Preppy's blog

Layoff Pains

Sun, 04 Jan 2009 09:16:31 -0700

A sad article on the times via the NyMag. Several NYers talk about the experience of being laid-off.

My Laid-Off Life
I’m going on week three of no bookings or auditions. I used to have five commercial auditions a day that would have me flitting all over the island. Now I have no reason to set the alarm. All auditions have stopped. I know you can’t really get laid off as a freelance actor, but it feels like I was. It’s absolutely dead.

I’m going to be broke. I live off residuals from when work was good, like it’s my severance pay. I’ve considered selling a lot of my jewelry. I have to figure out the stuff that wouldn’t piss off my mom. A lot of it’s heirloom. Maybe she wouldn’t notice.

I've also been reading the comments. Some are insensitive actually like that one comment which criticized the employees for being "privileged whiners". It was from an anonymous person who it seems was recently laid-off for the first time.

Personally I have been there myself having gone thru my share of it over the years. It's an experience that one never really gets used to and yes, it is painful. I know how it feels like from getting that call from HR, clearing your cube, job hunting, to all kinds of lifestyle changes. Actually some in Wall Street never even got the chance to clear their desks or say goodbye to their colleagues according to the media reports last year. The firms just mailed them their stuff for reasons you can imagine. Just how bad is it in Wall Street? The last layoff count I saw was at 150,000. I've also said before that there will be a ripple effect across other local industries. For example one of the persons interviewed is an actress (above) while another worked as a recruiter. And yes there are also testimonies from finance industry workers themselves.

Anyway this comment from a dotcom era veteran offers some advice for those who view layoffs as something to be taken lightly. He recalls his experience during the 2001 recession after the dotcoms went bust.

But again, I have to laugh at some of you - you're all so naive. Wait till it's been 3/4 of a year with no work - no interviews - no prospects. You'll REALLY know what it feels like to be a zombie then. That is - for those of you who haven't already been made homeless. That happened to a lot of my tech friends. Some had to stay at my place on the couch. Some survived - some disappeared and the rest of us have no idea what happened to them. It's scary - and it'll get scarier. Be prepared for the worst. Don't think a magic fairy will bonk you on the head and grant you three wishes - it really doesn't work that way. You're going to have to come to grips with the fact you may NEVER regain what you lost. Ever. The sooner you face facts - the sooner you can start building a new (and different) life. Good luck!

If he was in Silicon Valley at the time I can also understand where he's coming from. Actually Silicon Valley never really recovered after the dotcom bust. Or rather if it hadn't been for the real estate bubble I don't think the local economy would've made it. There were articles in the media with titles like "Silicon Valley is Dead". There was a social networking craze of sorts within the last few years but it didn't really rival what happened in the 90's. It was really a niche bubble but like Wall Street many tech companies have been laying off last year as well. I've also said on a blog last year that real estate in SV was down 13%. A few minutes away is San Francisco and it was down 20%. That's practically unheard of as many who live in the area will tell you. Many think of the Bay Area as having an invincible local economy - just like New York.

Bossa Nova Friday

Fri, 02 Jan 2009 04:02:18 -0700

Happy New Year to all of you! I hope you had a wonderful New Year's Eve celebration. Anyway if you still have some hangover from the night's festivities here's some bossa nova to help you relax.

This is Summer Breezin by George Duke. This is a classic and I'd say one of the smoothest bossa nova tracks ever. It is also a fave of mine.

This is Classiquai. They're a band from Korea I believe and their style is r&b/soul but this is a very beautiful bossa nova track. I also love how the video was made. It is suave if I may say so.

This isn't really bossa nova but more like samba. This is the (famous) tango scene from the movie Thomas Crown Affair. Was your New Year's Eve celebration anything like this by any chance? If so, very nice!

Risk Management

Thu, 25 Dec 2008 13:51:05 -0700

Interesting article from the NYT. Some business schools are incorporating hedge fund management into their programs.

How Do You Run a Hedge Fund? Colleges Are Showing How
Jaison Ipe was about two minutes into his introduction of Silk L.L.C., a mock hedge fund, when the questions started flying. Why was the fund focusing only on biotechnology and not specialty pharmaceuticals? What was behind its name? Who were the scientists the fund planned to work with?

From the article some words of advice from MIT prof Andrew Lo "if the firm lacks sound risk management, best valuation practices and top-notch operational controls, it is a candidate for failure.”

Risk management is surely a hot career these days given the crisis in Wall Street. From this BW article B-Schools Tackle Risk Management it says risk management "has rocketed in status at business schools." and the firms are surely attaching more visibility to the role. Here's a sample job description of a financial risk manager

$2bil + Multi-strategy hedge fund in NYC is seeking a Sr.Chief Risk officer.
Main responsibilities will include: advising portfolio managers and investment committee on risk management, portfolio construction along with discussing risk management processes and infrastructure with existing and prospective investors.Prefer candidates to have MS/MBA. 5+ years experience within the Risk Management function of an Investment Bank or Hedge Fund organization.

But there are some who are less than impressed with the state of the art in risk management these days. One such person is Nassim Taleb. A financial engineer(quant), he's also the author of The Black Swan. Essentially the book is about randomness or events that are unpredictable but have the ability to cause crises such as the one we are seeing today. For example 9/11 was a black swan according to Taleb. Anyway here he is in an interview with Charlie Rose.

Do you think the financial crisis was predictable? Also do you view the crisis in Wall Street as an issue rooted in economics or financial engineering? Or rather did the financial models and risk management not keep up because economics was not factored in? Do financial engineers have backgrounds in economics(macro, behavioral etc.)? Here's the financial engineering curriculum from Columbia for instance. Are economists the typical financial engineering program candidate or are they more likely to be physics and/or math majors? Do the firms have dedicated economists and do they talk to the financial engineers and risk managers? Anyway this post over at Wilmott(the home of the quants on the web) also ponders the relevance of economics in trading.

How useful is Economics as a trader?
I've read various bits about this over the past year and it seems that opinion is quite divided. Some think that Economics is essential and others think it is totally useless. I'd be interested to know what Wilmott's opinion is?

For example, I fail to see how a knowledge of macroeconomics isn't useful in interest rate/forex trading, and even in equities some companies will have significant exposure to a) interest rates b) currency variations, so how can a knowledge of economics not be useful in this situation?

What do you think?

Merry Christmas!

Thu, 25 Dec 2008 11:00:28 -0700

Just wanted to wish all of you a Merry Christmas! Hope you are having a wonderful day.

Christmas Songs

Tue, 23 Dec 2008 01:51:53 -0700

Only a couple days more before Christmas. Here's a nice song by Al Jareau to get you in the mood. By the way do you have a favorite Christmas album? As for me I'd have to say it's Christmas Memories by Barbra Streisand. It is a really beautiful album and I highly recommend it.

Here's Island Christmas by Michael Franks. I really like Christmas songs that are on the jazzy side of things.

Finally, this is Frank Sinatra with The Christmas Song

White House Interiors

Sat, 20 Dec 2008 13:37:38 -0700

In one of my previous blogs I had talked about redecorating the Oval Office. The NYT has a great slideshow and an article on the different decorating styles from some of the White House's first families.

What Will Change Look Like in White House Décor?
EVER since Mary Todd Lincoln overshot the White House decorating budget by $6,700 (a third of her $20,000 appropriation), infuriating her husband and delighting a press corps that had already turned against her, the redecoration of the president’s house has been a public relations minefield. Some new administrations tiptoe through it unscathed; others are less nimble, and bombs explode.

The interior above is beautiful isn't it? It is very preppy. It is timeless and it also has an understated elegance to it. For me at least it's also a a style that blends well with the White House's architecture. What kind of interior design style would you say it is? Is it English Country? Or French? Or a mix? What elements would you say define Classic American interior design? What is your favorite interior design style?

A Preppy World

Sat, 13 Dec 2008 10:53:34 -0700

When I was I kid, my parents were members of the local Rotary Club. They had a student exchange program every year and I was asked to join. Basically you had to stay with a host family in a different country for about a month. My family in return would also host a kid from that country. At the time I was sent to Japan. Anyway "preppy" had a strong following in Japan at least during the time I was there. I visited The Sartorialist today and this photo of his brought back some memories. Please click on the photo for a larger version.

You may be wondering what preppy, from a fashion point of view, is like over there? Well, back then it was sorta collegiate. Guys wore items like tennis sweaters, college sweatshirts, oxfords, khakis and etc. The pastel polo was huge back then. The ladies for instance would wear their popped polos over a pencil cut (jean) skirt together with loafers. I also couldn't help but the notice the loafers. The brand that was very popular back then was Haruta (below). I thought theirs was the best looking loafer ever. It has the split toe front which gives it a really nice profile. I like the shape, leather, etc. Besides plain the kilted variety is also very nice. Besides black, they also made them in an excellent burgundy color.

In Japan, the place to be back then was Harajuku. It's a city where all the kids would meet preppies and otherwise. There were many preppies back then and I wonder if the same is still true today. I hope to visit Japan again someday as I had a really great time over there.

On a different note, while visiting Paris, reader Justin takes a picture of this window display from French preppy brand Vicomte Arthur. Of the French preppy style she says "That is not to say Parisians dress like people from Boston or London, but Parisians are stylish and they mix all kinds of fashions. I see a lot of preppy influence in Paris."

Finally I'd like to extend a very preppy welcome to readers all over world. Many more countries visiting the site since last I checked.

Preppy. Made in America. Enjoyed worldwide.

Redecorating the Oval Office

Sat, 13 Dec 2008 01:01:52 -0700

If you had the task of redecorating the Oval Office how would go about doing it? From Vanity Fair 4 designers propose their design ideas for the next president.

Top Designers Redecorate the Oval Office

When Barack Obama moves into the White House, one of his jobs will be to redecorate the Oval Office. In the spirit of guessing Obama’s next move, we asked four interior designers what they’d do with the official office of the president if given the chance.

As for me I'd decorate in such a way that it would definitely say "America" to any guest. As for decorations it would be eclectic with items selected from different periods from America's history. I would definitely use a lot more items than the photo above to balance out the space. As for color I'd use wood furniture with a black finish. The same is true for the color of the frames used in any paintings. I would also add photography to the wall art. For more please read Black Wood Frames. I think this would add to the elegance and sophistication of the room as well as give it a resolute quality. I also like the baby blue color which seems to be the current theme (note the striped chairs). If you look at the White House website you can also see the same color used in the site design. I think that color really softens the room and makes it appear inviting. I also think the color is very preppy. I would also use larger furniture. The furniture would be new (as opposed to antiques) but still classically designed again to give it that eclectic look(new + old). The floor would just be a simple light brown wood without any layout pattern(assuming I can change it). Kinda like the flooring you see on lofts and maybe add a sand colored sisal rug in the mix. The problem is where to place the seal? Any thoughts?

Anyway here's a sample image from Pottery Barn with the color scheme I like. I love the khaki lamp shade covers and will definitely use those as well.

The New Address

Wed, 10 Dec 2008 00:56:30 -0700

Interesting article via the NYT. Are you a politician or new employee planning a move to DC? Having difficulty deciding whether to live in DC itself, Virginia, or Maryland perhaps?

Location! Location! ... Obama!
Take the last eight years of Republican rule. Georgetown, for decades the fabled center of the city’s power elite, was said to have been displaced by the bucolic Virginia enclave of McLean, or “the new home of America’s ruling class,” as The New Republic put it in a 2006 cover story.

Now as the Obama Democrats begin their move to Washington, they appear to be moving the center of power back to the district. Moneyed Democrats are still attracted to Georgetown and Kalorama, young families to Chevy Chase and Capitol Hill, and 20-somethings to Adams Morgan, U Street and Logan Circle.

Anyway here's a brief tour...

Georgetown is a great area. There are lots of beautiful homes in Georgetown. It also has a really nice strip mall with all the neat shops and places to to eat. The commute from Georgetown to say... the White House or the Capitol takes only a few minutes hence it is very convenient in that regard. As you know it is also the home of Georgetown University. McLean on the other hand is much further away in Virginia. McLean has a nice downtown area where some of the big name consulting firms are based ie Deloitte, PWC etc. It is also home to Tysons Galleria and Tysons Corner which has been described as the Rodeo Drive of Northern Virginia(NoVa). As for stately colonial homes you will definitely see them in McLean. As discussed by the article, McLean has a reputation for being an affluent area(like Georgetown and Chevy Chase MD), but there are also parts which are quite affordable.

Ad for Tysons Galleria in McLean.

Reston is also another great area. Many tech companies (ie Microsoft, Accenture etc.) have buildings in Reston. Actually the area and its vicinity is known as NoVa's hi-tech corridor. Reston has a beautiful downtown area and within its center is an Italian style piazza. In one part of the piazza is an atrium like area which is converted to an ice skating rink or concert venue depending on the time of the year. Another area worth noting is Alexandria. It also has a great downtown and cute waterfront with cobbled streets(Old Town)and all. The article mentions Adams Morgan (in DC) which has the vibe of the Haight in Frisco. Dupont Circle(in DC) is nice, lots of great restaurants, but the vibe is downtown living. If you want true suburbia, then you may want to consider areas like Herndon or Ashburn. There's a neighborhood in Ashburn(I forgot the name) which is straight out of Americana. Or rather the houses there are so classically designed they are postcard perfect. During the 4th of July (when every house has a flag on display) or Christmas it is so very preppy. But the commute from Ashburn to DC can be hell due to the heavy traffic along the i267. Please note that snow can be quite heavy in the area at times so it is definitely something to think about. Other locations worth noting are Arlington(another great location), Roslyn, Chevy Chase(Md) and etc.

A home in McLean

What do I recommend? I can see why McLean has become popular. The commute to DC isn't too bad not to mention the drive is scenic if you take the GW Parkway(as opposed to the Beltway). The indoor shopping and dining in Tysons is very convenient especially during the cold months. In McLean it also feels like you're in the middle of everything. It takes but a few minutes(15-30) to go to DC, Reston, Alexandria, Arlington and etc(assuming light traffic).

According to this 2006 WaPo article, McLean residents "include GOP bigwigs such as Newt Gingrich, Scooter Libby, Colin Powell, Andrew Card, Liz Cheney, Bill Kristol, Clarence Thomas, Antonin Scalia -- and scads of obscure Republicans who were Hill staffers in the Gingrich revolution and are now raking in big bucks as lobbyists". The Kennedys also had a home(or estate) in McLean once I believe. And yes in McLean there probably isn't a week that'll go by where you won't see a group of black, tinted, SUVs or sedans (government issue) en route to some location.

PS. I also started a new poll - Would you consider a career with the Federal Government?

Lilly Party

Sun, 07 Dec 2008 03:16:46 -0700

I saw this video over at the Lilly Pulitzer website. It looks like they are celebrating their 50th anniversary. Lovely jazz music in the background. The music makes me think of the party scene in Breakfast at Tiffany's for some reason and I am wondering if it is the same tune from the movie. Everyone in the video is very stylish. Check out the band. It looks like they are wearing Lilly stuff. Pink and green piano =) Very cool huh?

Love Song Saturday

Sat, 06 Dec 2008 02:23:51 -0700

Some classic love songs from the 70's and early 80's to get you in the mood this weekend.

This is Ambrosia's How Much I Feel. I heard this on the radio some days ago. At first I thought it was a new song by Simply Red. Their lead sounds just like Mick Hucknall. I've heard of Ambrosia before but I didn't know this was one of theirs. A very beautiful song.

And who can forget this classic by George Duke and Stanley Clarke. This is Sweet Baby.

This is Never Gonna Give You Up by Frank Stallone and Cynthia Rhodes. This song was part of the Staying Alive soundtrack. Have any of you seen it? I believe it was intended to be the sequel to Saturday Night Fever. I also believe it bombed at the box office but nevertheless this is a great song.

Downment

Fri, 05 Dec 2008 03:54:33 -0700

One would think schools were insulated somewhat from the financial crisis but apparently not. According to the WSJ, Harvard lost $8 billion from their endowment.

Harvard Hit by Loss as Crisis Spreads to Colleges
Harvard University's endowment suffered investment losses of at least 22% in the first four months of the school's fiscal year, the latest evidence of the financial woes facing higher education.

The Harvard endowment, the biggest of any university, stood at $36.9 billion as of June 30, meaning the loss amounts to about $8 billion. That's more than the entire endowments of all but six colleges, according to the latest official tally.

First of all I was always under the impression that Stanford had the biggest endowment but apparently not. Anyway you can also read the letter from their prez here. It looks like this will be the worst loss in 40 years eclipsing their 12.2% loss in 1974. He says "the severe turmoil in the world’s financial markets has affected all major asset classes in which the endowment is invested." and the school is preparing for 30% loss in the portfolio which include investments in stocks, real estate, and etc. The WSJ article also mentions other schools that are seeing losses on their endowments.

The University of Virginia Investment Management Co. said it lost nearly $1 billion, or 18%, of its endowment over the four-month period, reducing it to $4.2 billion. In Vermont, Middlebury College says its endowment fell 14.4%, to $724 million. In Iowa, Grinnell College's endowment dropped 25%, to $1.2 billion. In Massachusetts, Amherst College says its endowment, $1.7 billion as of June 30, also fell by 25%.

What does all of this mean for the student? Watch out for things like enrollment caps, tuition increases, canceled classes or programs, and etc.

Stop Trading

Thu, 27 Nov 2008 10:41:26 -0700

Yet again another busy week in terms of news. One of the headlines this week was the rescue of Citibank. Unbelievable isn't it? Anyway here's a great article via the NYT that talks about the risk management inside the bank.

Citigroup Saw No Red Flags Even as It Made Bolder Bets
Today, Citigroup, once the nation’s largest and mightiest financial institution, has been brought to its knees by more than $65 billion in losses, write-downs for troubled assets and charges to account for future losses. More than half of that amount stems from mortgage-related securities created by Mr. Maheras’s team — the same products Mr. Prince was briefed on during that 2007 meeting.

Essentially the article is critical of risk management inside Citibank. Because the risk managers missed (or underestimated) the signs the consequences were tragic for the bank. But while reading the article I couldn't help but notice this statement "what caused the largest problem for some banks was that they retained dangerously big positions in certain securities — like C.D.O.’s — rather than selling them off to other investors."

As stated besides selling/distributing the securities for a fee, they were also trading them like stocks. They had their own internal investment/trading portfolio which I suppose was also true of Bear Stearns, Lehman, Fannie and Freddie, and not to mention the insurance giant AIG.

I also recall reading an article from Fortune some months ago. It said that an investment bank's source of revenue essentially came from two types of sources - anything fee based and trading. As noted above, they sold the securities for fees and they also traded them as well. The Fortune article did say that 60% of an ibank's revenue comes from trading. A hefty sum no doubt especially when the bets are going their way.

Anyway there has been much been much discussion over the months on how to prevent this crisis from happening again. For sure there will much in the way of new regulations. For sure one of the things that will be looked at is leverage. In fact on the second version of the TARP, I recall seeing a line there for a Congressional study to "look at how leverage and sudden deleveraging contributed to the crisis".

You've seen some of the leverage ratios out there ie 20x1,30x1, 60x1 and so on. As you know there were criticisms leveled at the SEC for allowing such levels of leverage. Some firms were too highly leveraged to survive even the slightest drop in the value of their holdings. But then I also recall browsing The Trillion Dollar Meltdown at a bookstore some months ago. It was one of the first books out there on the credit crisis. The book mentions a hedge fund (a private investment/trading club) that imploded back in the 80's while investing in collateralized mortgage obligations(CMO). The fund had a leverage of only 2x1 yet it still imploded when the Fed raised their rates.

"It must be the concentration/composition..." you must be saying to yourself. Or rather the firms wouldn't have gotten into trouble if they hadn't kept too much of these mortgage related assets in their portfolios. But consider the hedge fund Sowood Capital. It made a bet on corporate debt instead and it still imploded. What happened? Because of the market panic last year their investors moved away from risk and into the safety of Treasuries or cash instead? Harvard lost $350 million in that fund by the way. What about the other hedgefunds? What sorts of securities (besides mortgage related) have they been selling as they deleverage? Because of all the selling what sorts of assets(besides mortgage related) has been going down in value since last year? Some have estimated that 40-50% of hedge funds will not survive this year by the way.

Maybe you're thinking this was all about subprime. If it hadn't been for that darn subprime the firms wouldn't have gotten into trouble. But as noted here and elsewhere, there is trouble in prime mortgage as well. What is probably true is that housing in general was the principal catalyst behind the crisis. But what caused housing to fall? It was the consumer but what caused the consumer to retreat? Also did we not have housing declines in past recessions? If so why didn't we have "the greatest financial crisis since the Great Depression" back then?

LTCM

Maybe the firms just didn't have the right talent? Maybe Citibank and the others would've survived if they employed better risk managers? But I'm sure you've heard of LTCM, the large hedge fund that imploded back in the 90s and was founded by Nobel laureates. These were the guys who discovered the Black Scholes equation which has been referred to as the Holy Grail of finance. Enron might also be worth noting (did Fastow not make CFO of the Year at some magazine?) as they traded in energy derivatives and dotcom stocks. Anyway for those of you who did predict the fall of housing much kudos to you. But did you also anticipate that it would take out major banks for instance? Did you also anticipate Iceland going under?

I guess by now you're wondering where I am headed with all of this. Basically do you ever wonder sometimes whether the market is really nothing but a crap shoot? The dynamics that affect it are so complex and maybe even random that prediction or risk management seems all but an exercise in futility. The market which I've seen described as "the greatest fade artist of all time". Hence, to borrow from the movie War Games, it looks like the only winning move is not to play the game. Or to borrow from Jim Cramer maybe its time to stop trading.

Anyway the Fortune article concludes that as long the firms rely on (risky) trading for revenue, as opposed to being safe by having a fee based business only, we are bound to see an epic crisis again. Some have argued that having a depositor base will make them(specifically investment banks like Goldman and Morgan Stanley) safer. Citibank has a depositor base right?

PS. Some firms actually did very well during the crisis. Do you think they were just lucky? If not do you think that kind of success is repeatable? Also some of the firms have been trading for decades. Hence what is it that they really missed this time around?

Soul Saturday

Sat, 15 Nov 2008 04:31:37 -0700

How's your week so far? Is the economy giving you the blues? Some smooth soul music to help you relax into the weekend.

This is All the Things by Joe. For me at least, this is one of the best soul tracks around. He sings the song with such emotion. Love the acoustic guitar and background vocals as well.

This is another one of my faves. This is Cab Driver by Darryl Hall. Very cool and beautiful videography! The video isn't embedable so just pls click on the graphic to view. I promise you won't regret it.

Finally this is But Alive by by Workshy. They're a UK band with a style along the lines of Shakatak or Jazzmasters(for all you Jazz enthusiasts). If you ever see a CD of theirs definitely buy it. Lots of great soul/jazz music but the CDs are kind of hard to find.

The Preppy Interview Suit

Thu, 13 Nov 2008 02:48:25 -0700

Great article from the NYT. It talks about the comeback of the interview suit.

The Return of the Interview Suit
But with the unemployment rate in America at a 14-year high and more than half a million jobs lost in the last three months alone, there has been a detectable shift in the way people are dressing for work. In the financial sector, certainly, the tone has become more serious, and as a predictable result, somber suits are making a comeback. Companies like Men’s Wearhouse and Tahari are reporting an upswing in suit sales, particularly for those classic navy or gray pinstripe styles they classify as “interview suits.”

Nice picture huh? After reading the article I got the sense that corporate is becoming more conservative stylewise at least. I think it's great though that wearing a suit to an interview is becoming a standard again. Even if the times dictate otherwise, it is always professional to do so in my opinion. Of course this also depends on the kind of job you are interviewing for. For guys I'd say the minimum should be at least a necktie. In terms of women's styles the article has an interesting debate between pants vs skirts. I'd say go for the skirt. The pants craze has been going on for too long imho. A financial recruiter says that the firms "are looking for a sharper style" and recommends "a strong suit that says you are collected and ready to work." Hence here are a couple of styles from Ann Taylor that you might like.

What about the interview style for guys? Whenever I watch CNBC for instance the trend (in Wall Street) seems to be a dark suit and some sort of shiny solid necktie. Check out this Vanity Fair video and you'll see what I mean.

As you can see there's a definite style trend. Some of the suits are sleek yet classic. A dark suit is definitely the way to go. But I'd opt for a different necktie maybe a navy mini dot for instance.Anyway do you watch Charlie Rose? I think his style epitomises what the modern preppy finance look is all about.