The Salesman, from James Bitumen

September 6, 2006 |

Several months ago, Victor wrote a beautiful post on The Salesman. "When you call a man a salesman, you flatter him," I think a quote from the piece read. It stuck in my mind, as did, "Nothing in the world happens without a sale being made." It was a piece that would flatter anyone associated with the art of sales. I took great comfort in it at the time, as I had recently returned to a sellside platform on Wall Street, mainly because I felt that the opportunities on the sellside, and the less rigid structure, offered a much greater reward in comparison to the rewards offered to a manager of market risk who is forced to operate under buyside confines best defined as ignorant, inept, and hypocritical.

But sales, as an art, is dying, at least in the industry we refer to as Wall Street. Yes, there are "research sales" people who still get all excited when a firm analyst comes out with a new recommendation. They make the call into the portfolio manager's office or analyst. "John, how are you? So nice to take my call. Listen, I have some really important things to discuss, but we will get to the dress your date was wearing the other night at the gala in a second… No, John, this isn't Mike from Buckingham. No, this isn't Mike from Weisel either. This is Mike, the guy with the Salsa moves from Pru… Now you got it, listen, about Ann Taylor, we love it today." Everyone is saying the same thing with the same routine. Institutional sales people still get goose bumps when calling a customer to schedule a meeting with the CEO of that new growth stock, but at the end of the day, they are just appointment makers. And the hundreds of firms making hundreds of appointments is disastrous.

What is even more scary is what happened earlier in my day. I had a conversation with my friend Tom, who recently made the switch from the still-in-existence telemarketing department of his firm to the institutional sales side. He only knows telemarketing of the retail kind, and he is not going to change his approach whatsoever. He has no research, just his own ideas. I am not so inclined to believe that such an approach is going to bring Tom a windfall in commissions from all of these hot hedge funds, but all sales efforts need enthusiasm and encouragement if they are ever going to get anywhere.

Here's a transcript of our Instant Message dialogue. I love Tom like a brother and I had to play along with him so that he would be excited and not lose enthusiasm to go out and write some tickets.

Tom: I am telling you, it isn't so often I get an idea like this one. You ready for it?
Me:  Go
Tom: NOC. You love it already, don't you?
Me:  I don't really know anything about it to be honest. What do you have?
Tom: Think of the geopolitical mess going on around the world. It is a nightmare
     to say the least. First, 9/11 -- the US and world starts to militarize. Then
     Iraq, Korea, you with me?
Me:  Yeah, I guess so.
Tom: Militarization is only going to continue -- everyone is going to continue to
     build arsenal and these NOC guys can't go wrong.
Me:  I suppose that could be the case, but I am on the other side. A Democratic
     landslide in the elections is a risk. And, that combined with a world that
     will politically and culturally start gravitating back to the left is going
     to be major inflection point in the business cycles of anything defense.
     Buy the cheap long-dated puts -- your risk is clearly defined.
Tom: Great thought, but you have to admit, defense is not a partisan issue, and
     you can't tell me America, as a nation, wants to be less safe.
Me:  So missile buying continues or escalates. Good luck with that. Anything else?
Tom: It is, no pun intended, defensive in a lousy market. Ha Ha Ha. Isn't that great?
     Gotta love the chart, decent forecast. This is a fast trade with a tight stop.
     Why don't you give me an order to buy 50k and let me trade it for you?
Me:  No thanks, but good luck with it. Appreciate it. But keep me up. I am too
     wrapped up taking all of the time off from my screens for these meetings.
Tom: Time off is time lost from making money. In fact, you are going to lose money
     by not having it on. Do want to lose money?

I am not going draw any brilliant conclusions here, but these examples are evidence that the salesmanship of today cannot beanything like of what is used to be, and this might be presenting all sorts of problems for Wall Street. This in no way is a prognostication of an unfortunate market direction, but it is representative of the times.





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