After sending some advice to a friend that referenced my own career in finance I thought it deserved further comment.
A post-script for finance people
For fellow finance people, this deserves a few more words. Whether or not the field has been very lucrative for you, I’ve noticed finance folk often struggle with dissonance. Maybe you think every time a private equity suit quits to start a lifestyle biz in a LCOL state an angel gets its wings. It’s true, finance as a matter of daily agendas can be soulless. And making lots of money may just delay the questions that those with unlucky careers would have faced earlier. Compounding matters more, finance attracts its share of grifters. The Wolf of Wall Street is a great movie but a bad boss. Stir in a heap of leverage and finance collides with the physical world in numerically unnatural ways. Glistening wealth. Nation-state sized corporations. It can look a bit disfigured.
That said, I would push back strongly against judging finance by its worst. If it’s dry and brutal it’s because finance thinking ultimately boils down to efficiency. On a macro aggregate level it is nothing more than reducing transaction costs. Transaction costs between the present and future. Transaction costs between people who do not know each other. Matching lenders with borrowers. Savers with risk-takers.
Its cold bean-counter logic is a feature. Viewed over decades, the rent it extracts is a sliver of the value it facilitates. If it looks large it’s because the value is large. Every incremental squeeze in margins boosts consumer surplus whether or not a journalist thinks that’s a story that will get clicks. Yes the progress is uneven and there are unsightly moments (cough Goldman Sachs basically being made whole by US taxpayers after 2008). But when people in finance start talking about missions and visions well that’s when you should reach for your wallet. I mean just imagine if a Wall Street brokerage were named Robinhood. For most of finance folk the job says “look I’m just here for the money”. It may not exude cool but it is honest. The dissonance only creeps in when you dress up the job or need it to be cool.
My email’s implied dissatisfaction with finance has nothing to do with finance as a villain or its perceived societal value. It has to do with how I personally absorbed its cold logic. Working in finance requires mental lenses. These lenses are not just effective but useful in so many contexts. Being somewhat prone to getting carried away, the seduction of optimization crowded out some of my pre-existing lenses many which had still not matured. As we always discover in these letters, every strength has a trade-off. If you lift but forget to stretch you get tight. The histamines you detect in my email, are a reaction to some personal Randian remorse.
So if you are going to be a relentless optimizer, make sure you check in every now and then on what you are optimizing for. The friend I wrote to knows to get anything done he’s gotta put his head down and grind. But in the moment he paused for a breath, I hope he found my email to be fresh air.