Here is a guaranteed way to get paid well if you work on Wall Street. Find a best friend at a competing bank or hedge fund and take opposite sides of the same large bet.
On December 20, 1994 Mexico’s newly installed president Ernesto Zedillo devalued the currency, the peso, by 15%. As a candidate he had said he would “defend the peso like a dog.” That day the peso went from 3.47, where it had been for a year, to 3.95 and the trading floors of Wall Street were filled with the sounds of barking dogs.On that day I was in research working with the emerging markets trading desk of Salomon Brothers.
“If it weren’t for those meddling kids!” That was the punch line for every Scooby Doo episode. It also is the overly simple narrative that many in the media have spun about the last financial crisis.
Losing money is one of the loneliest feelings. It was Oct 22nd, 2008. Lehman Brothers, the investment bank, had filed for bankruptcy the month before.