Here’s why you need to develop an alternative income source.
Several years ago I was talking to a good friend and happened to mention how much I loved my Kindle since I was able to take a gang of books with me wherever I went without needing to make room in my satchel or carry-on. She was hanging out with her mother and had me on speakerphone, so her mother chimed in…
Mrs. Smith: You know… you Kindle folks are costing a lot of good jobs in the bookbinding industry. What’s wrong with a good old-fashioned book?
Me: Not a thing… I actually have a library of them and like turning the pages on occasion. But for convenience, you can’t beat the electronic version.
Mrs. Smith: Well your “convenience” means a lot of folks won’t be able to take care of their families.
Me: Unintentional I assure you Mrs. Smith. Tell you what… if you’re willing to get rid of your car and go back to the horse and buggy, I’ll happily return to physical books only.
Mrs. Smith: Why would I do that?
Me: When was the last time someone told you they were in the wagon wheel industry? I’m sure the appearance and growth of the automobile industry killed the wagon wheel business and thus destroyed lots of “good jobs.”
Mrs. Smith: That’s not the same thing.
Me: I’m sure it isn’t.
As a former Wall Street peon, I’m always especially interested in news, stories and anecdotes from the front.
Today’s [Update Note: I don’t even remember what the news was…presumably another round of Wall Street layoffs] is of a somewhat personal nature, but since it is not new information to anyone with half a brain and since I’ll be sharing no names, I’ll write of it anyway…
My old business was trading equities (aka stocks) on an agency basis (i.e., for commissions as opposed to as a principle trading for profits).
In case you’ve been asleep for a few years, stock commissions have plunged, thus the margins in the agency equities trading business have become razor-thin. Microscopic even…
I (like many others) saw this train coming down the track several years ago. Thus my decision to leave Wall Street in 2005 after creating an alternative income source for myself. I was relentlessly chided by friends, associates and colleagues at the time.
All I hear from them now is crickets… punctuated by the occasional, “so how do I get into the day trading game.”
Note: It’s an interesting paradox: the more you can treat your trading like a game, the better you’ll do. However, you need to take the decision to enter the fray (especially day trading) and your development incredibly seriously. But then, it’s only appropriate that it would be that way, as trading is full of paradoxes… As you move forward with me (if you move forward with me), you’ll hear things like “less is more,” “increase you loss rate to increase your win rate,” and “better to have a small loss than a small win.” All sound inconsistent on their face, but you will learn both the power and the truth of these and more.
That train is picking up steam again and it seems a number of my former co-workers are finally coming to grips with this truth.
Now the question (again) is what do a bunch of well compensated (perhaps overly so) individuals with highly “specialized” skills do when the “Wall Street Boogie” finally stops? If today’s news of pending “quiet” layoffs at a number of shops is true, I think we’re about to find out anew.
Originally Published 13 June 2011
Updates: 22 February 2016, 27 March 2017
I wrote the above in June of 2011. I would like to say that the situation and need to develop an alternative income source has improved since then, but alas it hasn’t.
The number of bankers, traders and salespeople on Wall Street since the peak in 2010 has fallen 20%. And, interestingly, the “…vast majority [of the head count reductions] are quite permanent…” [These were February 2016 numbers… It’s worse now.]
I’m sure that folks are wringing their hands in angst for the poor, displaced Wall Streeters, but I assure you… when Wall Street gets the sniffles, most of America gets a full blown cold… if not pneumonia.
Put another way, employment opportunities continue to narrow and/or shrink… Whether because of offshoring, automation, or obsolescence, the once plentiful landscape of “jobs” is no longer… Unless you happen to be a techie. And the right kind of techie at that.
So what should you do?
The answer is still the same. Develop an alternative income source before the employment hawk lands on your stoop. You’ll be better for it.
And you won’t get caught “praying for the volumes to come back.”