Thoughts From The Farm, 3/21/17

Why is it so hard to take risks?

A friend of mine in New York City told me he often sits in his favorite midtown cafe, and listens to bright young people talking about the future.

They are creative and have fantastic ideas about start-ups, alternative energy, financial technology developments and other future trends.  However, although they spoke with passion, knowledge and enthusiasm about the topics, few seem to have plans or the audacity to get involved.  Most conversations about the “doer”, began with “somebody I know”…

It is understandable that a middle-aged person with life responsibilities (mortgage, kids, etc.) may find it difficult to “go for it”, but why aren’t more young people chasing their ambitious dreams, instead of settling for the safe career choices?

Part of the reluctance may be caused by the excessive burden of college loans (Blog Post: Is College Necessary), but that doesn’t explain it all.

Another major factor may be the natural fear of failure, or discomfort with going against the grain.  The peer pressure and conformance associated with going through the teen-age years.  (Blog Post: Are You More Wildebeest Or Croc?).  It is far easier to stay safe.

Even on the trading floor, where the young people are talented, ambitious and capable, they tend to avoid “the road less traveled”.

For example, It is not surprising that the evolution of technology in financial markets results in more efficient trading execution.  Historically, Wall-Street’s stars were the securities traders who used traditional methods such as risk management, customer dialogue and intuition to generate large trading profits.

However, the last decade has seen a reduction in traditional sales and trading headcount, and an increase  in algorithmic and volume based electronic trading.  Since 2000, for example, Goldman Sachs shrunk the numbers of “risk taking” U.S. equities traders from 600 to 2.  Yes, 2.  A good friend of mine was one of the 598, but he got out ahead of the tsunami and successfully shifted careers.

Any reasonable person would guess that a young person looking forward to a long career in trading would have better odds as in some form of electronic trading.

But guess what?

When young people start on the trading floor, they rarely request to learn about or join the electronic trading group.  They gravitate towards the higher paid traditional traders, and assume that their success (a decade from now) will come from taking the same path as the “old bulls”.

In all careers, success paths are changing, and the clever young professional learns from the old bulls, but volunteers to get involved in the emerging, less lucrative areas of a business that are the obvious area of future growth.

So when talented young people ask me, “Over the next 20 years, should I fear the inevitable change caused by technology and the reduction of sales & trading opportunities?”

My response?  I tell them that if they expect to succeed the same way I did over the next two decades, “Yes, be fearful.  Change is inevitable”.

“But you are asking the wrong question.  The better question?  Are you confident in your ability to recognize emerging opportunities, quickly re-tool yourself, and boldly seize them?”

If so, then there is nothing to worry about, and the future is very bright.  (Blog Post: Fortune Favors The Bold)

2 thoughts on “Thoughts From The Farm, 3/21/17

  1. Another stroke of brilliance here, Frank. Love the honest take about needing to be flexible and aggressively observant regarding the changing opportunities around us.

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