Monday, July 1, 2013

The Buy Side: A Wall Street Trader's Tale of Spectacular Excess by Turney Duff

By Professor Jeffery Atik

This review was originally posted on Jeffery Atik's Blog Attraverso.

The Buy Side is part tell-all, part movie treatment and part self-therapy. Turney Duff presents the rise and fall of a Wall Street trader (Duff himself, or a character resembling him) in the years leading up to the 2007/2008 financial crisis. Duff is well on the way to crashing long before the crisis hits; The Buy Side is a story of self-absorption, addiction and perhaps (though it does not arrive by book end) redemption.

Duff would have us believe that he was one of those Masters of the Universe - magically in touch with the hidden rhythms of the markets, knowing just when to hit the buy or sell button. And his sure-footed ascent is predictable. He deftly passes from sales to the Buy Side - the trading firms who engage the fawning brokers to execute their transactions. The Buy Side may or may not be where the big compensation is - but it's certainly where the perks lie. And Duff relishes the Buy Side life: imagine buying six extra Yankees tickets in order to take out-of-park smoke breaks.

Duff claims no special savvy; he's just a party guy who attracts other party guys (and party gals). Somehow this leads to universal admiration and a seven-figure bonus check. I wonder if Duff is calculating in his modesty: it makes a better film. Still he must have had some knowledge of the health-care sector (he was heralded as an expert).

I read this book for what it may teach about Wall Street - and it does raise some questions. The Buy Side is a story of addiction - and so there is real pain involved. At the end, Duff manages to lose everything and everyone to cocaine and alcohol abuse. Yet things 'work' for Duff for quite a while, even when he is using. Can abusing substances contribute to Wall Street success? The idea should not be dismissed - staring at those little screens and making million dollar snap decisions is not for the faint of heart (see John Coates' The Hour Between Dog and Wolf (2012) reviewed herefor the science). Or is it only a matter of correlation: are addictive personalities suited to trading? The Wall Street Duff depicts is one of conscious, if not cynical co-dependence.

Drugs, booze and hookers are continuously on offer to those on the Buy Side.
These pleasures corrupt, of course, as they seduce traders to book their business with candyman brokers based on, shall we say, suspect criteria. Perhaps the hospitality enables as much as it disables, at least for a while. At no time do Duff's employers object to his harvest; there seems to be a Wall Street understanding that it's all part of the reward of office. Yet by the end of the story, Duff reveals Wall Street trading to be yet another substance to abuse. He can only come clean by renouncing alcohol, drugs and the financial markets.

Duff proclaims he has a moral compass. He had (in retrospect) the good fortune to work for Raj Rajaratnam, a convicted inside-trader. On the way up, Duff enjoys the power and wealth Rajaratnam's Galleon hedge-fund throws off. And Duff is now free to publish stories implicating Raj; Rajaratnam can hardly touch Duff from federal prison.

Duff would scoff at the Efficient Market Hypothesis. For him there is no price that is not a manipulated price; this is the essence of the Wall Street game. The successful trader seeks "the edge" - and this, more times than not, is access to inside information. Indeed, these seem to be the only transactions Duff can remember (investment analysis is for the meek). And the inside information he plays always seems to have a Wall Street source: an institutional investor is about to make a big buy, an analyst is about to release a downgrade. Duff's trading resembles surfing.

Duff admits to aspiring to write for film - and The Buy Side displays well-worn plot devices. Duff the protagonist is a nice guy (though he plays mean tricks on others and has a taste for vengeance). He has Dad-issues and women-issues throughout. But he never cheats on his wife; the audience would hate him if he did. The story arc is carefully followed - up and down. His wild living ends with a satisfying plop and a possible rebirth follows. Duff the manipulator may be manipulating us once again, with the same selfish cynicism that drove him on Wall Street. How carefully he hides his ambition.

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