Part of the charm of Wall Street, and what scares most reasonable people away, is that it is as close to a meritocracy as exists on this earth. It’s dog eat dog. It’s sink or swim. You do a trade and it makes money, then you’re a hero (for a moment anyway) and deserve a bonus. You bring in a deal, you get paid. You lasso more clients’ assets under your firm’s roof, you’re a hitter. I once discovered some good news on the stocks I followed before the rest of the Street, and mentioned it to the sales force at a morning meeting and moved markets in New York, Tokyo and London. I had the head of global equities pat my head on the elevator ride up the next morning. Pat my head! I was told he never does that.
The flip side, of course, is what makes Wall Street so dangerous. You lose money for the firm and you’re a heel. Do it again and you don’t get paid that year. Do it a third time and you’re out of a job. Just like that. Gone. I’ve seen it happen to friends and acquaintances at just about every firm up and down Wall Street. There is no tenure on Wall Street, no job security, no long-term guarantees. Ten- and 20-year careers end in a flash. Happens all the time, and everybody who works in the business knows this.
That’s one reason why everyone is paid so well. Think of it as combat pay. But the other reason compensation is many, many multiples of the average wage in this country is that trading stocks, doing IPOs, merging companies, managing money is a very lucrative business. Not everyone can do it. It looks easy, football-field-sized trading rooms jammed with adrenalin-rush maniacs sitting in front of huge LCD screens. It might as well be a call center in Mumbai. But it’s hard. Really nasty hard. Wall Street hires in that 99 percentile zone. And then they make your life miserable hoping you’ll quit before they break you. Or hoping they break you before you lose money for the firm. It’s not WalMart or General Motors or even Pfizer or Intel. It’s trial by fire.
You would think that would make the entire workforce afraid to do anything for fear of being tossed…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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