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Monday, February 18, 2013

Speaketh the Godfather


In the second round of twisting and misinterpreting quotes as a thought and literary exercise I set my sights on the holy grail of quotables. Guys of a certain age can quote the ‘Godfather” at length and many have based their life on the book and the movie script. The gangster fantasy lies somewhere in the mind of every man, the desire to live as one pleases, on one’s own term with total disregard for authority and the laws of the land. Of course the money, the women, the really sharp suits and cool hats have to be offset somewhat by the occasional vacation at Club Fed and the lead jacketed retirement plan but let us not mess up a good fantasy with any of that nasty reality.

Whatever some may think of gangster life style there is no question that the book, and the movie trilogy have provided us some incredible quotes that can help us frame life, markets, relationships and other critical parts of the world in which we live. There was a code, an ethos about the world of the Sicilian Mafia that had much to admire and perhaps something to teach us.

This is the Business We Have Chosen

This line is delivered by the Hyman Roth, nee Myer Lansky, character in the second film. It is an acceptance that if you choose the life you have to accept the price and there will be a price. Friends will die, you may go to Club Fed for an extended stay and there are expectations placed upon you for you membership in the mob. The real man is the one who accepts the risk without question and without complaint.

This can be applied to almost any profession but I certainly think it applies to those of whose work in finance and markets. Over the years I have discovered that, as a group, Wall Streeters can be whiny little shits. Just look at the social media feed of some of the traders, investors and bankers that regularly share their thoughts.  That guy stole my research.  This guy poached my client. They killed my deal at the 11th hour. The market maker fucked me. I can’t get a damn fill. The trade is going against me. My P&L blew up. My boss is a dick who doesn’t understand quant. I can’t believe they promoted that asshole. That guy has all the luck.

Look, you chose this life. Odds are you went to school specifically to work in finance. Half of you have been having a Wall Street wet dream since puberty and can quote Wall Street word for word. No one forced you to take a job on the overnight currency desk so quit bitching about it. There was no gun at the back of your head and some guy growling at you to trade Mr. Softy or he will blow your fucking head off. No one walked up someday and drug you into the back of a car to inform you that if you didn't go into I-Banking  the wife and kids were going to get it. There was no one threatening to break your knees if you didn't get long a leveraged line of coffee in front of a bumper crop or short corn as we entered a drought  You chose to be here. You are probably overpaid relative to your value to the world so just shut up and do what you came here to do.

 And please stop telling me how hard you work. Sitting up late at night flipping through stock charts and drawing squiggly lines is not hard work. Neither is updating your model to blow up the world or drawing up the latest merger proposal. Digging ditches is hard work. Teaching is hard work. So is nursing. Plumbing and bricklaying are hard work. Soldiering, now that’s hard work. Wearing an Armani suit sitting in an office with an exquisite view of the harbor crunching numbers is not hard work. Shut the fuck up and enjoy the fact that the only calluses you will ever get will come from golf and tennis. You chose this life. Quit whining and enjoy it.

I never wanted this life for you

I took a lot of flack last year when I wrote a column suggesting that the young  hard working young person today should avoid going into finance. After all this has been a rewarding life for me and I have reaped the benefits of working in markets and financial services. Why wouldn't I want my son to follow in my footsteps?

It is a valid question and I have a two part answer. First and foremost this is not the business I came into almost three decades ago. We sold stocks and bonds, maybe had a few high roller clients that traded options.  The best years of my life as a broker were at a regional firm that made markets in local bank stocks and was big in local muni bonds. We got well paid to inventory and offer illiquid securities as well tax free bonds. It was actually kind of easy to make pretty good money. You either wanted what we had or you didn’t and if you did, we got paid and you usually made money. The firm did well, the clients did well and the brokers did well. That business model has pretty much vanished from their landscape.

No one is a stockbroker anymore. They are all advisers and financial consultants. They are expected to do financial planning and consulting and know a little about everything. You are expected to swallow your credulity and credibility to sell packaged products to clients that any rational human has to know are just a horrid idea. If you show one ounce of imagination the compliance department will land on you like Patton in Africa. The firm wants more, always more and they do not really give a shit how you get it as long as its more. Clients are unwilling to learn even the basics of the markets and have unrealistic expectations and an aversion to paying you. It’s a shitty business. The firm is trying to fuck you in every way possible because you are the highest cost item in the business. The clients expect you to be god and will switch, or worse sue, at the first sign of mortality.

My second reason has to do with values and moral hazards. Wall Street no longer provides some valuable function to society. Do you really think that the deals that should be done can’t get done by guys like Buffet and Ross without I-bankers? Do you think that Dr. Smith cannot find someone to manage his assets without the big firms taking a cut?  When I first started in the world traders and speculators were a valuable source of market liquidity for investors. With as much as 90% of all daily activity being one spec trading with another can we really say we do that anymore? Wall Street is just spinning money and Main Street only exists as a place to package and lay off risk on unsuspecting clients. Yield to broker is far more important than yield to client these days in my experience.

Of course there are exceptions to this. There are firms out there doing deals for little banks and bringing new and innovative companies’ public. There are money managers and even brokers who really give a shit and bleed to do their best for clients. They seem to be the exception and not the rule.

I expect to see my kids do very well in the markets over their lifetimes. I want to see them use the techniques and principles of asset based value investing to put together portfolios that trounce the markets. I want them to learn to pick long shots that pay off in multiples not percentages. I want them to learn to think like old fashioned private equity guys and buy companies at ugly prices and sell them when they are pretty again. I just want to see them do it with money they earn running a construction company, a book store, being a teacher or almost any other occupation. If they go into money management I want it to be as a sole practitioner a jillion miles away from the Street and the poisonous culture of more. The only thing worse than one of mine going to Wall Street would be one becoming a politician as a part of the two party conspiracy. I hope they get dirty stinking filthy rich but I want them to do as part of something that adds real value to themselves and the community in which they reside.

Friendship is everything. Friendship is more than talent. It is more than the government. It is almost the equal of family.

  Friends are a huge part of what makes life enjoyable. This was not meant to be a solitary journey. I have always made it a point to make friends easily a cross wide range of the world. I am sorry but if you and all your friends work in the same business and live the same lives you are just fucking boring. To be sure I have a lot of friends who work in the markets. I also count Professors, chemists, fireman, salesman, teachers, mechanics, fisherman, restaurateurs, nurses, doctors, authors, artists and even a few government employees among those I call friend. I want a wide range of friends who know things I do not, who have had experiences that I have not. I want friends who add value and information to my life not just a collection of stock guys to sit around and talk markets and watch football. I can do that by myself.

Over the years a group of core close friends will develop. These are the ones who will be with you most of your life and be around for the highest highs and highest lows. They will be the ones you confide in and seek help from when it all goes to shit. The best way to figure out who your closest friends are is to lose all your money and see who is around the next day. It’s pretty much infallible. Your close friends are almost family. Treasure these relationships and give as much as you get from the relationship, if not a little more.

 Over the years you will have friends who betray you or harm you in some way. They will steal your money, make a pass at your wife, never repay a loan or in some way harm you in order to further their own good. You can forgive them but you still have to whack them. Some people will turn into a cancer that does too much damage to be allowed to be a part of your life. The braggart, the thief, the liar, they all have to go. Life is too fucking short.

The one person you better be friends with is the one you wake up next to each day. At the core of a real deep lasting love is friendship. It is not enough to be wildly sexually attracted to someone or get swept up in a moment of intense romance. These are very nice and need to be a part of every long lasting relationship. But at the core, to get though all the ups, downs and most all the sideways nothing special days of life you have to like them a lot. I am very lucky in that my wife is my best friend. I was and still am wildly attracted to her and she can turn me on with a glance but as much as I loved the romantic whirlwind of courtship I knew I needed to marry her when I realized she was my best friend and the person I most wanted to be around every day.

I don't trust society to protect us, I have no intention of placing my fate in the hands of men whose only qualification is that they managed to con a block of people to vote for them.

Okay this is the part that if you are easily offended by profanity or actually believe government in its current form offers much real value you should probably skip. This is one statement about which the Godfather was absolutely completely, intellectually and morally correct. I am always amazed that my fellow citizens accept the corrupt raging piece of absolute shit our government has become. We claim to hate politicians and polls show that everyone hates Congress but 91% of incumbents were returned to office last election.

Take note folks. Government cannot help you. They are not here to make your life better. They do not give a shit about you. The bureaucracy of government has but one mission and that is to sustain and grow itself. In order to do that they need to control as many parts of your life as possible and coach it in terms that offer you reassurance that it is in your best interest. Liberty is stolen with good intentions far more often than by gunpoint in our modern world.

We elect these people based on their promises about making your life and world better. The truth is once they get up there they want to control your life. They want to decide where you live, how you raise your kids, who you love, who you marry and what you do with your property. When a man declares his intention to run for office he is basically saying he knows more about what you need to be happy than you do and he intends to make it happen by the point of a gun under the threat of incarceration. A professional politician will do whatever it takes to get reelected. He will take your money and give it to someone else to gain votes. He will allow banks to corrupt the economy and pass out benefit checks to people who have never worked a day in their life. He or she will vote to regulate your job, your sex life, your hobbies, and wrap it all up in God and flag.

There is almost no difference between the parties. They both exist to keep the dance of the dollars and votes going as long as possible. Yet we all act like there is some major difference between the two. The only difference is how much of your money they want and which behavior they want to regulate. That’s it.

We need to quit electing professional politicians.  Quit fucking paying them would be my suggestion. I want to see us elect a single mother who is balancing kids and a job and has no time for bullshit. I want to see a guy who has had to sweat out the choice between paying taxes and making payroll in office. I want someone who has just had enough of getting fined for not wearing a seat belt or letting his kids ride a bike without a helmet. I want someone who has lost a business to some asinine government regulation and is just tired of the ridiculous and arbitrary nature of government sworn in. I want people who have busted their ass and brown bagged it to work to buy a house and put their kids through school. I want to elect someone who did five years in prison for smoking a joint or having a poker game in their home. I want someone who wants to see their kids taught reading, writing, math and unadulterated or politically corrected history and teach self-esteem and personal values at home. Lets try voting for people who understand that the best thing government can do is stay the fuck out of the way.  I did not sign any damned social contract and as much as you owe me nothing, I owe you nothing.

The governments job is to provide for the common defense and provide a level playing field for commerce. Everything else is an infringement on my liberty and an attempt to control my behavior. The government is no longer for the people, by the people and of the people. It has become for the politicians, by the lobbyists, and of the bureaucracy. It is our apathy and ignorance that has allowed it and only our passion to regain personal liberty and willingness to embrace personal RESPONSIBILITY that can change it.

Yet, he thought, if I can die saying, "Life is so beautiful," then nothing else is important. If I can believe in myself that much, nothing else matters.

This might be the most important passage in the book form which to learn. Don Corleone has seen some of the worst things life had to offer and had indeed perpetrated some of life's worst on others. But at the end as he fell dying to the ground he understood that life itself is beautiful and should be lived in such a manner as to embrace that beauty.

Look, I am a realist. Life is not all cupcakes and unicorns. Bad shit can and does happen. We will, beyond any certainty of a doubt, fuck up and probably often. I have been sick, had children with a serious illness and I have had loved ones die. I have been beat up, locked up and have fucked up royally. I have gone broke a time or two. I have had my heart broken in my younger years. I have made more mistakes that I can ever count and I am sure I will make more before I am done. There is a harsh ugly side of life and it is all too easy to wallow in the muck, the blood and the pain.

Politicians will tell us we have to sacrifice for the greater good. The church tells you that you must abstain to insure a better life in the next world. Puritans will tell you that you must keep your nose to the grindstone. The do-gooders and bleeding hearts will tell you that you must live for the benefit of others. To all of which I say “Fuck You.”

I am not on mutual conversation terms with whatever deity created our world but I am pretty sure they did not fill it with love, music, books, sunsets, sex, wine and joy for us to ignore it in hopes that we will have more fun the second time around.

I am aware that one must work and contribute in order to makes ones way through life but I do not believe that is should be the major focus on ones life unless you enjoy the hell out of it. Do what you love and the money will follow is not always true as quickly as we might like. Sometimes you have to work at a job you do not like with a boss that’s a raging asshole. But that does not need to be the focal point of your life and is but a step along the road. One should work to live until you can find the capital or ability to do what you love to do and get paid.

It is your life not someone else’s. You may choose to help others long the way but that’s a choice not a requirement. You do not owe anyone else one damn thing you do not choose to give. Give what you want to who you want.

Embrace the idea that for all its faults, life is beautiful. Quit focusing on what’s wrong and look to what’s right. Kiss your lover, listen to your childrens laughter. Listen to more music, have more sex, read more books, embrace all that is good, right and wonderful about being alive. It sounds trite but chase your dreams and strive to live the life you want. If you dream of palm trees and sunshine what in the fuck are you doing in the snow belt? If you always wanted to be a ski bum on your days off you need to imitate  my good friend the Yeti and move your ass to the mountains. If you want to enjoy things educated and literate why are you watching a Simpsons rerun? If you want to work for yourself and own a business why did you just piss away $137 on miller light and jaeger bombs? Figure out what you want out of life and then decide how to make it happen. Embrace all the small wonderful things about life. Read books. Drink wine. Watch more baseball. Love. Live. Life really is beautiful if you look for it.

Resolve not to die miserable and wishing you had taken more risks and chances.  Arrive at the end with a drink in one hand, a bag of memories in the other, wearing a  smile with one shoe on, one shoe off saying that like the Don you found life beautiful and worth living.

In ending I leave you with a quote that in my opinion could well hold the true meaning of life.

LEAVE THE GUN. TAKE THE CANOLLI


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