Quotes from Frank Partnoy

Because if you don't know how to manage time, time can rule you like a tyrant.

Psychologists have suggested we have two systems of thinking, one intuitive and one analytical, both of which can lead us to make serious cognitive mistakes.

During superfast reactions, the best-performing experts instinctively know when to pause, if only for a split-second. The same is true over longer periods: some of us are better at understanding when to take a few extra seconds to deliver the punch line of a joke, or when we should wait a full hour before making a judgment about another person. Part of this skill is gut instinct, and part of it is analytical.

International Match debentures were quoted at $129, a high level for a security that would repay just $100 in eighteen years. The price was so high because of the conversion right. According to Berning "practically all debenture holders" had converted into common shares.15

As the partners ate, Ivar crisscrossed all of these topics, frequently citing financial statistics and data from his own companies' quarterly reports. He did it entirely from memory. When he had finished, he stood quietly and met everyone's eyes one more time.

First Boston was so plagued with harassment and discrimination problems that it hired a consultant to train the salesmen and traders not to sexually harass female interviewees. But the training was hopeless. Much to the horror of the middle-aged female consultant, during one training session, a male employee opened a mock interview by asking the prospective female employee, "So, babe, do you want to fuck?

During these early years, Ivar was constantly reinventing himself and reforming his personality. But he didn't want Durant and his partners to know about his efforts at self-improvement; he just wanted to show them the finished product. For these men, the story of Ivar's life began in 1908

The salesman simply nodded. He said state pension funds were among the biggest buyers of structured notes, of which this Thai trade was but one example. Generally the list of structured note buyers included the State of Wisconsin and several counties in California, including Orange County, although the salesman noted that this Thai trade was small and unusual and that state pension funds and insurance companies typically bought other types of structured notes.

The secret to understanding Citron was that ... he knows thirty percent of what he thinks he knows

Several salesmen focused on how many "bars" they made. To derivatives salesmen, a "bar" is not a place to go for drinks. A "bar" is a salary, a huge salary, with a long line of zeros, at least six of them. On Wall Street, you never said, "I make a million dollars a year." You said, "I make a bar." Lots of DPG employees made bars, often several. Of course, I, too, wanted to make bars, and by the end of the day I was salivating.

Time is a slippery concept, and we are often wrong about it... All too often we find ourselves looking in the right places at the wrong times.

In 1986 a typical salesman subscribed to Time or perhaps Playboy, played golf, and sold corporate and government bonds. By 1994 that same salesman read Soldier of Fortune and Guns and Ammo, shot doves, and sold leveraged-indexed-inverse-floating-dual-currency structured notes. This was no coincidence.

At the time, BT wasn't yet known as the bank where—according to one infamous derivatives salesman—they "lure people into that calm and then just totally fuck 'em." To most of the world, this was still a secret. I had assumed that BT was in business to make as much money as it could. Had I known BT's approach to clients was to "totally fuck 'em," my favorable view of the bank might have changed. Perhaps it would have improved.

One group of senior directors took an extravagant junket to Uruguay to kill doves. They especially loved killing doves. Why? It couldn't have been the challenge. The group paid a Uruguayan farmer who had thousands of doves on his property to allow them to shoot there. One of the managers told me the air was so thick with doves that the hunting resembled a scene from Alfred Hitchcock's movie The Birds.

If you don't understand it right away, don't worry, you're in good company. Many fund managers and corporate CEOs had only a limited understanding of the bond and derivatives markets until very recently. Even President Clinton reportedly admitted surprise when he discovered the importance of—in his words, according to one source—a bunch of "fucking bond traders.

For example, to value a ten-year bond with a 6 percent coupon, simply calculate what each of the interest payments and the principal repayment are worth today, in terms of present value. The sum of these individual values is the bond's total value.

Most investment banking employees are rational economic actors who know that once they've received a bonus payment, they'll have to wait an entire year for another. If you were planning to leave a firm, you never stayed more than an hour or so past bonus time if you could help it.

Scarecrow often would take me aside and explain that he lived by two simple rules. First, perception is reality. Second, trust but verify. Each of these rules, he was proud to say, he had learned during the most enlightened period in the history of the United States—1980 to 1988—from the most enlightened man alive during that period. Scarecrow believed Ronald Reagan was God, and at Morgan Stanley he wasn't alone.

This was a standard Wall Street ritual. You obtained an offer from another bank, then used that offer to try to persuade your current employer to give you a raise. It's the only way to get ahead at an investment bank, and senior managers, though furious when you do this, will think you are a loser if you do not. It's not uncommon for a new salesman or trader to multiply his starting salary by as much as ten times in a few years, using such negotiating tactics.

In early 1994 Mexico was hot. The U.S. had recently passed NAFTA—the North American Free Trade Agreement—and bankers were racing south to Mexico City. The Emerging Markets Traders Association said 1993 trading volume was $1.5 trillion, double the previous year, and Latin American derivatives were the fastest growing portion of the derivatives market. Monthly trading of Latin American derivatives had increased to a face value of $25 billion in 1993 from $3 billion in 1992.

The reaction to his funeral, in 1923, was more about the future than the past. New issues of securities of industrial companies would increase from 690 during the year after Harding's death to nearly 2,000 in 1929.1 Brokers' loans to investors and share ownership would quadruple by 1929.2 The number of Americans who paid tax on income of a million dollars a year also would quadruple.3

It wasn't clear what "emerging" meant, or how these markets might "emerge." Still, it sounded awfully good, and it helped cloud the fact that the emerging bond an investor bought actually was a Peruvian loan that hadn't paid any interest since the 1800s.

QUESTION: What did Lee Harvey Oswald say to Michael Jordan? ANSWER: Through the book depository window, over the grassy knoll, off the wrist, nothing but neck. Scarecrow was not a big JFK fan. I noted that he never joked about Ronald Reagan being shot.

Ivar Kreuger became the face of the International Match scandal, but he should not have been the only target. Overeager investors, sloppy auditors, and pushover directors also bear much of the blame. Holders of Ivar's securities didn't demand more detailed information about his businesses. Ivar's auditors accepted his word as truth even when facts suggested otherwise. His directors did virtually nothing except cash their annual stipends.