Wall Street Financial Truth

Chapter 28 What Chinese Can Get on Wall Street (4)
Six months later, the boss flew to the Philippines to inspect the work and listened to the report in Manila at a restaurant: how to recruit two college classmates he trusted; how to carefully record his past and solve routine problems in the system; how to understand traders The jargon, how to communicate with traders, etc., were all taught to the new assistant without reservation.The Philippine Department can be successfully opened.Seeing that Manila has made such achievements in just six months, the boss was naturally elated and full of praise, and blurted out in a slightly drunken way: Great, great, this way the cost of the company will be greatly reduced. Hiring a person here in the United States 6 people can be hired with high salaries.Manila said, yes, yes, I guarantee that they will definitely do their best to satisfy the company just like me.The boss laughed and said: Isn't that everyone's happy, haha!He kept praising Manila, slapped his chest and said that not only would he be given a big red envelope at the end of the year, but he would also be promoted and raised.

After Manila returned to New York, the two old classmates from the Philippines really lived up to expectations. One was on the day shift and the other was on the night shift. They matched well.And the work in Manila is getting easier and easier, and he is very proud.The end of the year will be one month away. Seeing that the big red envelope will be a good year, he promises his children to go to Disney and promises to give his wife a big diamond ring.

Early one morning, Manila received a call at home. It was from the boss. He informed Manila in a low voice: "I am very sorry to inform you that starting tomorrow, you will not have to go to work..." Because there is someone to replace him , the cost is still very low.

In fact, what happened in Manila is not an exception. It has been heard on Wall Street in recent years.Due to the globalization of the world economy, the earth is flat, and water flows downhill. For Wall Street, human resources are the largest part of a company's cost.In other words, a large number of jobs in New York will be transferred to the third world, and any jobs that can be worked from home will be outsourced first.As early as 10 years ago, major Wall Street companies began to migrate a large number of information technology positions to India, the Philippines, Singapore and other places where labor is relatively low, and the quality of employees is comparable to that of American employees.In particular, the financial tsunami in the past two years has intensified this trend and is irresistible.According to statistics, by 2015, more than 300 million professional IT jobs in the United States will be moved overseas.

After he was laid off in Manila, he spent 10 months looking for a job, and finally got a new job. He worked as a front-line technical support as before, and was on call 24 hours a day, but his salary was only 75% of his original salary. In order to support his family, He had to accept it.

8. Chinese promotion on Wall Street
The Chinese on Wall Street are all technical masters, and the specific work is done quite beautifully.It was able to rise every year in the first five years, and it was precisely because of the scoring system that everyone tried their best, and everyone was like a model worker.But often when we are promoted to the middle level, our weaknesses will appear. We often have to hold meetings to make reports, and deal with superiors and subordinates every day, and we are often unable to do what we want when we talk about "foreign".

I have worked on Wall Street for 15 years, and have worked in many investment banks, including companies in the United States, Switzerland, and Canada.Although each company belongs to a different country, it is interesting that as long as it is on Wall Street, the corporate culture is similar.When you enter the office building, you can see at a glance who is at what level.The people in the middle are all traders, and other people who do system support, model analysis, and risk control surround the traders and are separated into small cubicles.The single-person offices are all facing the windows. The higher the level, the bigger the office. The corner one must be the largest, and the level is of course the highest.

The first time I was laid off because of a company merger, I felt as if I fell from the top of the mountain to the bottom of the mountain. I was so bored that I didn't know where to go, and had no direction.On the first day, the company paid for a lecture to help laid-off people find jobs again.I went and sat down. More than 40 fellow sufferers reported their families one by one. They were shocked when they heard that. , and even the CTO, CIO and CEO of a medium-sized company!They were all laid off too!
Wall Street companies conduct Appraisal (performance evaluation) twice a year for employees, and "warm up" once in July. The total score is determined at the end of the year. Those who meet the Expectation (expectation) get 7 points, those who exceed the expectation get 2 points, and those who do not meet the expectation get only 3 point. point.Needless to say, once you get 1 point, just leave.Of course, if there is a punishment, there will be a reward. Those who are rated as 1 points will get a big red envelope, a salary increase, and will generally be promoted.Some people may ask, if everyone works hard and performs well, wouldn't there be no 3 point? no!Just like the "rightists" back then, there was a quota ratio, 1% to 5% of the people got 10 point, and 1% to 20% got 30 points.That is to say, no matter what, at the end of each year, at least 3% of the employees of each company pack up and leave.

It is natural to be unhappy to leave, so promotion and salary increase must be a good thing?Not necessarily.

One of my bosses once described that the workplace on Wall Street is like a high jump. Your level is the height of the bar. After you jump over, the bar will move up (upgrade), and everyone’s eyes will be fixed on the bar. Move from the small cage to the small single room, then the medium single room, then the large single room, and finally move into the "corner office"... Once you can't jump over and knock down the crossbar, the ending is like a high jumper being eliminated naturally, when you leave It's here too.

The living environment of Wall Street, where the weak and the strong prey, forces everyone to challenge their limits.Therefore, after 10 years of working on Wall Street, they will start to consider quitting.There are generally not many people who stay on Wall Street after the age of 50.

The Chinese on Wall Street are good at technology, but because of their lack of language, communication skills, and management skills, the Chinese who have advanced to the intermediate level cannot use their strengths (need to do specific work), but their weaknesses are fully exposed. The height of the bar jumps. But the result can be imagined.

Some people may say, as long as you score 2 points each time, you will be fine, and you can keep doing it at one level.But this size is difficult to determine, because no one wants to be the bottom of the list, and will definitely work hard, and sooner or later will fall into the promotion trap of Wall Street.

Having said that, after all, Wall Street is the territory of white people, and it is difficult for Chinese people to rise up to VP (vice president, equivalent to middle management level).However, "a blessing in disguise", that way it has been done more stably.Therefore, there are quite a few Chinese VPs on Wall Street, almost every financial company has them. It is reported that the number is between 800 and 1000.Of course, there are also very few Chinese who are particularly good in specific fields and can really break through the glass ceiling.My former boss, Wei Wu, was such a special person.

At the beginning of 2001, I entered an ECN electronic trading company affiliated to Nasdaq through a mighty interview. ECN (short for Electronic Communication Networks, a type of alternative trading system) was the fastest-growing and most promising trading method recognized by Wall Street at that time.

Wei Wu has a bachelor's degree in electrical engineering from Princeton University and a master's degree in finance from New York University. He entered Wall Street as soon as he graduated.In his early years, he was the technical backbone of Instinet, a subsidiary of Reuters (Instinet was the first ECN company on Wall Street), and completed the design and development of the most critical part of ECN.Today's ECN is based on the specifications they determined at the time.It can be said that Weiwu is the originator of ECN development. Due to Weiwu's special status in the ECN field, he has been promoted to the CTO of our company all the way, which is absolutely rare among Chinese people.However, success and failure are also Xiao He. After being a CTO for a few years, Mighty gradually drifted away from specific technologies and became a person like Lao Mei who "can talk but can't do it".Later, ECN declined, especially after the 9 incident, the trading volume of ECN dropped sharply, and the company began to lay off employees.Mighty bears the brunt of the first batch of layoffs.At that time, the poor man was still on vacation at his mother-in-law's natal home in Singapore.After returning from vacation, I turned on the computer and couldn’t log in, so I realized that I had been laid off.

Ordinary Chinese people rely on technology to make a living, and it is relatively easy to find another job.But for Mighty, it's too high to be too low.It is impossible for large Wall Street companies to invite Chinese people to "sit" in high positions, and small and medium-sized companies have filled up all the radishes and pits, and it is even more difficult for him to go back and do technology.

One day a few years later, several of our old colleagues got together, and Wei Wu also came, and he seemed a little lonely.Asked about the recent situation, he said that his father retired last month and transferred the large Chinese restaurant that his family opened on Long Island to him.He didn't want to pick it up at first, but his father said: "I'm just a son like you, and it's the most practical for us Chinese to run a restaurant here. You don't need to look at other people's faces, and you don't need to ask for help to live. As long as the dishes are good, the customers will always ask for food." He came to eat." I couldn't help feeling sorry for him.

Finally, I would like to mention that there are 5% of the special family on Wall Street. They have worked in multiple departments of many investment banks, participated in the development of countless products, and are familiar with various systems. From the front desk to the back office, Passepartout has already experienced many battles. Once you have mastered it, you can turn to become a senior consultant, just like changing from a high jumper to a coach (couch), just "pointing fingers" all day long.Once you become such a person, of course you can keep doing it, and there is no age limit.I once met a colleague who was an old man, and I asked out of curiosity, he was already 82 years old!

9. Poor computer engineer with more work than a donkey

On November 2009, 11, early in the morning, I was shocked by an astonishing news from CNN: 'US arrests and charges two Mad off programmers.' I'm in a cold sweat.

Over the past few years, in order to find the culprit of the financial crisis, the American media has exploded, and everyone has different opinions.Greenspan once pointed the finger at the advanced computer technology, saying that the current results are all caused by computers.It would be even better, the Federal Bureau directly arrests the software engineers and charges them, it seems that they will also go to jail!
Eighteen years ago, I entered Wall Street as a financial software engineer. After thinking about it, computer engineers have indeed "indispensably contributed" to the development of Wall Street today.

On Wall Street, the primary function of computers was to store transaction information and transfer paper transaction records into the computer system, making transactions easier, resulting in a sharp increase in transaction volume and a sharp drop in costs, which accelerated the flow of capital blood on Wall Street.However, with the further development of computer technology, transactions are gradually moving towards automatic processing and automatic delivery.The rise of Nasdaq was driven by computer systems, and its OTC (over-the-counter trading) method stole the limelight from the original Wall Street star, the floor trader. The development of ECN (Electronic Communication Network) enables buyers and sellers of securities to "meet" directly and become a huge virtual network exchange, without the need for traders to execute orders.That year, after Archipelago, one of the top five ECNs, entered the New York Stock Exchange, more than 600 floor traders who had enjoyed exclusive privileges for many years immediately "retired and returned to their hometowns".

If the functions of computers are only used on Wall Street to this point, then the effects should be positive: increasing the transaction volume, reducing transaction costs, and maximizing investors' returns.But "needle has no benefit at both ends", with the further improvement of computer technology, disadvantages are beginning to appear.

For example, the program trading developed by Wall Street is an automatic trading program system designed by a computer system to monitor securities prices and then designed according to various trading modes. Facing the market, it is like a beast.In a trading mode, if the stock price rises by 5%, or the number of buy orders increases, the computer will buy in a large amount regardless of the situation; and once the stock price falls by 21%, or the number of sell orders increases, the computer will sell in large quantities.This seems good, but if the systems of several companies use this trading mode to trade at the same time, once the stock price rises to a certain point, it will trigger the system to buy at the same time, which will enter an endless loop: the more you buy, the higher the price, The higher the system, the more you buy.If it falls, it will fall in a mess.

At the beginning of 2010, several major Canadian banks made a joint venture of US$2 million to develop a brand-new global securities transaction monitoring system. I was fortunate to participate in this project.Among the hundreds of securities transaction record files input from various trading systems around the world every day, I found a file with a huge capacity, containing millions or even tens of millions of transaction records.This document is from the Chi-X trading system. Chi-X was developed three years ago with an investment of several hundred million from the European financial community. It is a high-speed computer trading system that raises program trading to a higher level, supported by more complex trading models. , Every stock, even if there is only a penny of profit, they will automatically execute the transaction, claiming to be able to complete the transaction at "super-light speed". Only two years after the Chi-X trading system was launched, it has covered a quarter of the London stock exchange, and even 2% to 12% of the entire European stock trading volume.At present, there are only 15 employees in Chi-X Securities Trading Company!

The great success of Chi-X has caused many European financial groups to follow up immediately, and several similar trading systems with an investment of hundreds of millions have also been launched. Although the scale is not as large as Chi-X, they are all growing rapidly. "Fortunately" the United States has not yet allowed this type of system to trade in the United States. Once this type of computer trading is rapidly popularized, ordinary retail investors will stop playing, and it must be their side dish.However, with financial globalization, if these European systems are bought or sold at the same time, the stock market will immediately skyrocket or plummet, and the consequences will be disastrous. Will the computer or the engineers who developed these systems be blamed?

Due to the huge computing power of computers, all financial derivative products that financial geniuses could only talk about on paper in the past have become reality one by one.For example, the hedge fund LTCM (Long-Term Capital Management Company) in the 20s used Monte Carlo simulation to generate so-called "random data" with computers, which will win the Nobel Prize for the Black-Scholes model (Black-Scholes) Through the real-time calculation of the computer system, the price of derivative securities is generated, and a solid computer system has been developed. It claims: "It has organically combined the historical transaction data of the financial market, existing market theories, academic research reports and market information. together".At that time, the geniuses of LTCM didn't have to go to the company to take care of the business at all. They played golf every day, went to the beach for vacation, and let the computer do the work for them.Something went wrong, and it ended in a huge loss of $90 billion.

The collapse of LTCM is just a preview, and this financial crisis is the wonderful drama of Wall Street's derivative securitization.Although computer engineers work harder than donkeys, eat worse than pigs, get up earlier than chickens, get off work later than misses, pretend to be better than grandsons, and look better than anyone else.As far as income is concerned, while those financial giants, gold medal analysts, fund managers and first-class traders have millions or even hundreds of millions of dollars in bonuses every year, engineers only get a red envelope of 60 to [-] dollars. , but under the media's sensational publicity from time to time, it was "averaged" to [-] million US dollars.

Obviously, without the rapid development of computer technology, the financial crisis might not have been so serious; but no matter how powerful the computer system is, it is also developed by the human brain and controlled by humans.After all, it's not yet the era of the movie Matrix (The Matrix), isn't it too ridiculous to blame the computer?

(End of this chapter)