship Business
My senior year was supposed to be the best time of my life, the final episode of innocence before embarking on a career. I had the college experience perfected and looked forward to my Syracuse finale.
The stage was set—I bartended at my favorite spot, belonged to an awesome fraternity, and my GPA was on cruise control. I had one eye on the future but my other body parts were firmly committed to squeezing every ounce of life from my remaining time in upstate New York.
The weekend after I arrived home from London, I was lounging at my girlfriend’s home in New Jersey, wasting away a summer day. It was raining, there wasn’t much on television, and we had already eaten, among other things. Bored, I randomly decided to call my aunt, who lived nearby.
Karen was my mother’s college roommate and my father’s cousin. She introduced the two of them, which would explain why she always took an active interest in my well being. As we caught up, she told me of a friend of hers who worked at Morgan Stanley. “You should give him a ring,” she said, “He’s a great guy and a close friend.”
I called Chuck Feldman, who I later realized was a legend on Wall Street. He pioneered the equity derivative business and ran the show at Morgan Stanley. He was the quintessential old-school trader who worked his way to the top and ruled the roost.
His high-pitched voice was extremely soft-spoken on the phone. That’s the first thing I remember about Chuck, how soft-spoken his voice was. It would be the last time I ever had that thought.
He lived in a neighboring town and invited me to swing by. We met for a half hour and had a pleasant enough conversation. He wasn’t a large man, but his presence cast a long shadow.
There was no way to know that it was thirty minutes that would forever change my professional path.
It was thirty minutes that handed me the keys to the cash register.
The Fast Track
I was preparing for our annual toga party after the first semester of my senior year when my phone rang.
“Hey Todd, its Chuck. Listen—we have an opening on the desk and I need to know if you’re interested.”
I was surprised at how noisy the trading room was in the background. “Uh, I’m very interested,” I said, holding the phone in one hand and a Heineken in the other, “but what about school?”
“You can finish up by mail.” he shot back in his patented pitch.
He paused to bark an order at someone. His voice was anything but soft-spoken.
“Let me know if you can start next week!”
That was my chance, I thought—a once-in-a-lifetime opportunity to bypass the rigorous two-year training program at a top-tier firm, which would then spit me back out to get my MBA, and sit on one of the best trading desks in the world.
I spent the next day chasing professors, pleading with them to shift my course load so I could start at Morgan and still graduate with my class. One by one, they agreed and by the next day, I was set. My girlfriend cried in the background as I picked up the phone to deliver the news to Chuck
“I’ll be there Monday morning,” I said in the most confident tone I could muster, trying to mask my nervousness.
There was silence.
“Hey kid,” he finally said, “Why don’t you finish school and call me when you’re done.”
I didn’t know what that meant—was I getting the job? Did I do something wrong? Did he change his mind? All of these thoughts raced through my mind before I realized he already hung up.
I continued my senior year, occasionally sprinkling a random call to Chuck with hopes of staying on his radar. Each time he was cordial, but at no point did he renew his offer. I tried to enjoy the remainder of the college experience despite the uncertainty that lingered.
Finally, a few days before I graduated with my class in the spring of 1991, I got the wink. “Come in kid, we’ll see what we can do.”
To this day, I don’t know if Chuck’s initial offer was a test to see how badly I wanted the job or an impetuous gesture he later second-guessed. It really didn’t matter—I had my foot in the door and head in the game.
The following Monday, as my friends left for Europe and I nursed a wicked post-graduation hangover, I paced the pristine lobby at 1251 Avenue of the America.
I could almost smell the money.
R.P.
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