The Trading Game by Gary Stevenson is a memoir of the author’s time working and also not really working as a FX trader at Citibank.
You can read Bryne Hobart’s excellent review here, but to summarize, the author follows the typical hero’s journey of "naively excited by finance until reaching disillusionment and burnout". He starts from a poor working class family in England, wins a “trading game” that grants him an internship, and eventually becomes one of the most successful FX traders at Citibank.
Overall I enjoyed the book and liked how the author walked all non-finance readers through how interest rate trading worked from his own new graduate “I have no idea what I’m doing at first” perspective. Even after reading all of these Michael Lewis books - I still never realized exactly how trading worked at banks.
Implicitly it’s understood that banks leverage deposits from customers to make money through lending and trading financial instruments and packages. But I didn’t really understand the granularities of exactly how traders ended up making so much money. Turns out, an individual PNL (profit and loss) sheet determines how much you make for the bank. And in this case, after making north of $30 million dollars for the bank by doing many different trades throughout the year, received a bonus of 7% of that amount granted over a period of four years (similar to stock options in tech).
But what was interesting was how much traders make is sometimes based on on a “right time, right moment” period. His department at Citi was the only one to not be affected by the 2009 financial crisis and many of his co-workers made over $100 million dollars that same year just because European banks needed dollar liquidity. And so they rode this easy trade to become extremely wealthy. And it reminded to how a regular above average software engineer could make tens of millions from joining a growth startup in the late 2000s / early 2010s.
This didn’t really last though for the Citi FX trading team though. And while the author did make a lot of trades throughout this stint at Citibank, from 2010 onwards, he mainly made his big $30 million year through trading on a singular hypothesis of interest rates staying flat for years. Because the economy was terrible and he was betting on inequality growing, he would make trades on this thesis while his team suffered from instead betting on recovery.
Similarly this relates to how I view building startups in growing markets. While the author couldn’t really just sit around and make one big trade on this thesis of inequality and then prop up his feet for the rest of the year. You also can’t just expect to build a generic SaaS app in early 2010s and expect it to do really well. The author still had to grind and make lots of individual trades all based around this hypothesis of forever zero interest rates. And then of course it turned out well in the end until he realizes that he’s betting on a lot of people suffering as the economy continued to worsen.
Avoiding Misery in Your Career
The one thing that did get repetitive towards the end of the book was how the entire second half was observations of how much the author hated his job without outrightly stating that he hated it. You read a book where the guy's transformation from happy go-lucky “I just want to be a millionaire” to then being a miserable millionaire and wonder how the smartest people can be so dumb. And it’s pretty clear that most of this stems from a tunnel vision focus in making money.
One might think that the finance industry would learn to have better resources to not burning out their employees. But that might be just done on purpose churn out the ones that aren’t fit for the lifestyle of chasing measurable, concrete results from money and prestige rather than elusive qualities like happiness.
Balancing success and happiness is something I think about a lot when running a bootstrapped business. Since I have so much flexibility in how I want to run my business, ostensibly I’m working through the opposite problem from traders, bankers, and anyone who’s grinding away on long hours out of their control. I’m pushed to work long hours when there are no financial accountability from investors and bosses. And if my business makes enough to sustain my expenses, then what reasonings are there to push for 200% growth this year vs 20%? When does the added stress make it worth it?
In the end, I realize it’s probably best to invert the problem. For example, how do you to avoid misery in your career instead.
Let’s take an extreme example. Rob Henderson writes on how to avoid the most obvious example of misery: poverty. Which I found extremely illuminating.
If you live in a developed country, studies indicate that there is a simple and highly effective formula for avoiding poverty:
1. Finish high school.
2. Get a full-time job once you finish school.
3. Get married before you have children.
This has come to be known as “the success sequence.” Ninety-seven percent of people who follow these steps do not live in poverty. In contrast, seventy-six percent of those that did not adhere to any of these norms were poor.
Okay, a clearly helpful step in the right direction but not really applicable to people who are already above the income level where happiness levels plateau. But I think what’s helpful is the framework that it imposes. Can you set ground rules for yourself that will 97% of the time help you avoid misery in your career? How do I set up constraints so I can avoid misery - which over time will give me happiness through exclusion.
I know that there are certain things in life where if you adjust the knob up by 50 to 100% that they would create misery no matter what else happens. For example, if I were to go from working 30 to 40 hours a week right now to 50 to 60 hours a week, I know that even if it were the most interesting project in the world, the rest of my life would inevitably suffer after some period of time.
Here’s a few more personal constraints that I thought of:
I don’t want to travel for work more than a few times a year. I do not want a driving commute. I want control over traveling.
I want to have work days without meetings where I can wake up and just do whatever pushes my curiosity for the day.
I don’t want to look back at the end of the year and see zero growth across the business.
I want to be FatFIRE’d so that I can keep my existing lifestyle with a growing family and not be forced out back into a job that kills the above constraints.
I want the ability to reinvent myself when things get boring.
I think it’s helpful if you’re ever questioning any path to really invert this problem (ode to Charlie Munger) and think about what your hardcore constraints are that would make you miserable. At the end of the day, we’re all going to die. And because we are going to die - it’s truly helpful to think about what things you can do to remove the miserable conditions of the present moment, and anything potentially miserable to come.
Things to Share
Invest like the Best hosted Tim Ferriss last week as part of celebrating 10 years of the Tim Ferriss podcast. Two core ideas I found especially insightful from the GOAT. One was how he recommends recording a podcast partly as a way to just improve your conversational skills. By just playing back a podcast recording of yourself interviewing someone, you learn a lot about how you can improve as a conversationalist as you’ll naturally be able to notice your own gaps if you regularly listen to much better podcasters. The second was how he started the podcast as a way to win even if he lost. If he tried the podcast and it didn’t go anywhere, he would still have gotten better in conversations and talked to interesting people. But obviously because it’s Tim, it’s been a massive success with over a billion downloads.
These two articles On Talent and The Parable of the Talents balance the definitive argument that intelligence and talent is innate with how it doesn’t mean we can’t enjoy activities, contribute to society, and give up on life just because there’s always going to be someone much better than us in anything we set ourselves to accomplish. In fact, it inspired me to think more about what I’m naturally talented in, things I enjoy doing, and finding the comparative advantage of an overlap of all those things together.
Lastly if you’re working in tech or AI or consequently interested in it, I’d love it if you could fill out this quick customer research survey (<2 minutes). I’m working on a new product in AI and want to hear from people like you.