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Confessions of Wall Street S&T - Risk is good! How do you “hedge?”
142 Plays1 year ago
On this episode, Eleanor and LD interview Katia, who works in Derivatives Origination within Capital Markets. Katia went to Brown University and was also a former Investment Banker. First they explain S&T versus banking and how to “get the job.”
Second, they break down in girl-terms what actually is "hedging." They share how to practically apply thinking about risk and hedging to your own personal life.
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Transcript
Introduction to 'Pretty Invested'
00:00:00
Speaker
Welcome to Pretty Invested, presented by your favorite ex-finance bros. We talk about the money beings you actually care about.
Hosts in Bermuda with Guest Katya
00:00:09
Speaker
Hi guys, welcome back to Pretty Invested. We're in Bermuda in a bathtub. We're with my friend Katya, who's also in a bathroom. Three girls in a bathtub. Welcome Katya. Thank you guys for
Meet Katya: From Medicine to Finance
00:00:20
Speaker
hosting me. So Katya, we're good friends, but I don't fully know what you do. You are a brilliant young woman who
00:00:30
Speaker
is from Seattle, went to Brown, and I know now works for a big bank. Can you tell us a little about your background and what you're working on? Absolutely, absolutely. As you mentioned, from Seattle, you know, I actually never thought I'd end up in finance. I actually wanted to be a doctor. I wanted to be an ENT, and clearly that didn't pan out for me. That was kind of one of the decisions that led me to Brown. I pretty quickly realized that as much as I appreciate
00:00:59
Speaker
You know, kind of the concept of biology and physics and chemistry actually don't really want to study them. But I never really thought of finance as a career option coming from the West Coast. That's just not really something that exists there in the same scale as it does on the East Coast.
Transition from Academia to Finance
00:01:15
Speaker
You know, the main kind of, I'd say, finance roles are in wealth management for all the techies coming along now West. But I had a lot of friends that were going to finance and
00:01:27
Speaker
at some point I was working in a physics lab. God bless the professor that let me sit there and pretend to work. And I was so bored, not by why exactly I was trying to research, but more so the lifestyle. It was not fast, right? Like people... It's not exciting. It's not sexy. Yeah, it's different. People go into these PhD programs and they have the same experiment for like a decade, right? And every day you're doing the same thing.
00:01:57
Speaker
It's not even that I don't like appreciate that. It's just my feedback, you know, action to reward is a lot
The Rewarding Cycle of Finance
00:02:06
Speaker
shorter. And I think that's a really valuable thing that you need to learn about yourself as you kind of decide what you want to do in life, because that's applicable to finance too, right? Like different roles in finance have different kind of action to reward cycles. And I think my journey,
00:02:25
Speaker
I've had a few opportunities to kind of explore different roles that tested that has brought me to the right place. You know, capital markets where that loop is pretty quick, right? And that's where I found myself at the end of the day, really. So what is it that you do with your title?
Katya's Role in Sales Trading
00:02:45
Speaker
I sales trade interest rate derivatives. So it's interesting, makes kind of more on like the sales and trading side,
00:02:54
Speaker
of capital markets. Something I talk about, you know, kids trying to find where they belong in this world of finance is to really identify that. It's not a traditional sales and trading role, not a trader. I am a salesperson, but my clients are corporates, right? My clients are not necessarily hedge funds, right? So it's a little bit of a different interaction. My clients are treasures, you know,
00:03:22
Speaker
say sponsors that are doing like infrastructure investments or whatever else, right? So they have a little bit of a different spin. They're not viewing me as a salesperson to a trader. They're viewing me as someone that kind of helps them explain their different hedging options for whatever debt they're taking out,
Educational Interactions with Clients
00:03:41
Speaker
right? So for that, it's a little bit more hands-on and the less kind of like counterparty aggressive. I'm not looking at my clients being like,
00:03:52
Speaker
If I sell this to this guy or trade this to this guy, he's going to screw me over. It's more kind of like educational and you know, it's still quick because at the end of the day, the moment that I make money is when I am actually executing a trade. But the process to get there is a little bit slower. Whereas when you're dealing, say on a classic S&T desk, your clients are incredibly sophisticated and they're coming to you, are you knowing what they want and you just provide.
00:04:22
Speaker
that price, that product to them, this can tend to be a little bit more of a conversation, which is good, right? It's not totally nameless, which I think I need, you know, kind of have that contact, that like relationship. I tend to like find it easier to make relationships. I can appreciate those and work those, but at the same time, the actual turnaround of my deliverable and my actions is quick for me to like see the outcome. Gotcha. Can you explain the product a little bit?
00:04:51
Speaker
what you're working with, why would like a sponsor, like a private equity firm, perhaps, why would they come to you? Absolutely.
Understanding Hedging with Toyota
00:04:59
Speaker
So hedging in general, I always use this example in a perfect world, right? Say like Toyota as a company would make cars, subtract the cost of making those cars and then sell cars, right? And the kind of difference between how much the car sells for, how much it costs to make it would be your money.
00:05:19
Speaker
Unfortunately, or rather fortunately, I guess, bras, there's a lot of other different things involved in the running of this company, right? You have equity of debt that you use to finance the kind of process. In terms of debt, which is what my product is affiliated with, you have different types of debt, floating debt and fixed rate debt. So the kind of concept of hedge is that no matter what happens in the markets,
00:05:46
Speaker
Like that shouldn't flow through your P&M. So if you need to issue debt and rates are say really high, right? It's like your bond is pricing at like 5%. And then after some time rates go really well. You have this 5% coupon that you're paying on your bond, which I guess now is pretty loose, but you're making 0% interest on your cash. You have a balance sheet,
Managing Debt and Derivatives
00:06:11
Speaker
isn't that true? So you kind of need to keep your ratio of fixed and floating debt
00:06:15
Speaker
pretty like symmetrical to say how much cash you have on your balance sheet so that that doesn't eat away into how your company is valued such as Ron, right? You don't want to be paying 5% of your debt making 0% of your cash. You want to like match that. That's like a very like corporate treasury example. And you know, that aside a lot of these, the large corporations you'll see will have in there like 10K, 10Qs, kind of that already written out. It's like a mandated,
00:06:43
Speaker
risk management protocol that they have. So we can help be a company provider for those products that they can use. You can either say if you want to issue more floating rate debt, or you can just do derivatives, which will give you synthetic exposure to that. But the other kind of use case that we see a lot is part of a client getting a loan requires them to hedge. So it's an auxiliary product that's tapped on to the back of like
00:07:14
Speaker
classical floating rate lending products. Wait, see that last part again. So by purchasing the product, they inherently need to talk to you because they're going to have to find a way to hedge it. Exactly. Not I wouldn't even say purchasing, but say I'm like, you see this on a lot of different scales, even sometimes in personal, like private banking, right? You as a client want to take out like a $10 million loan, right? To buy something, I don't know, like a boat. It's like a very unusual example I've heard.
00:07:43
Speaker
And as a big, right, if I give out a loan, which is a floating rate instrument, I know that over the course of the life of this loan, rates can go up and down. So your ability as my client to actually pay me back is dependent on that. And I don't want that to be the case. So you will need to hedge a certain amount of it. Come to me, talk to me.
00:08:05
Speaker
We execute a trade in the market. This isn't prices I'm making out for. It's like, I feel like in five years, it's like a market-based product. So you have a trader that's pricing it. And then we'll say, okay, so like your hedge mandate, say 70% of your loan needs to be hedged. Your base rate is now, let's just say 3.8% plus the loan spread. Your like market risk for this floating component is my credit risk to you.
00:08:35
Speaker
you having the ability to pay that off or not? And the counterparty here is the person buying the boat, not the bank or company issuing a loan for whatever they want to bail it or do with that money. Yeah. It's interesting. Look, I think you're talking about very sophisticated, super basic. Can you actually just like explain what the word like hedge means? Like we heard the word hedge funds, hedging your risk. What's like the basic concept of like hedging?
Hedging: Certainty vs. Profit
00:09:05
Speaker
The concept, like I always say this, hedging is not about making money. It's about covering your ass. It's about actually creating a buffer between how the market moves and how the impacts you, right? So if you do a hedge, it should kind of like walk in. And this is something that we have to explain to our clients a lot because people think like, okay, like I'm going to walk in at this rate. It looks really great. But it's like,
00:09:30
Speaker
Maybe it goes well or maybe it doesn't but the thing is you know what you've locked in. Hedging is certainty to a certain extent, right? And that's the beautiful thing about it is like there's always a need for certainty. There's always a need for certainty and there's always a market for hedging products because that's like how actually businesses scale and function. Like you don't want, I think I see this a lot maybe more some commodities because that's a little bit, not I'm gonna say harder to hedge but
00:10:00
Speaker
There's like a lot of like movement in it, right? If I was like a chocolate producer, let's just say a relevant topic at the moment, giving me cocoa prices, like I don't want my ability to make and sell you chocolate bars to be influenced by the price of cocoa. I need to keep that risk relatively stable. And that doesn't mean that it's not high priced. It just means I know how much it costs me before I sell
Balancing Client Fears and Products
00:10:26
Speaker
it.
00:10:26
Speaker
How much of the role do you feel like is managing people's fear versus actually getting into the nitty gritty of the structure? You know, I would say, cause like just from the clients that I work with, a lot of them do have those requirements. Like, Hey, you are not a prop trader. You're not a prop trader. You are a treasure and your job is to kind of like keep this relatively stable. Right? Like it's quite interesting cause sometimes you will have people that try to like beat you down on
00:10:54
Speaker
Prices or like we'll be timing the market which is kind of the antithesis Yeah, that's our next step right like what this product is for. Yeah, like you can never time anything Mm-hmm, you know and like waiting to like it's not all about taking the risk off the table Yeah, not like waiting for the good time to take the risk off the table because it can swing against you interesting So do you feel like you take the concept of hedging into your own life in in a way sounds like I kind of
00:11:24
Speaker
I really appreciate the concept of hedging. I think actually one thing that's made me more comfortable with is taking risks, you know, personally and I'd say professionally because I back myself. That's my hedge and kind of not necessarily waiting for any given event to happen for me to do something. Right? Cause I'm like, I trust and believe in myself. I got this. I don't need any like,
00:11:51
Speaker
sign off from someone or like event to trigger me to do something that I want to do is kind of how I see it.
Hedging in Personal Risk Decisions
00:11:59
Speaker
You know? Yeah. I think like everything in life is about making decisions. Every decision you make has inherent risk because it's the risk of not doing something else. And I feel like you have a very exponential way of thinking about things. So just manually because you are your own hedge. Other like
00:12:19
Speaker
more quality of the other hand is like you went to Brown and you have all these other things that you have solid that I think you feel like you can make choices very quickly and like take on more risk and I think a lot of people have a hard time actually assessing how much risk they can take on and like risk isn't necessarily bad for sure in many ways yeah definitely I actually think risk is good you know and what I find a lot is
00:12:49
Speaker
people are always looking for some kind of sign that it's time to do something or that's some kind of thing that like allows them to do something, right? Like it doesn't even need to be like from themselves, right? Like, but they're like, well, when I'm like 35, it's when I will like go here. But right now, like, I don't know, I just don't feel right to me for whatever reason. But they can't explain why it feels like I'm 35 either. So it's kind of like, you know,
00:13:17
Speaker
just doing whatever you want, I guess. Because you can't time anything, really. That concept of like, it's always gonna be risk, it's always gonna be hard. In life, it's a little bit like, the one thing that you can 100% guarantee will be there is effort and attention from your end.
00:13:38
Speaker
Like just having the idea doesn't mean it's gonna miraculously come into place You gotta like have something a little bit more there to push it along So that I guess is the ultimate hedge really like your own effort and intention and like kind of like will I guess to make it happen Did you how did you fall into the industry? Like was there a specific moment where you like something clicked for you?
Entry through Hedge Fund Experience
00:14:04
Speaker
Or was it talking to someone while you were in college or like, you know, yeah, I had a guy who was dating at the time was actually a banker and he was like, Oh, maybe you should try this. And I was very like sanctimonious. Like I would never, I'm going to be a doctor.
00:14:20
Speaker
But I could realize my first day at this physics lab, I was like, how to be a banker? Like, I can't do this. It's just not working for me. And I would start interviewing around God bless this nice man that let me sit as hedge fund and pretend to work there. It was a biotech hedge fund. So it was a nice pivot story into talking to banks. And I was so intent. I wanted to be an investment banker so bad. But every time I spoke to one, they were like, I don't know what's wrong with you, girl. But there's something off.
00:14:50
Speaker
There's something off and all that's the people I spoke to were like They were like much more receptive and that's like a really important sign is like even though in your mind you might have this like a vision of Where you should be and when every single thing that happens is
00:15:09
Speaker
is actively like the red flag telling you not to do it. Like be mindful of that, you know what I mean? Cause like, funny enough, I actually ended up having the chance to be an ID and I took it. And the second I like actually had to open and read a 10K or 10Q for my job, as opposed to just like click open tab and close, I was like, I read the company name, cool, I don't know right now. I realized I was like, I hate this, I don't have the concentration for it.
00:15:36
Speaker
just in terms of like this work, it's not meaningful to me because like we're backing into a number as opposed to seeing a number and analyzing why it's there. Yeah. Yeah. I think certain colleges especially like you have to be a lesson banker. That's what you have to do. We're just, we like think that that's what we want to do. But sometimes you kind of just have to accept what the universe is telling you and the vibe shifts. And it's like, hey, instead of like trying to force,
00:16:05
Speaker
a square peg into a round hole and being like, I will make myself into this Baker archetype. Sometimes it makes sense to just go to the place that naturally feels most authentic to you, where they actually naturally appreciate you and just vibe with the folks there. Yeah, for sure. I'd say the biggest takeaway of that was right as I was leaving. I kind of had made the choice to leave, though I knew it was time to go, but kind of now in the coffin was
00:16:34
Speaker
Mentor I had the bank who actually went to Brown as well was like a much senior guy He and I were on a call after like a client call for like a mentor mentee kind of catch-up and on that call They were talking about some kind of product that was very interesting. It was like an insurance based product and I Asked more about it. I was like, you know, we get along like oh my what was that that they were talking about and he was like I
00:17:01
Speaker
you have a such an interesting way of communicating, which I was like, thank you.
Cultural Fit in Investment Banking
00:17:07
Speaker
Thank you so much. He's like, no, I mean, he's like, this isn't a training for where you can just ask me questions. You know, like you have to ask me about my day and like my dog and whatever. And like, maybe this just isn't the right place for you. And I was like, maybe you're right. And I closed the zoo. I was like, yeah, like,
00:17:28
Speaker
What kind of a situation is that I was like, I am curious and I want to ask you a question. And yeah, there's times to ask questions and not at the question time, not to ask is when your boss is X for your trade because he's busy. But like this is a mentee mentor call. This is the time to ask questions. And if that's not part of your culture or whatever, the culture of this firm or this role, which I've heard kind of is not right. Like it's a little bit more not up to you. I'm like, that's just not how I roll.
00:17:58
Speaker
And I don't want to change, you know, something that I'm very proud of, my curiosity, because some grumpy old man didn't want to answer it. That's so powerful that you were like, this is disrespectful. I'm hanging up. Yeah. I was like, okay then. But I was like, but you're right. Like you can't get offended by the cultures that you enter if that is their culture. I just knew it was time to leave for me because like,
00:18:26
Speaker
Yeah, he's right. That's not how they do things. That's fine. I don't know a place where that is how they do things. And that's the dream more, you know, that's how it works. You do ask, you have to ask. And in my world, like I always tell this to incoming analysts and interns. I'm like, if you don't ask me questions that are genuinely curious, then I don't know if this is the right place for you because it's not enough to be able to do something. Like every time that you click a mouse,
00:18:55
Speaker
And there's a client like on the line or like you're doing something for a client that is real money, right? Like you show pricing that's wrong to someone that is like tens of thousands of dollars. That's your mistake. Yes. Whereas in banking, I found a lot of times like no one even knows where these numbers who's active numbers came from. And you have a client that's on the line with the CEO of like a fortune 500 company.
00:19:19
Speaker
and the analyst did the work. That would never happen in S&T because there's so much actual risk being traded in the seconds that it's being traded. That's money, not like a future mandate, but like it's happening now, which I really appreciate. So like you're not even entrusted to pick up the phone and actively do that situation till you have shown that you know what you're doing. I think that rewards like,
00:19:48
Speaker
a lot of very like fast and bright and curious people. And then you feel a pride in your ability to do that and your understanding the product. It's also like when you leave and you haven't been following the markets for a while, you feel like not at your best heat. It's like being an athlete. So like it's a little bit more like it gets in your head, you know? Yeah. It's like you always need to keep the pulse of it. Yeah, for sure. Yeah. You can feel when you haven't traded in a long time, you're like,
00:20:17
Speaker
Go like this in terms and you're like a little bit shakier just because it's, you know, like nerve wracking. It's like a muscle. Yeah. If you guys haven't seen our episode from Anna on Confessions of a Former Investment Banker where she kind of goes into the work that goes into that and then Anna will scroll for a bank there, right? I think it's good to break down. There's two sides of the coin when you work for a big investment bank. There's the investment bankers who do a lot of like M&A, IPO,
00:20:47
Speaker
You work with companies and you advise them. You help facilitate a company going public, an acquisition, a divestiture of a business. And it's very different on the other side of the Chinese wall. You're not supposed to talk to each other in sales and training or cost you a sense. And you just did a wonderful job of explaining more of the sales role and that's the key role in your position. But yeah, very different. You're not supposed to be asking questions when speaking up their meetings when you're a junior person at a bank. That's a big
00:21:18
Speaker
No, no. I think the only time you really talk is like when your MD is asking, you know, what's the EBITDA in 2017? And you have to fill the answer. You're not asked to opine on anything.
Evolution of Sales Skills in Banking
00:21:29
Speaker
You're really not fun facing until you're at least in a solution and you have to build that muscle. Which separate topic is why I think there's a lot of churn from the analyst's MD because the requirements to be a good analyst is very different than that of a
00:21:48
Speaker
basically from VP, director, director. It's very different skill sets. A great analyst is not always a great MD. I remember the head of our bank said I was like the worst associate in my class, but he's like now the global head of the group because it's very different roles. And I think when a lot of jobs are like this, right? Like when, have you ever heard of this term, like every job is a sales job? And an analyst, you're like grinding numbers in Excel.
00:22:17
Speaker
but then when you become more senior, you have to like, sell to some advisors, you have to sell opportunities, make sure you win the business to lead the IPO, be the lead left, win the deal. So you have to have a very different, maybe more like what you do type of a role, where you have to like talk to clients being very eloquent, know what's happening in the market. So it's fascinating to hear like how different it is to be in your seat. And you were even saying to me like,
00:22:45
Speaker
If you were to like move up to become like more senior, it wouldn't change that much. Is that right? No, it's correct. Yeah. I'd say the beauty about markets is like your role is not necessarily different. Obviously my boss is like an incredibly much better than I am, you know, and he has more experience than I do. And he's seen a lot more different types of structures than I have, which is like the gift, you know, it comes with their time. But our,
00:23:15
Speaker
roles of when the money is made are the same. We're both on these calls, we're both executing the same way and that's really awesome because it gives you that direct feedback too. When I first started executing trades, sometimes I'd
00:23:31
Speaker
We also sit very close. We're sitting like this. So everyone can hear everything. There's no such concept as a privacy or a cubicle and you have to get used to it. I think a lot of people that freaks them out because they're like, how do you think? And I'm like, you have to be able to think in the moment. There's not a moment where you're like, I don't know.
00:23:51
Speaker
Oh, would I like to make this come more? You know what I mean? I think it's good for, again, each rule has a different desired output, right? For us, it needs to be fast and accurate, and having people that you can ask to double check your stuff at any given second in time is vital. As many kind of stops before the moment that the money is made that can be accomplished to have quadruple checks is incredibly important, because sometimes
00:24:20
Speaker
You don't do that and people trade the wrong thing. Like it's insane and like it doesn't even happen. It does for sure. For sure these kinds of like weird operational mistakes happen and it's like your job is to make sure that they don't. So like both of you price at the same time. If your traders put something weird your like hey dude are you sure?
00:24:40
Speaker
We're talking about the same situation here. Like that looks a little bit off to me. Like you have to be very aware. Um, and say if you have like eight inches is a great job for you because nothing is like takes that long. There's a lot of small deliverables that go into like the process. But yeah, the role is very
Trade Culture and Feedback Loops
00:24:59
Speaker
similar. So you have that live feedback of someone being like, Hey, like, you know, good job. But like next time I say this or like that's a way too long, like what's going on here?
00:25:08
Speaker
It's like the HBO show. What was it? Industry? Yes. That seems so much more toxic than what you're describing. You know, it is a little bit, obviously like all the, it's not a guarantee guys. It's an HBO show. And I mean, there was parts of it where like no child would be allowed to like do that kind of like prompt risk situations. I don't even know where that message came from. But yeah, like the,
00:25:35
Speaker
The conversations, it really depends on like who you're working with. Like I have heard of people like still kind of having that old school bravado. It's definitely a lot more contained now, but because it is so, like I don't even like call it like fast pace because it's not like every single second of every single day, like looks like that, right? There's periods where things are a little bit slower and that's normal for every road that you could possibly be in. But is there yelling? Yeah.
00:26:03
Speaker
Is there direct confrontation? A hundred percent. Is there times where you're like looking at the same number and it's like a conversation and you know, you have to like put yourself out there and be like, oh, I think this is how I got there. And your boss is like, that's wrong. And you have to give yourself the chance to be taught or you double check his work or whatever. Yeah. It's not easy. I think for a lot of people to have that confrontation kind of atmosphere. Yeah.
00:26:31
Speaker
because it is very direct. But that's a good topic too to discuss. How do you deal with that? Do you take it personally or do you take it as a growing point? When I first started, I told my team, first team ever, I was like, look, I'm gonna work for you and you're gonna ask me to do something and it's gonna be really bad. I was very open, I was like, it's gonna suck.
00:26:58
Speaker
because I don't know you and I don't know what you like to see. So like the more feedback you can give me early on, the faster I can like AI, AKA, just like a normal humanoid thing, learn what you are looking for. And then we can go from there, right? That's so emotionally aware to like be upfront with them and be like, Hey, like I need repetition. Like I just met you. This is how my brain works.
Importance of Feedback in Finance
00:27:20
Speaker
And I think a lot of people will shy away from that because it's like,
00:27:25
Speaker
You shy away from giving feedback and receiving feedback, but you have to make it open in communication. These kinds of rules. The faster you can get to that, the more successful you'll be. Do you see a lot of churn in this industry? Not really. Sponsors are very hard to come by in these rules, and it's quite like a tight community for the specific kind of product. So you tend to see people moving around, but it's very much
00:27:51
Speaker
The people that are running respective groups of different banks have been doing this, they don't know each other. How did you break into it? Did you go on a job board or move within banks? It was the first job I was hired for out of college and I was very lucky that I'm a shameless human being when it comes, when I identify what I want.
00:28:19
Speaker
which I think as we get older, it's harder to identify exactly what we want. So it's hard to be shameless, but I wanted to be in finance. My junior year, I switched formally. Well, not switched formally because I still graduated with a biology degree, but I was like, this is what I have to do. I got myself to every conference, like a woman in business for like freshmen, my junior self and senior self would go. And I would write to them like admins like,
00:28:47
Speaker
this is my last chance, like please give me a shot. And they would admit me and I happened to meet a woman there that worked at my first bank and I'd only applied to like IB Rose. This happened to be like an S&T, like woman in business, S&T plus wealth management, no like banking proper. And the next day after the conference, I get an email that's like, you are going to the Super Day. So like I go to the Super Day, email the lady, I'm like, I'm gonna be a banker, I'm so excited.
00:29:17
Speaker
And I get there's all girls and they're talking about like the tenure treasury, the yield curve, about time wide war. And I was like, hey, like, what are you talking about? I was like, what are you interviewing for? What are you interviewing for? And they're like, global markets, sales and trading. I was like, that's so weird. I'm interviewing for banking. And then I got some possible shows your invite. As I open my phone, I get an email response from this lady like,
00:29:43
Speaker
It's not a bank interview that you're going for because I need more like, oh, like let's get coffee after my baking separation. She's like, no, it's the S and T super that I put you into. Like, please be prepared. Oh, wow. So I'm there like, oh my gosh, guys, please tell me what I need to know. Like, not competition to you. You know, like what's what? And I'm like, inverted yield equals possession.
00:30:07
Speaker
It's like college, like economics, like- I also love that women were- Yeah, women helping women. That's so sweet. They're like, why would not do that for each other? They're like, one on the LIBOR equals this right now, three on one equals this and six on one equals that. And just like, you know, I have to run to my interview, good luck. And I see girls coming out of interviews crying because they're like, I just told an options trader I knew what black shows was. And then he like, asked me some questions. He was like, you know, like laughed them off. And it was so like telling like me in the moment how I like,
00:30:36
Speaker
just wanted to get into a bank. I was like, fuck. I come in, some guy is like a bond trader. I actually ended up having to do some random deals with him at one point. I don't know, he was like EM rates and bond trader. And I asked him what he did. Like, describe your role to me. Me coming and asking the interview. And he gave me this hilarious analogy.
00:31:03
Speaker
Imagine there is a company in Mexico, and they have a factory in Mexico, and that factory catches fire. I evaluate the cost of their bond, the price of their bond, based on that event happening. And every subsequent interview, I'd be like, I'm just really curious about how this Mexican fire affects the price of the bond. I didn't get the S and T rule, but the paper. That would be such an epic story. Because it was like a rotation program
00:31:32
Speaker
But the funny thing is, they were all very amused, right? And that was kind of the feedback I guess I got. But on my way out, serendipitously, I mentioned Santacon of all things to the HR lady. And after that, we formed a bond. This is where the real relationship building, because it wasn't just me or a dealer. We just had a nice relationship. She would send me offers every time. I got another interview for the role that I was chosen for in this.
00:32:02
Speaker
interest rate derivatives rule and I went through all like the different like interviews and they too were kind of like a little bit like we don't know this is a high-risk individual like you clearly like have nothing that would make us want to hire you other than your life yeah but like what is it that and the last man I spoke to who like was the one that ended up signing off the main kind of like not the head of the group but like the main
00:32:29
Speaker
most senior sales trader there was like you know to this day we like keep in touch and it was like it was kind of your attitude when you kind of broke script from what you were supposed to say yeah because I'd been rehearsing like oh here's my name here's where I went to school here's what I studied here's why I want to work here and you just were like look I'm gonna be honest like I can't tell you that I know everything about this job because I don't but I do know this so like
00:32:55
Speaker
you say jump and I say how high. And that's like the one thing I can bring to you at this moment in
Unconventional Interview Success
00:33:00
Speaker
time. Like I'm very keen, I'm very curious and like I will do whatever you want me to do. I feel like that's the best piece of advice that you could give a senior. Cause people ask me all the time, they're like, how did you do this? How did you do that? 22 year olds try too hard to act like they're adults. Cause you're not like you're a baby still when you're 22. What you have that really no one else has that a 22 year old has is that hunger of being like,
00:33:24
Speaker
you say jump and i say how high because that you burn out after that in two years you're like all right like go for yourself like i don't care like make make the intern do it or whatever yeah but that highlighting that quality during an interview is like the thing that will get you the job because yeah most everyone else is like too insecure to be like look like
00:33:46
Speaker
I don't really know like what you guys do. All I know is like I love you guys and I really want to be here and like I will do the best job I ever can. Exactly. Yeah. And it was like, you're honest. I mean, you weren't like a typical candidate, right? For sure not. But that was why. Yeah. But they took a risk on you and like you did great on the job and sometimes it is those like unexpected folks. Everyone can memorize the answers like,
00:34:13
Speaker
Why do you want to do S&T? Well, I have this, this, this, and this. It's like, oh, my dad wasn't like blah, blah, blah. But you stood out. And sometimes, I think that pays off even more, I also think, as you get older. Making yourself stand out. Because if you want to interview for a bank when you're young, just memorize the Wall Street whatever guide and say the right answers and then you can get the job. Do the right things. If you come from the right background.
00:34:42
Speaker
Network and stuff, but especially to get older. There's not gonna be a class of a hundred people There's gonna be like hiring of like we're gonna hire two people or we're gonna hire one person And so you need to really stand out. You need to make it known how you're special Realize what makes you special and start cultivating that a little bit earlier, you know Definitely, that's the first job advice I ever got from the guy that hired me was like, you know, you're at the age now you have 22 like we're
00:35:08
Speaker
It's too late to think about and focus on growing areas that are not your most natural. It's time to really see where you shine and focus there. That doesn't mean you can't be good. You can try and develop things that you're not good at. But your main energy should go to
00:35:28
Speaker
Further honing in on what you're already gifted on and I think Yeah, like everyone can benefit on like having the self-reflection to ask themselves those questions. They're not easy. You know what I mean? like and I think like we all know the answers to them, but they might not always fit with like what we want to Like project. Yeah, I wish I was a brilliant like mathematician physicist. I'm not bad at math. I'm like decent at math. You know what I mean? Like I can do
00:35:58
Speaker
Right. Like not fairly like intuitively, but it's not something that I'm like a gambler, right? But like, yeah, I see a probability every second of
Building Trust with Unique Skills
00:36:07
Speaker
every day. Like that's, it doesn't come naturally to me, but it comes naturally for other people. And like, that was so interesting. And they lean into that. They lean into that. Like, it's interesting even talking to my, who was a salesperson himself, right? Like,
00:36:20
Speaker
I asked him, I can't believe I was so audacious as a child. I was like, would ask every person on the desk, what makes you special? What's your thing? Because I can hear they self-select into certain client groups. And he was obviously with the biggest megacorporate names. And he is like, to be honest, I can do math very quickly in my head. And it's not that I'm a genius, but because I have that ability,
00:36:45
Speaker
it gives me a lot of trust with clients. When I can like give them an answer to like something, right? Like whatever like long division or like multiplication, like impact of like moves and rates they're looking for on the phone in real time, it makes me look very, very, very like Einstein vibes, right? To people that don't have that skill, he seems like a superhuman. Yeah. And he, that was always kind of like the word about him on the street. He's like, oh, he's very smart, very like, you know, like Matthew really understands everything and he's like,
00:37:14
Speaker
whether that's as true as I think it is or isn't like it's what I am good at and like I've leveraged that skill by like giving myself more credibility. Yeah. That was like an interesting kind of like gift. I mean it doesn't mean he has to be a mathematician, right? Cause he's like, I'm not like that, that kind of guy that can like sit there and like write the episode. But he uses gift to in his sales role,
00:37:40
Speaker
make it more amplified and win him that kind of business that he otherwise maybe would have had a harder time competing for really. And I think another quality that like you're very good at and like people sometimes undervalue it's very easy to be like they're really smart they're really good at doing fast math but being a very personable and trustworthy person and being able to build relationships and trust I think a lot of women are good at that and we kind of discount it like sometimes people just want to work with Katya
00:38:08
Speaker
you know, for whatever reason.
The Value of Personality in Finance
00:38:10
Speaker
And I think understanding sometimes women, like, we are actually very good at that. And let's lean into that. You know, the whole idea of like, a personality hire. Like, there are virtues in these things. And, you know. Yeah, I think we just count personality hire so much. Like, personality hires, like, can make or break a culture. Yeah. For sure. Do you think you're like a personality person in your team? Not like a hire, but like a personality on your team? I definitely think so, for sure.
00:38:38
Speaker
I ask a lot of like funny questions to everyone but also you know I try to be not I try to be this is actually like it's just who I am I'm very open and I'm not afraid to ask for things right but I do it in a way that's not like entitled I think when you repress the things that you want in life and in business when you want the race but you're not willing to ask your boss for it things
00:39:04
Speaker
kind of manifest, if you will, in weird social tension that ultimately breeds distrust and hate. Resentment. And resentment towards each other. Right? You're like, fine, I'm just not going to work hard. And then your boss is like, well, why would I ever promote you? Like, you're not good at your job anymore. Like, for me, something that I do and kind of try to breed with anyone that I like, come into contact with or train is like, hey, there's no shame coming up to your boss manager, boss's boss, and being like, hey,
00:39:33
Speaker
what can I do to get to the next step? Like I want to be promoted. Like what, like where, where am I now in your eyes? Cause in my eyes I'm here, right? And I can't promote it. Like what do you think the next step looks like for me? And it's not even like some kind of like, I read like Dale Carnegie's Academy of Friends and Infants because I did, but like it's not even something that's like a conscious thought. I'm just like, I genuinely want to know the answer to that question. Right? Like if you're the gatekeeper, like,
00:40:03
Speaker
what does it take to get the gig open? And like, is my perception of where I am in this role equal to yours? Or is there something that I'm not doing? Cause it's usually very small, subtle stuff, right? Cause like, well, like maybe if you don't come in early enough, I'm like, okay, like do I want to do that? Yes or no. If I feel like that's an easy, comfortable thing for me and that's going to be like the make or break thing, then sure, whatever. If I feel like that's completely crazy and like not something I'm willing to do to get promoted or you're serious, then like maybe this is something I should be thinking. I don't want to be here anymore. Yeah.
00:40:32
Speaker
Right? Like, that honesty is, I think, what gives me not even like a leg up necessarily, but kind of that fluidity, that ease of like navigating some situations that people would otherwise find incredibly difficult and choke on and uncomfortable and would make them miserable, you know, and want to leave or not do this job anymore. Yeah. I mean, I can't believe how like,
00:40:57
Speaker
like well-balanced you are emotionally, given like the intensity of the job that you have. So Katya, a question we like to ask all of our guests is what is your favorite purchase or investment? Honestly, I was just thinking about this. My favorite purchase, even though I'm very like materialistic, I just love beautiful things. I love to see them. I was like, hold like a little snow bag. But I'd say it was probably
00:41:23
Speaker
our trip to Bali because it was such like a crazy thing that I kind of did last minute. Very much exemplifies me as a person. I'm like, you know what? Like I do want to go. I have this opportunity to go. It's going to be awesome. And like, you know, it is expensive, but on my way there, I will see my family in Hawaii. I will stop by Manila, like LOL. Like it was never that much.
00:41:52
Speaker
and then I'll have this amazing experience and come back like through Dubai for an hour like you know like all across the world like that is so rare yeah so I'm very happy I did that yeah so Kati and I went to Bali for the holidays and I think booked it like like a few weeks before
00:42:14
Speaker
Like, I had already planned to go and you... I think I'm a very warm, open person. Like, comfortable! Yeah, why not? And I don't usually expect most people to be like, yeah, I'm down. But you're like, okay. Like, what's the experience? And on a quick tangent, I really admire the way that you think about
Balancing Risk and Experience in Life
00:42:33
Speaker
these things. I think most people, right, they always say like, oh, well, it's like this many thousands of dollars and da-da-da-da. But you kind of...
00:42:43
Speaker
find a really smart way to, like, assess, like, going back to risk. There's also risk of not going, you know, and not getting that experience. What makes you think about things, like, sending it? How do you justify sending it all the time? And how would you, like, hope other people be like, ooh, should I pull the trigger or not? You know, positive or negative P&L? Like, how? Yeah, it's like a fast, it's a fast calculation to make in your mind.
00:43:08
Speaker
At the end of the day, I'm like, what am I waiting for? You know, and it's like, if it's something that I really want to do, like I knew at that moment in time, it was like I was going through something like with an ex-baby daddy. So I was like, not actually a baby daddy, an ex-boyfriend. And I was like, I want to be around people. I want to get back to like doing these fun things because that's something that in our relationship, I
00:43:33
Speaker
didn't really have a chance to do. He was definitely not the same vibe as that. He really, that freaked him out. He was one of those people that like, you know, Venmo requests my friends for like a coffee, like behind my back kind of vibes. Like, that's not who I am as a person. And we didn't travel at all for like six months. So I was like, it's time for me to give back to myself. I do like to travel. I like to enjoy these experiences. I like to be all over the world and,
00:44:01
Speaker
when the opportunity presented it, I knew like, yes, is it gonna be very expensive? It is, it's always gonna be expensive. We're flying around the world. You know, it doesn't matter when you buy the tickets. It's also peak season. Well, you know, it was holidays, it was holidays. So it's all gonna be expensive. Like, what am I waiting for? What am I gonna do otherwise? Like, be by myself alone. Is that really, like I know in that moment I always think like, you know, at the end of your like time, like you're gonna wish that you did that
00:44:31
Speaker
right? Or that you like got those experiences, you know, did what you wanted to do and there's really no reason to wait for it. Right. I always talk about like the time value of fun, right? Like what else in your life you're young, maybe this thousand dollars you invested you could make this much, but you also have a good job and you also have savings.
00:44:53
Speaker
Right? And so like the marginal difference of those like thousand dollars, it's like how often do you get to go to Bali with one of your good friends and like a very pivotal, important time in your life? For sure. That, like how do you put a price on that? For sure. And so when you think about it in those terms, right? Like, oh my, I'm booking a kind of last minute, the flights are a little expensive, da-da-da. Yeah. Like you can always, for sure. So yeah, you know, well.
Conclusion and Social Media Call
00:45:18
Speaker
Thank you guys for having me. You're so interesting and inspirational. Thanks mom and dad. Thank you guys for tuning in for this episode. You know where to find us. We're pretty invested media everywhere. If you enjoyed, please like, save, download, et cetera. And we'll see you next week. Bye guys.