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8
Nov 11
Tue

Four sticks a year

Globe and Mail published an excerpt from a newish book written by an ex-Lehman trader called Street Freak. I just placed an order for it on Amazon.

Louis frowned. “Anyway,” he continued, “so I asked him, ‘If you have my comp, do you have everyone’s comp?’”

“And?”

“And he says yes. So I ask him, how much does a managing director make? He hedges a little bit and says it’s a really huge range, but says that pay can vary from one million on the low end to multiple millions on the high end.”

“Wow.”

“So then I ask him, ‘How much does a VP make?’ And he says anywhere from a few hundred thousand up to four million.”

“Four million?” I exclaimed. “What the fuck VP makes four sticks a year?”

“Right? That’s what I said. I told him it has to be in structured credit or mortgages or something. You know what he said?”

“What?”

“Nope: real estate.”

It all made sense now. These drunks who went and bought Archstone, the drunks who had risked the entire firm, were getting paid assloads of money. The traders thought that the bankers were getting rich. The bankers thought that the traders were getting rich. They were both wrong: the people in real estate were getting incredibly rich. How much talent does it take to buy a building and wait for it to go up in price?

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