Rarely ever step foot into a movie theater but with all the fuss and questions it was time to go ahead and see “The Wolf of Wall Street”. For those that have not seen the movie, there will be some spoilers in this post so ignore the post if you want to see it first.
Summary: Jumping straight to the chase the movie is a 7/10 due to entertainment value however, Wall Street does not operate at all like the movie depicts. There is no chop. Brokers don’t make squat anymore. There is definitely no way you’re going to personally own 85% of a company you take public and the office environment is certainly not a college frat party. With that said drugs are still common (people use anything from testosterone to modalert to cocaine etc etc.), pay for play does occur (definitely not in the office but strip clubs and other drunken celebrations do occur) and you can still make some decent money on Wall Street if you’ve got the work ethic (survive to your mid 30’s and you did something terribly terribly wrong if you’re not at least a multi-millionaire).
With that said lets get the myths out of the way and jump into the good stuff after.
1) The Chop: Back in the day, stock prices were flashed in 1/8ths of a dollar terms, 1/4 and so forth. So you could make a “spread” on the transaction. In simple terms, you find a sucker who buys the stock for $15 when you’re on the phone with a willing seller at $14.75… You just made 25 cents per share. This is why one of the brokers suggests he simply “makes a lot of trades”. This was true back in the day, if you could get a large chop on several hundred thousand shares, you’re good to go. Today? Good luck making more than a few pennies on a transaction.
2) Stock Brokers Don’t Make Money: If you look at our Wall Street map, we don’t even include brokers anymore. They are basically dead. You make peanuts. Just check out this listing where someone with 3 years of experience can make… $50K. That’s not even worth a look. In addition, while we’re at it, they claim that the series 7 examination is some sort of “serious” test. It is not. The joke on Wall Street is you should shoot for exactly 70% on the test, if you get 90%+ you’re a weirdo who had to study to pass the exam and if you score below 70% you’re just an idiot. Fun fact, during training some people pool together and say “whoever scores closest to 70% wins $X”, the test is that easy.
3) IPOs: The glorification of IPOs in the media is beyond overblown and the movie basically makes it worse. If you ever meet a guy who says he wants to “Work on IPOs” just shake your head and move on since he is saying he wants to work in Equity Capital Markets… one of the lowest rungs within the investment banking umbrella (still better than back office of course!). There is no skill involved in an IPO, if you’re a Big Swinging Dick (BSD) with massive connects and can leverage a balance sheet for a billion dollar IPO, you’re the man! If not try to avoid starting your career in ECM unless you have the rolodex. Finally, illegally owning 85% of the stock would simply not happen today, that is a whole different level of pump and dump.
4) Education: Good luck getting a job on Wall Street with no credentials today. If you’re at a non-target school, get ready to grind more than you’ve ever grinded before in your life to get your foot in the door. That resume better shine like a diamond too. Easy ways to move up on Wall Street simply don’t exist anymore, unless your dad is the head of the investment banking division or your uncle is the CEO of a Fortune 500, the only way for average man to break into the Street is with 1) great work experience, 2) a great school/education and 3) an extremely positive attitude.
5) Frat Life: The closest you’ll get to a frat like environment depicted in the movie is if you become a trader. Here you can hear all the cussing, screaming and annoyance but definitely not to the level in the movie. Funny though, you can actually hear some traders calling up hooks from time to time but that’s another story. In reality, the environment today is “quietly intense”. If you’re using your mouse to operate on your computer and if you’re unable to respond to questions/tasks/clients within a few seconds… consider yourself a terrible employee and soon to be fired (yes this comment is broad and IB/PE/S&T/Research/Hedge funds all have different priorities but quietly intense is the best description for the whole industry).
The Fun Stuff:
1) Money: Yep. Of course this is always going to come first. No matter how you slice it there are simply not many jobs that pay $100K+ your first year out of college. They don’t exist. If you are not motivated by money who knows why you’re reading this site and who knows why you’re alive in the first place. Money buys everything from the best health care to a custom suit to a brand new apartment dead center in SoHo. Money is referred to as a drug in the movie. This is actually true. We half-jokingly tweeted that every zero in your bank account is a point on your long term looks scale. Put a million bucks in the bank and you’re a “7” for life. You can’t fake that kind of confidence. If you follow the money/life advice on here (even outside of the Street) you should be able to gather up 6 figures relatively quickly, 7 figures is definitely not out of the range and you’ll see for yourself that money changes you. You don’t get stressed out, you don’t care about some chick turning you down, you don’t care about the price tag on the new iPad. Anyone who says money isn’t important, ain’t never had any to begin with.
2) Sell Me This Pen: If you can sell you can do anything in life. This was probably the highlight of the movie, “Sell me this pen, now.”. The biggest takeaway for anyone who watches it should be this “sales will always lead to success”. If you can sell a million pens, a million diapers a million burgers… you’ll be a millionaire. Fast. The Street generally recruits people who have good academic skills, above average math grades etc. But at the end of the day sales will set you apart. Can you work the room? Can you walk into the office and get the “right guy” to like you? Can you sell your higher ups on more responsibility? A promotion? Will XYZ important client like you? Can you convince your PM to take a position in XYZ stock? Can you raise funds? Can you convince that 8.5/10 Russian girl to spend the night with you? Sell sell sell sell sell. Always Be Closing (ABC). If you’ve found the cure for cancer it doesn’t mean squat if you can’t sell it!
3) Go to the Rich: There is a major change in the movie when Bedford decides to go after the whales. He becomes rich! Not surprising! If you’re going to make a sale, if you’re going to sell anything always get the deepest pockets possible. The other clear point is this: get near wealth and you will be wealthier. If your phone is filled with CEOs and CFOs there is next to no chance that you are poor. If your phone is filled with a bunch of haters, complainers and average dudes… Chances are you are or will become a complaining, hating average dude. Don’t put yourself in the poorest environment in the world, try to put yourself in the richest environment in the world.
4) Partying: Never been to anything quite as extreme as the movie, but wealthy people definitely know how to party. If you make friends with the right people you can find yourself in some interesting venues. You don’t need to own a private jet, you just need to know someone who does. The best parties in the world are always thrown by wealthy people.
5) Drugs: Can’t decide if this is a good or a bad thing but the truth is, unless you have monk like capabilities, you’re going to use some sort of drugs at some point in your career. Many guys get addicted and lose their jobs, don’t be that guy, but you’re going to go through some horrible horrible crap during your career. The best example is the “banker twitch”, this usually occurs when you cram through 48+ hours straight and you lose control of your eyes. Your left eye looks left and your right eye scans to the right. You’re on empty. Thank god those days are over. Drugs have an extremely bad reputation in the public eye, the scenes in the movie didn’t help, but the truth is that drugs are used for high end professions. It does not stop at Wall Street, just go to a Law School and tell us those guys/girls are not loaded up on addy.
The movie was much more entertaining than expected, was a bit long at 3 hours since the end got dragged out, but it was certainly funny. One day Hollywood will come out with a more accurate depiction of Wall Street today, but we won’t hold our breaths.