Confessions of a Wall Street Analyst by Dan Reingold Read Free Book Online Page A

good to be sponsored by an analyst and firm as well-respected and bullish on our shares as Ed Greenberg and Morgan Stanley. We offered Ed a ride on MCI’s corporate jet, a Falcon 50, and he accepted, naturally; six hours in the air with MCI’s CFO was an analyst’s fantasy, not only an opportunity to learn lots of new things about MCI and its strategy, but an experience he could layer into every conversation he had with his large investor clients, thus enhancing his reputation as a “well-connected” analyst.
    So that Monday morning, Ed picked me up at my house in a taxi. Myhome, at the time, was nothing super fancy, but my wife, Paula, and I had put a lot of sweat into it and were quite proud of it.
    Ed took one look at the house and almost started laughing. “You ought to come to Wall Street and hit the big time,” he said. “I’m serious. You’d be good at it, you’d make plenty of money, and you’d get to do analysis all day long instead of just parroting management bullshit.”
    Parroting management bullshit? I was offended—until I realized that he was absolutely right. That was exactly what I’d spent much of the last year and a half doing in investor relations. My job was not to express my own opinions but rather to pass on the company’s party line.
    Our trip to Europe was a blast, made even more fun one day by the fact that the Morgan Stanley salespeople had arranged for us to be chauffeured in a sleek black Bentley, complete with a wonderfully obsequious driver. Even by Wall Street’s standards, this was over the top. I started to wonder exactly how much money Wall Street analysts made, anyhow. What they did didn’t seem any more difficult than my job, and it did sound more appealing to be the one whose opinions moved markets rather than the one who had to react to those opinions. I figured if I could be about 30 percent as smart as Ed and 20 percent more practical, I had a chance to do all right on the Street.
    I knew the basics of how an investment bank worked, but not much more than that. My understanding was that they advised companies on strategic and financial issues and raised money for companies by selling stocks and bonds, taking a piece of the proceeds. And they worked with investors, helping them select investments, matching up buyers and sellers of securities, and charging a commission on every trade.
    But I had no desire to move up to that snake pit called New York. I was fine in D.C.; Paula had a good job, and we now had two young daughters. By early 1989, I was promoted to director and put in charge of MCI’s business analysis group, running a group of MBAs analyzing everything from how to price a new MCI service to how much to spend on new technologies. But then Ed came back to me, telling me that he was rethinking his own career. Because Ed was so smart, he was also easily bored, and he was bored with being an analyst after so many years. He wanted to do something different. He decided to become a banker.
    “Come work at Morgan Stanley,” he cajoled, “and take my job. I’ll train you and make you as good as me.” I told him I wasn’t moving. The cost of living in New York was way too high. Ed just laughed. “Just come up here and meet the people,” he said.
    So I did. In fact, I took two trips to meet various research managers and institutional salespeople at Morgan Stanley. I’d been told that Morgan Stanley was a white-shoe investment bank that advised many of the largest and best companies in the world. It had a reputation of being genteel, refined, and snooty, with an old-money sensibility about it. Morgan Stanley didn’t trample all over people trying to bring in business like some banks did. It didn’t have to.
    I enjoyed myself during these visits to Morgan Stanley. The meetings convinced me that the job would be fascinating and fun and that, with Ed’s tutelage, I could probably do it. I didn’t meet anyone from the banking side: apparently they didn’t care