For those of you newbies settling into your sales trading career, I offer a list of excuses, white lies and empty promises along with a few examples that may help smooth out some of the bumps that will most definitely lie ahead.
Traditionally, as I’ve mentioned before, sales traders have relatively short attention spans and once they’ve managed to lock into a customer order, regardless how much means or doesn’t mean to them… 7 out of 10 times, they will either fail to follow instructions, lose track at some point, or flat out forget about the order all together.
The good news is that the only folks with shorter attention spans than the sales traders are… you guessed it -the clients. Realizing how crucial it is for sales traders to to be able to hide their incompetence, the sell-side has created a Looney Tunes type of trading environment to hide behind. What Wall Street has done is to take the simple practice of buying and selling, and loadedup the process with layer upon layer of excess. These expendable layers can sometimes include specialists, clerks, brokers, position traders, traders, sales traders and a multitude of electronic trading platforms. Do we really need all these layers? Absolutely not. These layers were exclusively designed to make our business appear complex, giving way to a plethora of ridiculous excuses. With a little help from some crafty rating agencies, this is a little something we like to refer to as “Best Execution”.
We’ll never really know if the clients actually buy into this line of crap. Maybe they’ve just accepted that this is the best we can come up with. Perhaps it’s just showing that we care enough to make up such lies. This philosophy can also explain a lot in married life Anyway, here are a few excuses used on trading desks across the country that if you haven’t already used – just may come in handy:
Always Manage Expectations:
Whenever possible, avoid quantifying the situation. No matter how many times they ask for an update – always beat around the bush with comments like, “got a little done… showed it to a natural who was heavily involved in the name… Don’t you worry – I’m making sales… etc…etc”.
Placing new issues in a soft market:
No matter how bad a deal is coming along, it’s never any less than 2x oversubscribed. Ever.
The five minute rule dictates, that even if the IPO isn’t scheduled to come for another two weeks … If a client inquires about the deal – you need to let them know that the books are closing in five minutes.
You don’t have to know a thing about what’s in the pipe, but what need to know is that the deal is shaping up VERY nicely, you’ve got all the right guys lining up for this one and you should get in early so that we can try and get you some stock.
Not following Instructions…
Beware the terms “around here” , “in here” and “in-line”. It’s a set up. When your client gives you an order and tells you he would own them “right around here”, this means your client just planted a seed and is in the mood to verbally abuse you in the very near future. The reality is, despite his clear instructions to buy them in-line, you are expected to scale it in if the stock softens or you should be buying the snot out of it because it’s about to rip to the upside. Since you have know way of predicting the future, another way to translate “around here” to mean – No matter what report you eventually give me, “you’re a fucking idiot.”
Justifying Bad Executions
The abrupt hang up is probably one of the most over used perks in the industry. In any other business dealing, a curt dismissal followed by a hang up would be considered rude and unacceptable. However, on an active trading desk, it’s totally acceptable. When your client starts pressuring for prints… “Call you right back, gotta answer this one <Click!>”….”Where am I filling you in?”…I’ Gotta hop! <Click!>”….”Was that our print on the tape..? Call you back <Click>”.
This is move is a form of quality control which allows you to get your story straight. This move works great on the wife too! “Is it going to be a late night? Who will I be out with…? Sorry Honey – I have to grab this.<Click!>”
“Well we did our best, but there wasn’t much I could do – the Algo’s were all over this thing.”
“I’ve got your report. Just keep in mind that this thing was all over the place.”
“Dude – We were lucky to get that much off! “(I heard that one yesterday.)
“If it wasn’t for those monster prints on the close, there’s no way we would have missed the VWAP by 1/2 a point.”
“You would have had a great average, if we had a little more ammo.”
When asked for the report, sidetrack your client with something along these lines… “So… have you ever seen the Stone Temple Pilots in concert?” …or just throw the old reliable hormone barrage at them… “Bro – you’ve gotta see the outfit on the Russian sales assistant I keep telling you about …”
“I know it’s kinda early, but I just finished up your sell ticket. We were 3 out of the 4 million that traded. Tapes still strong… Wouldn’t be surprised if this thing rallied.”
The Forgotten Order:
“I sent you an IM. You mean you didn’t get it? “
The Pacifier – “No worries – you’re halfway there. You’ve sold 50k and we leave 50K.” this tends to work out well until the client points out that the stock has only traded 30k on the day so far. Use this tactic wisely – cause if you told them they sold 25k when you haven’t sold anything – you’re long them and the last thing you need when you wake up from your nap is to have a position going against you..
“No..No… you finished up like twenty minutes ago. I was just working out your average… Silly.”
“Seriously – you haven’t seen any electronic reports come across? You’ve been done for an hour already. Let get my IT guy to force those executions over to you right now.” – Just be ready to explain why those “old” reports are coming over at current prices.
Next to the abrupt hang up, the “fake look” will prove to be your new best friend. Aside from winging the pre-open look that you forgot to get when you see your client ringing you at 9:27, these fictional looks can help shape your day and build your business. Why even bother asking looks? Just make it up. If your client’s a seller then guess what… it looks like Goldman is a reloading seller, so you had better give me the ticket so we can start ringing the register. What else would you do – tell them “Well, it looks like Morgan’s got your buyer – why don’t you give him a call?”…. Fuck that. Feed your client whatever bullshit it takes for him to drop that ticket in your lap or get him off your back.
Where’s your Natural?
“I can’t get a hold of the seller, the PM stepped off the desk, actually he left the office and is presently having lunch on an airplane that might have disappeared somewhere over the Bermuda triangle.”
“My buyer is Haitian and apparently, its some kind of Haitian holiday…”
“You’re absolutely right! I did say I could buy multiple seven figures – but, the problem is that the sales trader who covers the buyer says he left a message with the guy’s trading assistant – so it’s on a relay. It sounds like this guys really got some size to buy but it’s some type of swap type situation and the stock he’s trying to sell to raise the cash, that he’s short on, is a very illiquid small cap that trades in London which closes in about ten minutes. So… Why don’t I work you out of a nice chunk while we wait to hear back?”
Fishing for Orders
Sympathy orders… One thing a sales trader need not have is pride. There’s no room for it, it can be detrimental to ones business. Sympathy orders can be fished out through a variety of methods…”My grandmother passed away… my dog just died… they just found a spot on my lung”. Sympathy orders can also sought after by keeping clients up to date with fictional office pressure such as “we’re doing reviews today – could you hook me up?” or the classic, “Listen – I just wanted you to hear it from me first, but I’ve basically been told that if I don’t start writing some tickets with you soon, they’re gonna switch coverage”. You some much room to be creative here, so have fun with it. Be mindful of stories told. I’ve seen a guy get called out for having 3 grandmothers die in a seven month period.
“I’m not sure what your picture is over there, but I’m getting checked by a seller… you want me to bid him for 100k –just to see if he bites?”
Downright Lies…
“I have no idea why this thing just bounced back $2 in your face. Did I tell you that we crossed your last 25k with a natural and he’s got stock to buy?”
“We were working for another buyer before you came in – you sure I didn’t mention that earlier?”
“No it’s not a hedge fund. There’s nothing wrong with the stock, my seller is just using it as a source of funds.”
“That takes him out of the name. “
“It’s the same shop – different portfolio.”
“Bro – I thought he was done too!”
“If you don’t’ want half, the other buyer will take it all. “
“No, I’m natural. “
“I swear on my life, we have a Chinese wall with our prop desk and have zero interaction.”
“You got best allocation in whole deal – swear”
“Of course you’re always my first call – you’re my favorite client.”
Good luck in the trenches,
-Dopey
