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Morning Coffee: The newly free course that gets you the $310k hedge fund job. A dangerous, impressive, ingenious banker who refused to die

Although there are plenty of quant firms who make a big deal out of only recruiting physics and math PhDs, it remains true that the Harvard MBA is also decent preparation for a career in hedge funds.  In the last year, 1 in 12 graduates went into this industry, earning a median base salary of $165k with a bonus of $145k.  If you have ambitions to follow in the footsteps of Bill Ackman or Ray Dalio, and you have the chance to go to Harvard Business School, the sensible career advice would be to take it.

It is, of course, not as easy as that.  For one thing, you have to apply and get accepted.  But it’s also quite expensive - $76k over two years.  In principle, that’s a great investment in a future career, with a payback period of as little as three months.  In practice, not everyone can come up with that much cash, and those who can tend to be a little “samey” in terms of their background.

Partly in an attempt to improve its diversity, Harvard is now making 200 places – ten per cent of the total class – free of charge.  The subsidized places are going to be given out roughly in the same way as financial support is for other “needs-blind” university admissions – on the basis of “gross income from the prior three years, assets, socio-economic background and levels of undergraduate debt”.  Successful candidates will still have to pay their own living costs; Harvard estimates that these are about $35k a year if you skip the more extravagant party scenes.

Of course, there might be an implicit hope that people who are brought into the business school on this basis might do something a bit more public-spirited than just following the track down to Wall Street.  The stated purpose of the program according to dean Srikant Datar is that “We want to remove the financial barriers that stand in their way and alleviate the burden of debt so they can focus on becoming leaders who make a difference in the world”.  Conversely, it’s a bit of a cliché of financial recruitment that some firms prefer to take employees with expensive tastes and a significant debt burden, as it is thought to make them hungrier and easier to control.

But on the other hand, it’s a free country, and there’s nothing to stop needs-blind graduates doing exactly that.  Some people go to Nepal and discover that making a load of money is meaningless to them and they want to pursue spiritual growth; some people go to Harvard and have the same revelation in the other direction.  And in order to get the free tuition, it looks as if you would have had to overcome so many other obstacles in your life that you might feel you deserved a shot at wealth.

Elsewhere, the Financial Times obituary of Anshu Jain has been published a few days after some of the others, and is perhaps consequently a little more balanced and less glowing than some of the others.  And the differences are interesting; although someone said Anshu was a "killer" with "a knife between his teeth", there still appears to be nobody who has too much of a bad word for him as a person, but one senior regulator is prepared to call his strategy as CEO “wrong and dangerous”.

Which might be the right way round to have it – heaven knows, there are all too many characters in the market who would have to be remembered as being great banking strategists but not such a success as human beings.  But what the anonymous regulator is to some extent referring to is Jain’s determination to maintain Deutsche’s investment banking business model without recognizing that the industry had fundamentally changed after the financial crisis, along with his 'last man standing strategy' of doubling down when other banks blinked.  That points to something which most traders would regard as a fundamental character flaw – the inability to let go of a losing trade.

In general life, though, refusing to admit defeat isn’t necessarily a bad thing at all.  The obituary recounts that Anshu Jain met his cancer diagnosis in roughly the same spirit as he met business challenges – with an absolute confidence that a combination of determination and ingenuity would let him beat the odds.  He maintained his optimism and started an “exhaustive” program of research into treatments. Just 36 hours before he died, he reportedly told a friend that rumours of his demise were “greatly exaggerated.” That attitude bought him four extra years, which seems like a good final trade.

Meanwhile…

Mizuho Securities is 12th in equity and debt capital markets and 18th in M&A advisory in the USA (the top ranked Asian bank), but it’s aiming to grow its presence, with a combination of acquisitions, “business alliance” and potentially hiring coverage bankers. (Japan Times)

Mizuho Securities is also looking at ways to cut costs in Europe after losses. Back office jobs are most at risk, but it might build out its derivatives business on the continent. (Bloomberg) 

Watches of Switzerland, the biggest Rolex dealer in London, is moving to a new flagship store eight times the size of its current one.  This feels like either a very good sign for the outlook for the discretionary income of bankers and other rich men who like jewellery, or a very bad sign about the kind of deal it’s possible to get on luxury retail space. (Bloomberg)

The CEO coming down on to the trading floor and demanding to make big investments in risky positions , then blocking other people’s attempts to cut losses – it sounds like a banking melodrama, but according to claims made in the Celsius bankruptcy hearings, it might have actually happened in the world of crypto. (FT)

Credit Suisse is suffering a particular problem in China, where there have been a number of senior personnel losses; the supervisor seems to be saying that there’s no point inspecting the local operations until some of the vacancies are filled, which in turn has put a brake on expansion plans. (Bloomberg)

“Even though I have more than enough money, I can’t stop worrying about it all the time”.  It’s a common problem; therapists suggest that the money worries might be a defence mechanism against thinking about deeper and scarier emotional issues. (The Cut)

The second season of “Industry” is finally getting taken more seriously by the connoisseurs of quality television, if perhaps a bit less so by people familiar with junior investment banking life. (The Atlantic)

Photo: YouTube

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