We're Gonna Get Those Bastards
You might recognize the title of the blog from the Dick Fuld quote just before the Lehman bankruptcy. On September 12, 2008, Fuld came down to the equities trading floor, got on the hoot, and yelled, “We’re gonna get those bastards!”
It was kind of an interesting insight into his psychology—he probably thought that the imminent bankruptcy was a result of nefarious short sellers, not his own incompetence. Anyhow, We’re Gonna Get Those Bastards was actually the working title of Street Freak for a while, until my agent got involved. I’ve been waiting for an opportunity to use it.
Richard S. Fuld was known as The Gorilla, because he was an unthinking brute. Kind of hard to imagine, right? The dude didn’t have a reputation for being smart, but legend has it he would turn into a fire elemental when he was angry. Anyway, Fuld started his career in commercial paper in the late 1970s, which makes sense, because who was losing money in commercial paper in the late 1970s? With interest rates at 14% and ripping around like the Flight of the Bumblebee, it was a license to print money. So Fuld (and Joe Gregory) didn’t get to where he was because he was smart, he got there because he was in the right place at the right time.
But that’s true of a lot of people on Wall Street, right? The same could have been said about Jon Corzine, the legendary long bond trader who became CEO of Goldman, Governor of New Jersey, and had a rough couple of years along the way. Kind of hard to lose money when bonds are a quarter wide on the screen—see how many geniuses there are when it’s a half a plus. And bonds were in the middle of a big bull market. Right place at the right time. Hell, the same could be said about me in ETFs, if we’re being intellectually honest.
Corzine was unquestionably more sophisticated the Fuld, though, who was dumber than a bag of hammers. You can’t measure the intelligence of animals, but gorillas aren’t that smart. It’s safe to say that he didn’t have the intellectual horsepower to lead a complex financial firm through a decade-and-a-half of lurching from one crisis to the next. Lehman almost went tits up in 1998, then didn’t, and Fuld learned entirely the wrong lessons from that experience. He learned that you could cheat death by having the biggest balls. Hard to believe anyone was willing to own the stock after 1998.
IQ has a mixed reputation, and it’s kind of a political third rail these days, but I think it’s useful to have a discussion about intelligence, and how some people have less of it than others. The average IQ of the population is 100 (by definition), and the standard deviation is 15. If Fuld had an IQ of 115 (which is probably a pretty good guess), and you had an IQ of 145 (roughly 1 in 1000 people do, and there are lots of them at investment banks), then you would be two standard deviations above Fuld. Which is to say that you talking to Fuld would be like an average person talking to an eggplant.
I met some eggplants in my time on Wall Street. Some of them had incredible personal qualities that compensated for their intellectual deficiencies. Some of them had great relationships. Some of them knew someone who knew someone. I’m not a snob and I don’t look down on people, but I did resent people dumber than me getting paid more for work that required less technical sophistication. But as time has gone by, I’ve learned a lot about compensation on Wall Street, and that a bonus has practically zero correlation with performance. Instead, it’s about loyal a person is, how likely it is they will leave, who hired them, and who will get mad about their number. And for the people in the position of assigning bonuses, if they could make people not complain by justifying the decisions ex-post and remaining loyal themselves, that was valuable.
That is why this newsletter is not about finance. Finance is depraved. The further away it gets in the rear-view mirror, the worse it looks. Fuck that. I like investing—I like the intellectual challenge, I like taking risk, but I am allergic to bullshit. And there is more bullshit than ever on Wall Street.
Instead, I want to talk about how Sammy Davis Jr. and Sandy Duncan are both one-eyed tap dancers. I want to talk about how Miguel Cabrera has the largest penis in professional sports. I want to talk about my 20-year crush on Claire Danes. Stuff like that. I do not want to spend one minute more than absolutely necessary talking about the stock market. The thing about working in finance is that it’s so all-consuming that there’s no room for culture or enlightenment. And The Grateful Dead, the Allman Brothers, and Phish do not count as culture. They’re in the Wall Street dickhead starter kit with the fleece vest and horsebit loafers.
You can’t be an effective critic of culture if you’re inside it.
I will end every issue with a music recommendation. This is a bit normie for me: Calling by Marsh. But this is some of the best production I have ever heard. I can’t wait to play this live.
Go fuck yourself,
P.S. We’re Gonna Get Those Bastards will always be free. Feel free to forward to as many people as you like.