Hey everyone, Ben here & welcome to motivation 2 invest.
Today I will be joined by a VERY SPECIAL GUEST, ALEX a FORMER TRADER at the INVESTMENT BANK
CITY GROUP!
Which is the 3rd Largest invesmtent bank just behind JP Morgan & Goldman
sachs.
He has a WEALTH of EXPERIENCE in the financial industry so in this video
we’re going to discuss his MOTIVATION 2 INVEST & INVESTING JOURNEY.
Remember guys if you do find value in this video.
LETS DIVE IN.
————————-
CONTENTS:
1. How to start a career working for an investment bank?
Background.
2. How to become a Hedge Fund Trader?
Opinion on Forex.
3. Positives & Negatives of working for an investment bank
(those who may want a career in finance)
(goldman sachs rivalry)
HQ in NYC
Interesting stories from inside the investment bank
Citigroup CEO testified at congress may 2021
4. Is the smart money , really the smart money?
5. Do you have any investing tips?
5. Is Crypto currency a good investment?
bitcoin, ether, dogecoin
———————————————————————-
hey everyone ben here and welcome to
motivation to invest today we’re going
to be joined
by a very special guest his name is alex
and he’s a former trader
at citigroup which is the third largest
investment bank
in the entire world just behind jp
morgan
and goldman sachs so in this video alex
is going to reveal to us
what is it really like working for a
major investment bank
we’re going to dive into his background
his motivation to invest
and maybe even some of his tips he can
provide for us on our
own investing journey so this is going
to be really exceptional video
guys and i think you’re going to like
what we’ve got for you
so before we hop right in if you do
appreciate the value in this video
feel free to give it an early thumbs up
that helps out tremendously with the
channel
and if you haven’t joined the investing
family yet and you do like these
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hitting that subscribe button
and turning that notification bell on
and with that being said
let’s dive in right alex great to have
you here
so what was your motivation to invest
tell us a little bit about your
background how you got started
so my my journey into uh investments
probably different than most people who
end up trading
at a investment bank the normal route
that people would take into that would
be
recruited out of university and they’ve
had an aim and made sure they’ve
put themselves in that place where they
are seen as a prime candidate to
uh get picked by that like a high-end
university exactly like a global
university with
a reputable program the route that i
took was i’d left the
left the army i found myself in london i
found myself at a careers fair and
gotten uh offered a four week unpaid
internship at citigroup
yeah um and from that i then got offered
a job
in in back office yeah yeah that for
quite a few months like eight months or
so yeah um and then through
just being good at what i did but also
making connections and talking to people
um i then got offered a middle office
role working with the trading team
yeah and then from that point i was put
on the training desk itself so
nice that’s not a route that i would
suggest anybody to take yeah there’s too
many variables there’s too many
bits of luck judgment opportunity that
come into it you might get shot in the
army
yeah you could get shot down beforehand
um i’m not sure if like
yeah if the army gave me any skills it
would never transfer yes
baby but i think
generally you have to kind of go to like
a top-end university and get recruited
that way
yeah make it sure um so that’s kind of
how i got started
did the army not give you that maybe
discipline or work ethic
did it matter maybe some others maybe
not me yeah i think i’m quite resistant
to
uh two things i’ve got i have my own
mind yeah i think
that sort of strength of character
enabled me to go into different
environments and and make my own
judgment which is
i think was my usp so when you get the
people from the
gen general kind of recruiting exactly
they’ve done the right courses they say
the right things they’ve been to the
right university
yeah um and that’s fantastic but then
you i still think
that with any team you still need people
who see things slightly differently
yeah that bring a different aspect to
that team
and independent thinkers are very rare
yeah i find
like in a lot of jobs in a lot of
industries even in investing and also
trading
people follow like sheep and like
lemmings and then if there’s a situation
or there’s some sort of setup
and people say well why is it like that
they say well it’s always been like that
this is absolutely true yeah i mean
we’re all before working jobs and no
matter where you are what industry
you’re in
that will be the generic thing we just
do this process and the only answer is
just because we’ve always done it which
is an absolute
terrible thing to say so i think because
i came from a non-traditional background
and because of the way
that i was brought up i was always
questioning why we do things
and that just enabled me to see things i
thought were pretty obvious
but weren’t obvious otherwise you would
have been implemented in a different way
traditional educational institutions
they teach people to really think
in a box yeah and just get the right
answers to exams and stuff like that
whereas
if you were you did when the army route
and then a really alternative route so
perhaps
you brought you in as a bit of a wild
card because you’re going to be thinking
you more you think outside the box you
think independently
and that can add something to city group
obviously major investment bank yeah i
mean i think
because of the route i went i was able
to prove my
my my value every every step here’s a
question is the smart money really the
smart money so in these big investment
banks
you’ve got these supposed to be the best
minds in the world
are they really smarter exponentially
than
say somebody who studied it
independently everybody truly thinks
that smart money is somewhere else
if they’re honest with themselves i
think there are a few firms out there
that
seem to be smarter than others yeah um
which i won’t name but i think
generally like if anybody thinks they
are the smartest money in your room then
you’re definitely not
it’s good to be humble and also
self-aware yeah because
if you think you know it all and you
think right this is the smartest
possible investment possible trade right
now then there’s probably going to be
somebody else smarter somewhere doing
something else
that’s maybe completely different
absolutely so do you have any funny
stories from when you were inside the
investment bank
i mean funny stories always depend on
your aspect which
which size you’re on um but i think with
when you look at retail investors and
they you find sometimes that
you get confused with the tickers and
you maybe bought the wrong stock or it’s
not the stock you thought it was and
there’s
yeah you bought it on the wrong exchange
and all those things you think oh
i’m sure these smarter guys these big
funds don’t suffer
unfortunately smart money doesn’t suffer
these unfortunate things
they absolutely do i mean there was an
incident i was aware of
where somebody was trying to um short a
stock
yeah and they were hoovering up all
around the market and they thought that
it was going so well that i can’t
believe i’m like the only person on to
this unfortunately
they were short in the wrong stock yeah
but by
the time they realized it caused
absolute chaos so
you know the company they that they work
for
yeah started getting run up by the
regulator because it looked like they
were doing a hostile takeover on this
stock when
yeah you know it’s that level of stuff
yeah it really goes to the top level
uh and then unfortunately it’s going to
fill it down at some point yeah
because it was was it a smaller cap
company than the company you thought it
was
it was it was it was both both companies
started with with it with their
with green and the the latter part of
the name was different but yeah when
you’re just looking at a ticker and you
you it’s early in the morning
yeah and maybe you haven’t quite
listened to the brief from that well
you know everybody’s out there trying to
get what was the hottest short on the
market
and you’re going around getting all this
sort of the stuff in yeah
um and you think you’ve done a stellar
job and you’ve you know what a brilliant
job i’ve done but then
later in the day when you can’t settle
your stuff because it’s the wrong stock
and it’s
unwinds it becomes very like it you know
very awkward so how much
cash was sort of extinct there how much
i don’t know on the actual
approximate i don’t i don’t actually
millions oh there’s always there’s
always there’s always millions
of millions they’re not small trades
they’re not like
because to make money on these things
you have to do it in if you’re going to
have convictions do something
you do it and you try and um do as much
leverage as you can
yeah so there there is it’s not it’s not
a cheap or
you know a quick fix mistake yeah yeah
yeah but say
mistakes happen even even with the smart
money yeah what happened to the guy
after that that situation obviously i
think
it wasn’t the best for him i think just
it’s one of those things so it can
happen to anybody
[Applause]
yeah and it’s just unfortunate that it
happened
this is where whether you’re working for
goldman sachs city group or
your investment banker or your retail
investor you’re all human being yeah
so you can you can have biases you can
have and be emotional
just calm down i am coming yeah you can
make mistakes
and it’s in a way it’s inspiring for
those people starting out investing
because you
you can see obviously the pathway
everyone makes even the great warren
buffett he’s always making mistakes it
but the the real amazing thing is being
able to admit the mistakes be self-aware
and say okay
i was an idiot i made a mistake and then
you can move forward
yeah and the difficult thing and i think
the negative thing
which can affect anybody no matter what
level they are in the industry
is if they’re in denial and they think
well actually i didn’t do anything wrong
yeah because then
they can keep making the same mistakes
again and again this idea of smart money
comes from and this idea that
there’s this big sort of division
between the retail investor and then
these big finance guys have got all the
information look they make mistakes
uh as well and i think as a retail
investor you think oh it’s because i
wasn’t in the know or something
happened but uh it’s also just because
you say you’ve got those underlying
biases you’re like
you’ve you’re an emotional creature
you’re a human creature if
you could if you had two parallel days
and you were buying the same stock
how you felt about buying the same stock
if you had a really good morning
or you had a really bad morning will
feel very very different and therefore
would your risk parameters slightly
change would your optimism slightly
change upon
seeing a bit of news so i think just
being aware of that as a retail investor
especially if you’re on your investment
journey
and just trying to be aware of it as you
say making sure that
you feedback any learning you have and
try and build that entity into your
strategy
yeah also it’s not just a question of oh
you’re never going to be able to to um
get to the level of the smart money
you’ve got to do what’s appropriate for
you
i started the market in 2007 2008
so literally like the huge financial
crash
and the market wasn’t the best so i you
know my aspect of
of the optimism on the market is kind of
probably less than somebody who’s
started during a more effervescent
period
so and it was quite funny so one of the
fun managers i worked for
he started just after 87 so everything
was on the up so he’s very positive
about being yeah yeah an active fund
manager
he thinks he can pick stocks and he does
pick stocks he does really really well
where for me you know when when i was
trading my product we had
um we we used to work with with
arbitrage strategies so you can make
money on the up or down but we also
worked a lot with
with with short selling yeah um
strategies for hedge funds
and then bringing that money back to the
long fund yeah to sort of finance their
their costs then you know that made
sense because in that market everything
was going down so yeah
you know if you’ve got a stock that’s
going down but a hedge fund is going to
short it and then give you some of that
profit
as a long fund you’re thinking brilliant
because we’ve got to hold this for our
investment for 10
20 30 years it’s having a little blip at
the moment but in 10 years time 20 years
time
it’s gone up but during that really bad
period we’ve also earned money so
i think that’s the sort of the the
aspect i’d like to sort of
have the retail investors take away that
short selling isn’t this
absolute terrible thing what it stops
you doing it for me as a retail investor
is having a really poor company or
really bad investment being overvalued
you buy into it with all
the merits that should be given to that
and then you find yourself on
the wrong end of yeah of something yeah
um that’s the real issue with these um
obviously a lot of short squeezies have
gone on recently
yeah and i i say this on this one the
real risk with that
is the fact that the fact that hedge
fund has done a lot of research in the
short in that stock they’ve done it for
a reason because they believe it’s
overvalued the fundamentals are poor
it’s a declining business so to actually
get a short squeeze it can work
sometimes if you get enough
obviously momentum behind the stock and
then they have to buy
the stock back to actually further
obviously escalates
the share price but there is a major
risk of that
um like i know there’s a major short
squeeze that happened with tesla even
before
all this gamestop issue and tesla great
company i believe overall but there was
a lot of people shorting that stuff at
the time who didn’t have faith in the
company
we saw the situation gamestop at the
beginning of the year and you’ve got
this idea that
the retail investor and they’re trying
to you know give it to
the big guys and we always use these
hedge funds as these
terrible evil character chores who are
sort of sitting there
when you’re in the investing space hedge
funds are tiny they’re really like
small small players when you’ve got
sovereign wealth funds
you know with hundreds of billions of
dollars
and you’ve got a little hedge fund that
can have you know a couple hundred
million dollars
yeah you see the difference in scope and
therefore i
i don’t see it as starkly as some of the
um the retail investors see it now i i
get the idea that their premises is
correct from their understanding but
the way i look at it is the reason you
would short sell anything
is because you you think the stock is
overvalued yeah
so what generally happened after the
financial crisis in 2008 is a lot of
governments
tried to ring fence certain stocks
mainly financial stocks okay
because the pressure they were suffering
now you said you can’t short sell these
stocks okay yeah
so they know the fundamentals are bad
for the company exactly so i’d have my
long funds who
had these stocks and you’d have hedge
funds you wanted to short them now in
some
countries you can do that and in other
countries they wouldn’t allow it
now the argument was that if you
short sellers drive down the price but
if you’re warrant and the price goes
down what you’re going to do you’re
going to buy yeah to buy an opportunity
and therefore
the value of anything can should be
determined by the market
and therefore if you restrict market
dynamics you actually
create an artificial bubble yeah and
just because you try and protect a stock
and it happens
with a lot of financial stocks
especially like southern europe it
doesn’t make them any better zombie
companies the zombie companies are doing
capital raising so you’re an investor in
the company they’re doing another
capital raising this year
and the next year and the next year and
you’re throwing good money after bad
you’ve got stocks in italy that you know
one of the
the oldest banks in the world that was
protected for years and years and years
and eventually went bust recently and
you’re thinking well
you can’t restrict market practice and
then
artificially create a healthy
environment for
socks to be traded and where the true
value is given wall street vets and all
the relatives and the way they approach
stuff i think it’s fantastic i think
it’s fantastic people are interested
in investing and i really encourage
people to become
uh more educated in that space i think
you could be very careful about drawing
arbitrary lines that don’t exist because
you can find yourself
fighting a battle yeah for no reason
it’s a bit like retail activist
investing and i i’ve said this on
previous videos i’ve said
just know why you’re investing or why
you’re trading and the idea is obviously
to make a profit
yeah if you’re doing it for some sort of
protest reason
or because you want to take on the big
bad hedge fund that they may take our
lives
but they’ll never take our freedom
[Applause]
then your motives have changed and that
can also
influence you with plenty of biases so
you may invest
poorly you may trade poorly you may hold
the stock as they say
um even though it’s a poor company like
let’s say gamestop or amc
despite all the the out the fundamentals
of the business or even the technicals
yeah just because you’re trying to
actually bankrupt a hedge fund
so i just think it’s quite dangerous but
i do understand
like you said the reasons behind it and
i feel there’s a lot of frustration in
the market
from retail investors because they feel
they haven’t got a level playing field
against the hedge funds um i wouldn’t
say that the skill set for an investment
banking career is very very different uh
and i think
personally a lot easier than being a for
example
i’ve worked with a fund manager one of
the top fund managers in the uk in his
sector
um and his job is exponentially harder
because he has to
prove himself every day every year with
a track record and
keep on producing that where when you’re
an investment bank and you’re trading
investment bank you’re trading a product
yeah and it’s about building those
relationships make sure you’ve you’ve
got things
that are going to keep on working but
you’re not necessarily having to go out
and making direct investment decisions
people are then going to judge you on
trading floor how is it all set up
what was your role in that city group’s
a huge institution
so the trading force would generally be
split up uh along sort of like
asset lines you’d have an equity trading
floor fixed income trading floor
your commodities trading floor your fx
trading for so the
i was primarily sat on uh the equity
trading floor
yeah um but within our team we had a
couple fixed income guys and
a couple cash guys as well because of
the products we traded we needed that
outlet now when you look at the trading
floor and you see these films and you’ve
got the all these screens and hundreds
of people that are
sort of shouting and whatever they’re
doing is is it really like that or is
that all
i think it’s quite down now because it’s
obviously a lot of stuff’s done on the
phone but it’s still a very vibrant
and loud environment because of the
personalities you’ve got there
[Music]
yeah you need to convey information um
and the people around you and your
training the reason you have that open
structure
is because i when i’m on the phone to
any any of my clients i also need to be
listening for example to
the five other guys behind me about what
they’re doing because what they’re doing
could also have an impact upon me
ah so okay there is a the reason you sit
so
relatively so close and in such a open
proximity
is to open those barriers that you would
normally have in a normal office
i see these movies and you see people
going like yeah i feel
like really aggressive like why don’t
you put that trade is it is it like did
you get that sometimes or is it just
or was that maybe 10 20 years ago is it
more i think a little bit more chilled
now maybe i think i think obviously
is nobody had a problem with people
swearing
yeah i don’t think but then i think
that the the old style that you have in
the head yeah that’s what i’ve had
pretty much has pretty much gone
i think one of the best scenes that
really like sums up how
a trading floor is it’s only one from a
one um
one phone call kind of aspect yeah the
the nature of
you know 100 of these phone calls going
at the same time is a scene in margin
call where he’s selling
selling the assets down and i think that
the way they talk on the phone the
terminology
hey it’s williamson william how are you
i’m all right how’s the trouble in
stride
busting my ass as always you see that’s
why i tried to tell you john why’d you
think i’m single
i know you did what can i do for you
listen i just got the tap on my shoulder
and we’ve got some risk over here that
we need to move
so today it looks like my loss is your
game what kind of size you’re talking
should be on your screen i just sent it
jesus
where does this land 96 on the dollar 91
all three and we’re done at 94.
93 and a half done so what are some
positives and negatives the best one is
you get to make decisions
and that depends whether you like it or
not but i i like making active decisions
and i like making decisions
pretty often um otherwise i’ll ruminate
and think about things for days on end
so when i’m forced to make a decision
and i’ve got to make a decision every
minute
yeah and i’m working for like eight ten
twelve hours a day depending on the time
of year you don’t get decision fatigue
you just get
used to making decisions and therefore
you actually find it easier to make
better decisions because you’re in that
frame of mind downside of that
is um what make the wrong decisions
maybe
because you’re making quick fast
definite decisions
yeah so does as much thought go into it
as if you’d make a
i think i think because of the if you’re
an active fund manager you make
decisions at a slower pace yeah okay
so you’ve got that value investing yeah
warren’s idea
so yeah that’s patience exactly that’s
actually what i’m trying to do at the
moment i’m trying to
not make it because i’m a bit like you
in a way i like to make
quick fast decisions i actually prefer
that but i’m actually trying to
not make as many decisions as fast so i
don’t
jump into something a bit too
aggressively yeah and this is this is a
difference we’ll touch on this later
with
where my career has gone but this is the
real difference between
trading and investing and people confuse
the two terms so
if you’re an investor you’re looking
over a much longer time frame and you
should
leave things alone and not overreact
just because something’s happened or
hasn’t happened when you’re trading and
i’d say it probably makes sense at this
point to kind of go into
how my what my role was and what my team
did
um but you you
aren’t making those kind of investment
decisions based upon what you think the
future of
a stock may be for example you are
you’re you’re trading around the product
so yes you can make wrong decisions but
it’s not as arbitrarily
seen as oh i should have held the stock
and yeah
sold here or should have bought here and
yeah you know those
those classic kind of ones so the
downside just from
having all that the the time you spend
in the job and the intention of the job
can have an impact upon people’s
health and their other parts of their
life
and that’s another reason why as you see
later on the journey i want to start
want to start bringing a few more
aspects into my life
other than just the job and hence one of
my motivations to
move away from the training into where i
currently am when you’re on that trading
floor if you picture that you’ve got all
those people they’re not all doing the
same thing
the product that my team uh focused on
was uh for long managers yeah who are
going to hold this stock hopefully
yeah um because it’s doing well and they
picked it for right the uh right reasons
uh going to hold it for a long time but
while you’re doing that you’ve still got
a lot of other things that will
happen to it so you have to have you
have to put it somewhere if you have a
custodial bank you’re just going to look
after it but they’re going to want fees
for doing all the things that happen on
a stock like a corporate action or
paying a dividend
and just holding holding your assets
they’re not going to do that for free
okay um so with that if you’re just
holding the stock you’ve got to finance
that so yes of course you can you can
take it out of your own trading profits
from your fund yeah
or you can you can let somebody like
myself
make money using your stock in on a
different investment time frame
your time frame so we had a legal
agreement
that basically said this is your stock
here always use your stock
but you’ve given us permission to
hopefully make you some revenue
okay in the short term there’s no risk
to you
but you just you’re going to earn a
little bit of nice cash along the side
that then you can use to offset your
your fees and your costs and running
your own business and hopefully have
some profit as well to put into your
overall
okay so is that like you sell you’d be
selling options and
doing that type of thing company will
volunteer with their assets and say
okay you can invest these in the short
term or option or do option trading with
them yeah
and that’s fine but that’s not done i’m
assuming for somebody who’s just got
stocks in a brokerage account no no i
think so
the industry is evolving and the product
that we worked on is evolving and a lot
of the
um a lot of the funds you do have retail
investors
uh assets may be doing this
and do do this internally themselves to
to make sure that
your retail investors have a lower cost
of uh
operation because they use the cost of
this to say finance
those holding those equities and
therefore you can pass that on to their
investors your black rocks and your
vanguards
where people got a passive investment
yeah and you want to they want to get it
as a low
low expense ratio exactly yeah they
really want to have like as few bits
going on
yeah yeah and that’s the attractiveness
of it now you can the more you can
reduce the cost of running that business
yeah through other
other um aspects the the better it is
for
your retail investor to buy that product
because they don’t have to pick up all
those extra costs
okay so then the natural question is
well what
sort of things can you do with the stock
yeah if you’re holding it for the long
term what can
uh i do with it on a different
investment time frame so i would find a
for example hedge fund that has a
short-term view
yeah on a situation in the market for
example made shorter stock
yeah now for this they’re therefore
they’re going to borrow the stock
from me um and effectively for my long
fund
yeah they’re going to sell it in the
market hopefully the price goes down
then they’ll buy it back
they will then give us a stop back and
the
the hopefully for them yeah the the
difference between where they sold it
and where they had to buy it back will
be their profit
now always built into that irrespective
of where the stock goes
is effectively to keep it really simple
a rental fee
for providing that now how we structure
that rental fee will be driven by
a lot of different metrics like you know
how hot was that stock
how much demand was there to short that
of what time frame
where they’re going to do it so you put
all these metrics around it to make sure
that you can’t run the hedge funds out
of making any profit otherwise would
never take the opportunity the
difference between
a trading strategy and an investment
strategy
an investment strategy should be over a
much longer timeline
yeah and this is where my journey’s now
gone i’ve gone into away from the
trading aspect
away from um from that side to try and
give retail investors normal people
the information they need to make sure
that yeah they’re making money but also
the main thing is they know how they’re
going to make money
but also they know why they want to make
that money so you try
what they want to do to a real need yes
yeah it’s great having
loads of money that’s going to solve all
your issues until you go to hollywood
and you find that
yeah all those people have more issues
than yeah that’s
very true yeah you’re better off having
an understanding what you’re doing and
what you want
in terms of health insurance so you want
better work three times more people in
this country this is the uk i’m speaking
about
have insurance for their pet yeah than
they do
on their own life your own health and
you think
well that’s ridiculous so six months of
the dogs
yes people love their dogs eighty
percent of people will insure their dog
yeah only six percent of people insure
themselves crazy yeah and that’s really
warm because if you’ve got a family and
you’ve got
uh you know you can’t go to work long
term
you’ve got no reserves you’ve built up
yeah you then you start you might start
needing to cash in your investment
positions it might be the best time to
do it
there’s not a lot of financial education
uh globally i completely agree with that
i i believe the education system’s
broken they’re not taught how to make
money work for them
yeah and i find that a major issue in
the education system right now
and obviously financial education is the
way forward
and but it’s just not done in schools at
the moment so it’s up to people
to actually seek out independent
financial advice or
just wherever you can learn the
information learn it and that’s just the
best way to do and actually
understand yourself understand your own
financial goals your own investing goals
and then take it from there because
everyone’s invested journey i believe is
very personal yeah
so everyone needs to have their own path
their own route and their own goals
yeah yeah and then you’ve got other
aspects as you evolve i mean
if you if you’re a young guy that’s fine
yeah but then as you start having more
responsibilities and other things start
coming to play you’ve got a mortgage
you’ve got a couple kids
you’ve got this you’ve got that then you
start thinking well
actually that evolves then you’ve got to
start thinking about your investment
strategies how that investment strategy
fits into your lifestyle
guys i just want to say i know i always
say on this channel
this is not financial advice but alex is
a financial advisor so
um this video is not financial advice
but if you guys do need financial advice
i will leave a link for with all alex’s
details in the description below
so you can check that out if you do want
to set some financial goals for your
lifestyle
and yeah it’s been great to have you on
alex today um feel free give this video
a big thumbs up guys if you haven’t
already
subscribe if you haven’t already and
alex yeah i’ve been fantastic have you
on yeah
and yeah i hope you guys enjoyed the
video comment your thoughts below
and on anything that we’ve talked about
in this video and it invests safe
