A successful career on Wall Street is as much about the failures as it is about the wins. Anyone who tells you differently is either hiding their past mistakes or is about to experience their own epic collapse, made even worse by the fact that it will be wholly unexpected to them.
This is good to remember the next time you hear any of the following terms assigned to a Wall Street professional…
Guru – As in “Options Guru” or “Trading Guru”. These days, robes and a beard are optional as investors are more than willing to lavish the appellation Guru on virtually anyone who can get themselves on television. This term typically precedes the name of someone who would like to sell you a set of instructional videos.
example: Lenny Dykstra (TheStreet.com’s ex-options expert)
Rock Star – Anytime someone involved in finance is called a Rock Star, you can turn on the bull$#*t meter and pretty much just leave it running. “Rock Star” is what they called Erin Callan, Lehman’s CFO just before the end, whose main role at the company was the application of lipstick to herself when the cameras were rolling and to their pig of a balance sheet when the Korean sovereign wealth funds were in town.
example: Erin Callan (former Chief Obfuscation Officer, Lehman Brothers)
Wiz – Similar to Guru, although with the added implication of supernatural talent or skills. Those on The Street who are referred to as “a Wiz” will likely end up in handcuffs before long.
example: Bernie Madoff (the most consistent generator of returns in the history of investing…until someone needed money back)
Wunderkind – Typically reserved for someone who runs a hedge fund and puts up incredible numbers within the first year or two out of nowhere. Much like your average American Idol winner, the “Wunderkind” rides this initial wave of success until his many new investors find out how rarely any one strategy works consistently in back-to-back years.
example: Thomas Hudson Jr. (Pirate Capital)
Prodigy – Similar to wunderkind, those in finance who are called “prodigy” are not only fresh faces, but they also have come up with a fresh way of going about something, be it trading, dealmaking or investing. Unfortunately, it will not be long before the prodigy’s methods are co-opted by the masses, thus rendering the novelty of the approach itself useless. Avoidance of this term is even more critical when considering sexy new technology investments.
example: Todd Krizelman and Stephan Paternot (founders, TheGlobe.com)
Hot Hand – This term is most commonly used to describe either a stock picker who has enjoyed a spate of recent success or a lucky shooter standing at the head of a craps table. The media’s usage of the term “Hot Hand” to describe a fund manager is basically a de facto endorsement or advertisement. Like the wunderkind, the hot hand eventually finds himself cooled off by a change in the market, leading to an atmosphere where his particular skills do not quite translate with the same effects.
example: Ryan Jacob (Jacob Internet Mutual Fund manager, founded 1999)
Hotshot – Normally attached to the name of someone in a sales role, “Hotshot” is perhaps the most childish term employed by the media when covering Wall Street. There is typically a trace of jealousy and/ or skepticism involved, but those who bask in the concomitant attention of Hotshot status are perhaps the most deserving of comeuppance on this list.
example: Philip Potter (the accidental face of 90’s Morgan Stanley – link)
Guru, Rock Star, Wiz, Wunderkind, Prodigy, Hot Hand, Hotshot…if any of these terms are being used to describe you or the person managing your money, curl up in a ball and hide.