It was the one day in the year that such behavior was

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It was the one day in the year that such behavior was acceptable. It was a given that some people were going to be disappointed and some elated. Bobby Schwartz was notorious on our desk for not being able to hide his emotions after a positive bonus meeting. A couple of times, Corey Stevens swore to me, he had actually seen Bobby click his heels. The one rule that was hard and fast was that the meeting lasted ten minutes, and not one minute more. If you were disappointed with your bonus, you could speak your piece—and then, at the ten- minute mark, the partner would say, in effect, “Thank you, the meeting is finished. Accept it.” My hopes were high when I entered Laura’s office. They were quickly dashed. Or, to put things into proper perspective, I should say that they were dampened. She told me that for 2006, my PATC would be close to half a million dollars. By the logic of the outside world, I was being absurdly well compensated for work whose chief benefit was to maintain the robustness of the world’s capital markets—work whose benefit to mankind was limited to the pensioners and foreign governments in the pension and sovereign wealth funds I serviced. By any measure, I should have felt exceptionally lucky and grateful. But by the warped logic of Goldman Sachs and Wall Street, I was being screwed. Our desk had brought in millions of dollars in revenue that year, and I was well aware that a vice president or managing director could have been paid between 5 and 7 percent of that total, assuming the firm was having a good year overall—which it was. It was true that I had just been promoted from associate to vice president, but, I told Laura, I didn’t think that that fact should have been held against me when it came to compensation time. I had, as she well knew, done at least 50 percent of the heavy lifting on the desk, along with Connors. I could only imagine what he had been paid. He hadn’t clicked his heels when he came out of Laura’s office, but he might as well have. Laura smiled sadly. “I’m sorry, Greg,” she said. “You’re just too junior at this point for us to compensate you at that level. If we do as well next year, it’ll be a different story.” The meeting was over. I stayed and worked for the rest of the day.
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CHAPTER 6 Hunting for Elephants While the world started seeing a financial crisis only in 2008, my clients were the canary in the coal mine. On our desk, we started seeing a crisis in 2007. Unbeknownst to the broader world, a significant portion of my clients started blowing up in the summer of 2007, in what became a huge “quant meltdown,” and was a foreboding sign of what was to come just one year later. On Wall Street, the term quant typically refers to a geek who has a PhD in a field such as physics, applied math, electrical engineering, or economics. Within the investment banks, quants do all the intellectual heavy lifting: they build financial models to manage risk; they test formulas to price complicated derivatives, sometimes designing structured products so complex and opaque that, even
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