Lessons from the Great Escape

Today is the one-year anniversary of my escape from the brokerage industry, my own personal Independence Day.

I put the blog on hiatus for ten days (see Things the Grandkids Should Know) and then on July 26th I announced that I had moved over to Fusion Analytics as an Investment Advisor Representative; my stockbroker days were officially over.

Breaking away after more than a decade in the brokerage business was one of the most difficult things I’ve ever done, but looking back a year later it has also become the most important.  I couldn’t have made it to the Emerald City without some help from my Scarecrow (Howard Lindzon), my Tin Man (Phil Pearlman) and of course, my Lion (Barry Ritholtz).

And as I look back on that Great Escape of one year ago today, I realize there are several lessons that are worth imparting to you guys…

Never Take Responsibility for a Company You Don’t Own:  If I could take a time machine back to any day of my career to change something, I would go back to the day in 2004 that I took my Series 24 and push myself into an oubliette.  The hope would be that I’d have enough time down in that hole to contemplate the risk and hardship I was taking upon myself.  Life is too short to take responsibility for the actions of employees unless you are an owner of the company and have some say in the direction and policy of how that company runs.  At a small firm, the owner’s word is law and as a manager, you become little more than a Batman villain’s henchman.  And do you really want to be someone’s henchman?  Minus ownership, you can’t ever truly change the culture of a firm, though you may kill yourself trying.

The Sicilians have a saying that goes “the fish rots from the head down”.  You may end up working for the wrong people during the course of your career, it happens – but don’t ever compound that error by becoming financially beholden to them and doing their bidding.  You will hate yourself and accomplish little no matter how hard you try.

Don’t Work for People You’re Smarter Than:  Not everyone has the luxury of working for themselves in this world.  And sooner or later, you may find yourself in a situation where you are answering to someone who should be answering to you.  My advice is to recognize it, remain respectful, and begin seeking out a better opportunity as soon as possible if it looks as though your current situation may last a long time.

Looking back, I can’t believe how much time I wasted working for people who knew nothing and were perfectly satisfied in their own stasis of ignorance.  I wish I had saved myself the frustration of trying to foist improvement on a culture where there was no desire for it.  I wish I had that time back to have been working under people I could truly have learned from. They’re out there, so find them and offer your services when the moment is right.

Beware of People in Debt: People who feel the crushing pressure of money owed and dollars due are the most unpredictable and dangerous sort of people you’ll ever come across.  They will behave like the proverbial animal backed into a corner and you will never be able to fully anticipate the depths they’ll sink to or the ripples created by their desperate flailing.  You cannot save them or help them unless you have the ability to pay their debts for them – which would put you in an even worse situation.  There is only one way to deal with the irredeemably indebted and that is not at all or at least from afar.

Now imagine trying to manage people who are deeply in debt or attempting to convince them of the right way to do things.  Impossible.  Sisyphus himself would prefer to push his boulder than trade places with you.

Always Take Care of Your People: Gary owned an independent trucking company in Wisconsin and he was my first “real” client.  I was 23 years old, had just gotten on my own and for some reason, he would do anything I said in the markets.  We were swinging around six-figure positions in JDS Uniphase on a weekly basis and at the time, that seemed to be the right thing to do – everyone was making money.  We bought the stock down 20 and sold it up 30 on a regular basis.  I had gotten so good at it that our transition from a cash account to a margin account was a natural progression.  And then one day. down 20 became down 30.  The next day down another 15 points and then a 30 point sell-off the following week.  We bought more.  Then the margin calls came.  “But the CEO is going to be on TV!”  We made the margin call and bought more.  Down another ten points, more margin calls.  “But earnings are on Thursday after the close!”  Another average down, this time we sold a muni bond to come up with the equity.

Gary was not only my first real client, by the end of the tech and telecom bust he was the first client I had wiped out as JDSU dropped to a dollar or so from 200.  I was a rookie and was only doing what everyone else was doing.  Gary didn’t blame me at all, he was on the same page all the way.  But he did say something that stuck with me the day we closed his account:  “You always have to take care of your people, Josh.  Even though I don’t blame you for this, you should never forget that.”

Do you know who “your people” are?  Are you taking care of them?  Gary was “my people” but at the time I didn’t know it, nor did I know that I wasn’t taking care of him.  I hope he’s doing okay these days.

In a Fight, You Find Allies in the Most Unexpected Places:  When the chips are down and you need help, you will be amazed at not only who doesn’t come through for you, but with who actually does.  Even now, there are acquaintances and colleagues of yours that barely merit a passing thought in your daily comings-and-goings.  They are silently orbiting around you while your focus and attention is on other people, other things – the people and things that are gratifying you now, paying you today.

But I say to you that there are heroes in your orbit, saviors and rescuers though they don’t even know they’ve been cast in those roles themselves.  And when the time comes and you need someone, they are there and they can be miraculously, unexpectedly counted on.

Have you been an unexpected hero to someone?  Have you committed an act of kindness that meant little to you but absolutely meant the world to someone else?  You may have without even knowing it; the hero who is unaware of his or her own heroism.

Always Have a Plan B:  I made the mistake of allowing some broken-down loser convince me in my early twenties that to have a back-up plan was cowardly, a de facto admission that defeat was possible.  He was one of my earliest “sales managers” and the great tragedy of his life was that he could’ve played pro baseball if not for a pair of worn-out knees.  He delivered his daily sermon of “You cannot have a Plan B,” to the brokers, indoctrinating us into the Cult of Buy or Die.  We were taught to sell stocks to people as though our lives depended on it because there was no way out.  He loved the metaphor of the Viking general who, upon landing his army ashore, would burn the ships so that the warriors knew that there was no choice but to win.  And we bought into it.  “I must do this because there are no other options.”

Years later, I began to deprogram myself, albeit a little later than I wish I had.  It turns out that his “burning ship” metaphor was little more than the bullshit his high school coach probably recited to him prior to a big game.  In the first place, there was no “Viking army” as Vikings were more like closely-held corporations, bands of fighters with an aligned interest under a horn-helmed CEO.  They fought for plunder, not flag-planting or national expansion.  And while the ship-burning may have happened once or twice on some forgotten eastern coast of Britain, what happened more often was that Viking raiders switched allegiances to other warlords who could pay more or had more promising schemes in mind.  Vikings were bald-faced opportunists and so too should a young professional be.

There is always a Plan B and a better way, only a moron cuts off his own exits.  And just so you know, that sales manager is now somewhere in Colorado, out of the brokerage business and selling an anachronistic service to lawyers where he backs up their data on a CD for them.  Behold the former tough guy who is apparently working on Plan Z after all his harangues and rants.

Be Aware that Control is Only an Illusion:  Every single “door close” button on every single elevator you’ve ever set foot in is a fake.  That button with the two arrows facing each other is there only to keep us calm and to create the illusion that we can actually control our immediate surroundings in a tight space.  The reality is that the button has no effect and the doors will close when they close.  You may hit it and see the doors begin to close and think that you’ve actually had a hand in closing them but it was merely a matter of good timing.  You can rapidly tap away at the door close button but you will only see the elevator doors close at the same speed at which they’d close had you pressed it only once.  This closely-held secret has been guarded at the headquarters of Otis Elevator Company (owned by United Technologies) for decades and now only they and you know about it.

The reality is that you can’t control everything in this world, even if the button makes you think that you can – the elevator will close when it closes and sometimes you will think that you had a hand in it.  But this is not necessarily a bad thing, it’s nice to feel like you’re in charge.

Everyone Deserves a Chance at Redemption:  Well, with a few exceptions, almost everyone.  The great irony of Wall Street 2 is that even though it’s the worst movie ever made, it contains the single greatest closing line in the history of film.  Upon finally and unexpectedly doing the right thing by his daughter, Gordon Gecko closes the movie with the explanation that “Human beings…you gotta give them a break. They’re all a mixed bag.”  While the line is absent the flourishes of Shakespeare and the wording may lack the gravitas of an ancient Greek philosopher, it gets closer to the Meaning of Life than any other sentiment I’ve ever heard so succinctly expressed.  We’re all a mixed bag.  This idea never rang truer than when I finally came out the other side and left my reluctant career as a financial salesman behind.  But even with this redemption, I know deep down that I am and always will be a mixed bag.  And the same goes for you.


Thank you for letting me share these lessons learned from my Great Escape of a year ago.  I hope that at least some of them become helpful to you in some way.  While it feels like a lifetime has passed, every once in awhile I am jolted back to the old days and the things I’ve seen and done in the brokerage business.

I have a book coming out in March of 2012 called Backstage Wall Street that is going to turn the financial services business upside down and rip your fucking faces off .  I’ve poured my heart and soul into it along with every ounce of experience and hard-won wisdom I could fit into the pages.  I will be telling of things that outsiders were never meant to hear about and I will probably become persona non grata south of Fulton Street.

The director Elia Kazan once said of playwright Arthur Miller that he “didn’t write Death of a Salesman. He released it. It was there inside him, waiting to be turned loose. That’s the measure of its merit.”  I can only hope that this same sense of release becomes apparent to readers of my book when it hits the shelves.

But until then, stick around and let’s see what other lessons we can learn together.



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