Along with the institutional equity business, the dynamics between between buy and sell side traders are always evolving. Fortunately, most clients operate ethically and are conscientious about how they interact within today’s market place and are sensitive to the many restrictions recently placed on our expense accounts. Technically and on paper, we no longer entertain. We educate. We add value. We no longer have dinner for four, spend enough for fifteen and then head to VIP’s until 3am. We now invite analysts and strategists along so that we can refer to these gatherings as conferences. And when we have five for dinner, we spend for four.
Anyway, for every ten buy side traders that get it, there are two buy side pirates the Street still continues to harbor. Your typical sales trader covers at least one of these guys. These shysters share way too many of the same traits for this to be a coincidence. Either these guys were all trained buy the same pick pocket orthere must be a secret society buy side trader’s hand book.
Unable to obtain the true buy side manual, I have come up with what shall be refered to as the:
Unofficial Buy Side Trader’s Trainee Manual
Rule number one – Always second guess your coverage. Second guess everything whether he’s distributing morning research or giving reports.
Never give your sales trader your entire picture. Even if you’ve know him since high school and vacation in his summer home on the Jersey Shore every year. It’s a power thing.
Micro-manage your smallest orders. Brokers love that.
Be sure to belittle your coverage early and often. It helps with the bonding process and reminds them who’s boss.
Try not to laugh out loud at any of their jokes and instead use awkward silence whenever possible.
Sales traders are not your friends. They want your business. Repeat this to yourself 10 times a day, it will help to make you salty.
Routinely complain that your orders are being whored too heavily across the street and are getting back to you.
If you agree to cross a block of stock “in-line” and the stock should move against you, simply ignore the phone ringing and continue to stall before hitting the send button.
If after crossing stock, the stock should move more than two cents, get your coverage on the phone immediately and accuse them of working for the other side. This shows them that your paying attention and helps to set the tone for the next transaction.
Sales traders are not that bright and know nothing about the stocks they traffic in. Never miss an opportunity to point this out. It makes you stronger.
Ask for opening looks no earlier than 9:27. This helps start your coverage’s day on the right foot.
If you get the sense that your coverage is going to be leaving early for a business trip – take every order you have and attempt to light him up just before he leaves.
Everyone has capital. It doesn’t matter what they tell you or how they market their firm. They have capital. Demand it.
If your not happy with your execution, wait until 3:55 to call you coverage demanding an indepth explanation, and when they’re done… ask them again.
Remember, we don’t ever “make it right” on our end.
If a broker should stop you on a position and they end the day with a significant loss – This is the perfect opportunity to step out 70% of the trade and then follow up with a request for Knicks tickets.
Never be specific. You’re average size order will require a minimal of 3 sets of contradictory instructions.
On the rare occasion you should find yourself with conviction or need to get something done in-line, and specifically tell you coverage that “you would” in-line, that doesn’t mean you shouldn’t feel free to throw the VWAP in his face. That being said, if you have conviction – lose it. There’s no place for it on this side of the business.
If your primary coverage is out and your backup picks up – ALWAYS say you were calling to talk about Fantasy Football and that you’ll call his cell.
There’s nothing wrong with leading them to believe it’s just the “tip” of the iceberg if it gets you on the tape. Just avoid the phone and set you IM to away afterwards.
No matter how good a job your broker is doing or even if they have a natural, always give your “tails” to some sloppy heavy thumbed regional. You’ll look like a super star.
When being entertained – don’t be shy. Always reach for wine list and never the check. Once you’ve got the wine list, go directly to the back and straight to the bottom.
Accept and take advantage of any and all offers including sporting events, concerts, dinners and golf outings. Never feel obligated. Brokers may try and sing a different tune – they like to talk about having to justify expenses and how difficult it was putting this through and that through… blah blah blah. It’s all nonsense, it’s not even their money.
Create a charity and Wall Street will contribute. It’s just something we do. And don’t feel pressured to make it a worth while cause, something along the lines of the Three Legged Blind Cat Foundation will do just fine.
After dinner it’s always a smooth move to ask for a little take home for the wife. There’s nothing wrong with a extra filet and a piece of chocolate cake to go. It shows character.
Anytime you attend a broker sponsored golf outing, be sure to forget your golf shoes and rain gear, even if there is a 110% chance of rain. Then innocently pick out the FootJoy Classics at the pro shop.
You’re only as good as your last trade,
Dopey
