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Wall Street & ML Baseball: A Common Thread

Posted by Larry Doyle on September 4, 2013 10:07 AM |

With the five year anniversary of the demise of Lehman Brothers right around the corner, a financial reporter from a major news outlet reached out to me yesterday to get my take on the current situation on Wall Street.

He was interested in touching upon the current culture within the industry and what has changed.

We had a fair bit to discuss and I was not bashful.

I highlighted the general lack of liquidity across most market segments as an indication of how Wall Street traders are committing less capital and taking a lower risk profile. I indicated that this reality is reflected in the fact that overall trading volumes in many sectors have declined dramatically over the last 5 years.

The lower volumes in these effected market segments have translated into lessened revenue streams, smaller bonuses, and significant downsizing in headcount. Not exactly a lot of fun for many people who go to work on Wall Street looking to put in an honest effort and earn an honest living. Very simply, there remains very little employee security in the securities industry.

I further offered that we can juxtapose that reality with the fact that the Wall Street banks themselves are generating tremendous revenues as a result of cutting expenses and taking advantage of the benefits that accrue to firms well positioned within an oligopoly.

My referencing the fact that the large, dominant Wall Street banks have been able to engage in the hoarding of information and manipulating markets (currencies, commodities, derivatives, interest rates, equities) with token fines as penalties evoked a strong reaction from the reporter. He questioned whether those on Wall Street have lashed out at me and criticized my forthright delivery. I let him know that I have experienced the exact opposite. I think he was generally surprised by that.

In fact, I then made a comparison between recent developments in Major League Baseball and the ongoing developments on Wall Street.

Not until the most recent suspensions for those using performance enhancing drugs were handed down by MLB have we witnessed those actually on the field come out forcefully calling for the game to be cleaned up and for penalties to be increased. Prior to these calls by the likes of Mike Trout of the Los Angeles Angels and others, the players almost always kept their opinions to themselves.

I truly believe that many individuals on Wall Street feel the same way about their industry. I have had a number of individuals inform me “off the record” that they would like to see the industry truly cleaned up and that senior executives engaged in or overseeing abusive practices truly held to account. Individuals such as Joe Saluzzi and Sal Arnuk at Themis Trading have the courage to speak out forcefully on these topics. Joe and Sal fortunately have the benefit of working at their privately held firm. Individuals at almost every other shop (large or small) are almost always subjected to the muzzle of not speaking out in public.

What is the end result?

Wall Street still has a long way to go to reconnect with Main Street.

Navigate accordingly.

Larry Doyle

Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.

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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved. 


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