The movie Wall Street (1988), as well as its 2010 sequel is rather odd, in that it was wildly successful across the board—including with the very segment it criticized.
Wall Street investment bankers and stockbrokers loved it and many since have been modeling their career on the rather unscrupulous Gordon Gekko.
Why is that so?
Can you learn any valuable investment banking career lessons from the man who famously proclaimed that ‘greed is good’? Read on to find out!
#1 You have to start somewhere
“You see that building? I bought that building ten years ago. My first real estate deal. Sold it two years later, made an $800,000 profit. It was better than sex. At the time I thought that was all the money in the world. Now it’s a day’s pay. It’s all about bucks, kid. The rest is conversation.” [Gordon Gekko]
Main takeaway: If you have to start somewhere (and you do, as do we all), start by acing that investment banking interview. Remember not to come across as an obnoxious Ivy League geek or prick. Come with a good resume, some solid internships, and great technical skills under your belt. Avoid typical interview mistakes, like a weak handshake, no questions asked at the end, or rambling on and on about you, your motivation, and your interest in investment banking. Try to come prepared with answers to the most commonly encountered questions on interviews. Finally, if asked a technical question, voice your thought process out loud. It will show your interviewer exactly how you think and what sets you apart from the pack.
Image source: CCMovieReviews.com
#2 Every battle is won before it is ever fought
“I don’t throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought.” [Gordon Gekko]
Image source: lundydee.wordpress.com
Main takeaway: Gordon Gekko is a man with a strategy, which is exactly what you need, if you want to be successful in investment banking. What he’s saying above is that winging it won’t cut it. For illustration, consider the appraisals for bankers, which occur at the end of each year. This process typically goes down by having some 10 people you worked with throughout the year to assess you. They get to evaluate your transaction performance, integrity, reliability, teamwork skills, and technical skills. Then, the senior bankers decide who gets fired and who gets the extra bonus. As an analyst or investment banker, it’s important to know a few tricks of the trade. First off, perform above expectations in the final 2 months of the year, since your colleagues likely have a short memory—working in a high pressure environment will do that to people.
Then, remember to network, play nice with everyone, and come across as more than just a highly skilled investment geek.
#3 Sheep can’t beat the S&P 500
“Ever wonder why fund managers can’t beat the S&P 500? ‘Cause they’re sheep, and sheep get slaughtered.”[Gordon Gekko]
Main takeaway: Buy low, sell high, right? It’s that simple, right? Well, no, it’s not. In fact, if there’s one piece of advice to be gleaned from Gekko’s otherwise ruthless advice about the trading and investing world, as well as about business and finance in general, is that you’re not going to beat the S&P 500, get that modelling task right, or pitch those stocks successfully, if you just follow the pack.
What you need to do is create your own standards for success, follow your own instincts, and strategies, and thus stay on top of your game.
Image source: AgentPalmer.com
#4 Want that internship? Try calling 59 days in a row!
“This is the kid, calls me 59 days in a row, wants to be a player. There ought to be a picture of you in the dictionary under persistence, kid.”[Gordon Gekko]
Image source: Blogspot.com
Charlie Sheen’s Bud Fox gets hired after a lot of desperate efforts. Not only does he call Gekko’s office for 59 days in a row, but he up and visits him at the office, with no prior notice—but a box of the stockbroker’s favorite bootlegged cigars. Gecko is impressed with the younger broker’s gall, but not impressed enough with his interview stock pitch. That’s when Fox resorts to an insider tip-off regarding Bluestar Airlines, and the rest is movie history. Over the years that have elapsed since the film’s release, both leads have acknowledged that many people (still) come up to them to say the movie has motivated them to start a career in finance. We don’t endorse insider trading, corporate spyingor any other sort of illegal activity. However, we do advise in favor of persistence.
Main takeaway: Work hard at getting the best internship possible, and make sure you make the most of the experience. According to Forbes, in 2014, investment banking company Evercore Partners offered a highly selective 10-week gig to 35-40 interns. They received training in recapitalization, divestitures, restructurings, joint ventures, and much more. Northwestern mutual ranked second in the magazine’s chart, but there are plenty more options to explore out there.
#5 Greed might photograph well, but that doesn’t make it good
Ivan F. Boesky, found guilty of insider trading, famously told his students “Greed is all right, by the way”.
Photo: Marilynn K. Yee for The New York Times
Image source: NYTimes.com
Gekkois inspired by real-life characters: Michael R. Milken was the most powerful and richest financier of his generation. Ivan F. Boesky was an arbitrageur who eventually admitted to dealing in insider trading. Eventually, both found their demise—Milken was sentenced to prison and Boesky to $100 million in fines. At the time, the U.S. authorities hoped this would signal the end of the insider trading era. The 1980s had been dominated by hostile takeovers, high-profile lawsuits and finance via junk bonds.
Unfortunately, insider trading didn’t stop there, as evidenced, at the latest, by the notorious case of Steven A. Cohen. Cohen, a hedge fund founder of SAC Capital Advisors, and a financier richer and more powerful than even Milken, made $1.4 billion in 2009. And, although neither he nor his firm faced any civil charges at the time they were profiled by The New York Times, in 2012. However, neither did many junk bond traders in Milken’s days.
Main takeaway: Even if the risk of getting caught is surpassed by the reward of dabbling in insider trading, don’t let this sharp cost-benefit curve fool you. Hedge funds often engage in non-transparent trading practices, which help them earn massive amounts of money over small price fluctuations. But, most of the time, insider trading is motivated by gaining social traction with a single, small insider tip-off.
Criminal charges and cheating for an edge are never worth it—and, if anything, the recession should have taught us all that.
#6 Look the part
Yes, what you wear on Wall Street does matter, as Gekko proves—not just by dressing for success, but most importantly by inspiring scores of would-bes to emulate his style. However, there’s an important amendment to make here. Where Douglas pulled off contrasting collars, suspenders, and pomade-slicked hair (it was the ‘80s, after all…), you’re going to fail miserably. So rather than advising you to dress like him, the takeaway here is to know and obey the dress code rules of today’s Wall Street.
This is how the real young Wolves of Wall Street actually dress nowadays. Photo: Rene Cervantes
Image source: NYPost.com
Where to start: this Business Insider Goldman Sachs fashion cheat sheet keeps things sensible, for instance.
Main takeaway: Avoid wing-tips, square toes, or those hazel BottegaVeneta loafers. Go the tested-and-true route. Gucci and Prada for shoes, CK and Giorgio Armani for socks, no garish belts or suspenders, no monograms, no breast pockets, no collar buttons, no Hermes, no brown jacket, always a Windsor tie knot.What you should be aiming for is a clean-cut professional look.
#7 Excess can never last forever
Perhaps the main reason for which Oliver Stone’s film was a hit at the time of its release is a matter of historic timing. It opened less than two months (eight weeks, to be specific) after the infamous crash of the Dow, which effectively marked the end of 1980s financial debauchery and excess spending. Nothing encompasses this ethos better than Gekko’s own mantra of “Greed is God.”
In case you need a bit of a history primer, this is what happened: Black Monday, as the event has been captured by history, hit on October 19, 1987. It all started in Hong Kong, extended to Europe, and eventually hit U.S. shores, causing the DJIA (Dow Jones Industrial Average) to lose 508 points, down by 22.62%, to 1,738.74. Ever since, many experts have theorized the causes of the crash, with NYU’s Anna Chen pinning it down on macroeconomic causes, on the one hand (inflation worries, ForEx and interest rate disputes), and internal reasons (program trading has been largely seen as the main such factor).
A visual timeline of Black Monday, as compiled by the United States Federal Reserve
Image source: Wikipedia.org
Main takeaway: Look out for market imbalances. Ever since, trade-clearing protocols have received several major makeovers, so that all the investment products available on the market are more or less balanced. However, imbalance between the big guys and the small fry still exists and probably always will. Come prepared with a strategy on how to deal with instrument dumping, as was the case at the time with the major players, who benefitted from portfolio insurance.