Inside Silicon Valley

Antonio Garcia Martinez presents an unobstructed view of the Bay Area in 'Chaos Monkeys'

Published 3 years ago on Jun 18, 2017 Read

I was a pricing quant on the Goldman Sachs corporate credit trading desk.* That means I was responsible for modeling and pricing the various credit derivatives that the biggest credit-trading house in the world traded. We’ll get into what a derivative is in a moment. More important at Goldman Sachs than the “what” was the “who.”

Goldman Sachs was unusual among Wall Street banks in that it had mostly kept a partnership management structure. Hence, every incoming employee was hired by a specific partner, and you were that partner’s boy. My feudal liege lord was a short, balding guy with an intense stare and oddly biblical name: Elisha Wiesel. Elisha was none other than the only son of Elie Wiesel, the famous Holocaust survivor whose horrifying Night is required reading for many American high schoolers. His father may have been a Holocaust luminary and a public intellectual, but his son was a vicious, greedy little prick.

His lieutenant, my boss, was a Caltech mathematics grad from my home state of Florida. Ryan McCorvie (“RTM,” per the three-letter acronym everyone was known by on the internal messaging system) was tall and gangly, with twiggy arms that emerged from a potbellied, ectomorphic body. His one flash of personal color was a tattoo of the infinity symbol on his forearm, studiously covered while at Goldman.*

There were other characters in this drama too.

The traders were crafty and quick-witted, but with little technical sophistication and the attention span of an ADHD kid hopped up on energy drinks and Jolly Ranchers. Their role was to trade with Goldman clients and other traders at rival firms, posting prices to buy and sell securities and their derivatives, all the while both hedging their books and making smart bets with the firm’s money. It was like juggling flaming chain saws while dancing a jig on top of a speeding train.

The sales guys were complete tools, with a collective IQ safely in the double digits. Their only role was to woo and ply clients with potential trades, presenting the glib appearance of trading savvy and market control, and then skulking away to a trader and begging for a special price for a client trade.

And the quants, called “strategists” or just “strats” in Goldman-speak? Mostly failed scientists like me who had sold out to the man and suddenly found themselves, after making it through years of advanced relativity and quantum mechanics, with a golf-club-wielding gorilla called a trader peering over their shoulder asking them where their risk report was. We were quantitative enablers, offering the new and shiny blessings of modern computation to the old business of buying and selling. But giving sophisticated models and fast computers to traders was like giving handguns and tequila to teenage boys. The quants were there to make sure the guns were loaded, but also to make sure the traders didn’t shoot themselves in the foot.

Though crucial to the drama, we weren’t terribly appreciated. In fact, we were basically the traders’ little bitches, and any quant who was honest with himself realized that. In time, we quants developed knee calluses from genuflecting to service the traders on whose profits our livelihoods depended.