Author:Gary Stevenson
“I was a clever, poor, ambitious kid, who just didn’t want to be poor any more.” An unusually gifted mathematician, Stevenson beats the odds first by getting into the London School of Economics, and then wins a trading game to get internship at Citibank. He has no idea what kind of job it would lead to – just that it would give him the chance to make a lot of money. And it does. Not bad for an unsuccessful grime musician (MC Gaz) who was expelled from school for drug dealing.
Ironically, it’s not Stevenson’s numeric skills that enable him to advance. Initially perplexed that he can’t understand how trading works, he quickly realises that he’s far from alone, and that many longer serving traders are as clueless as he initially is. Knowing that many interns are never offered jobs, he makes himself useful in the best way he can think of – fetching lunches, coffees, at his desk by 6am, and always ready to take note as and when a dealer decides to share a few gems of wisdom. Gems like you won’t necessarily make money by being right, but you can really cash in by being right when others are wrong.
Stevenson outlines some of the mechanics of the work he did. Despite his best efforts it can be hard to follow, but it’s still possible to grasp the arc of his story even if the details don’t make sense. He starts on the STIRT (Short Term Interest Rate Trading) desk, where currencies are traded, taking profits from differences in rates. It’s not long before he’s being taken to Las Vegas for lads weekends with guys he barely knows or likes, and long lunches with brokers where his job is mostly not speaking and thinking he had to eat raw chicken because he didn’t know he could grill it.
It slowly dawns on Stevenson that it’s not actually a job. It’s a lifestyle. It’s not what you know, it’s how you participate. Take the hazing from the more senior guys, expect to be ignored, fetch and carry to ingratiate yourself, and learn to exist in a state of permanent sleep deprivation. One truly surprising revelation is that the basis for the annual bonus payments – which dwarf the base salary – are a secret. Traders endlessly speculate about “getting paid” which is code for “I’m expecting a great bonus”. Although no one talks about exactly how much. It’s known that some banks have fired someone rather than payout big.
Traders have a profit and loss account that is updated in real time as each trade goes through, and can be seen by everyone on the trading floor. In September of 2008 when Lehman Brothers go under and the global financial crisis washes over the world, Citibank get bailed out, and the STIRT traders discover they can make even more money. And everyone can see the huge profits Stevenson makes.
Stevenson never looks back, bets bigger and bigger and rapidly becomes the most profitable trader in the office. The generally accepted wisdom is that markets will fall, then rise again. But Stevenson is determined to be right when the rest are wrong and realizes everything he learned at the LSE was wrong. He bets that there will be no wholesale economic recovery, and cements his position as Citibank’s most successful trader.
Stevenson’s insights to his personal life are strangely detached. Told as if he were an observer, not a participant. Just weeks before he trousers a bonus of almost £400k, he matter of factly describes a Christmas with his parents and his siblings, all of whom buy him presents, while he buys nothing in return. A girlfriend relocates to Japan when Citibank move him there, but opts to live in a different town. Clearly unhappy in his job and keen to find a way out, Stevenson still decides to end his relationship with her rather than have her continue to tell him to quit. In each of these instances he offers little insight as to why.
At the start of the book Stevenson references early moments in his career where people told him “once you get in, you’ll never get out”. By 2011 Stevenson sees a global economy that is terminally broken, with boom and bust replaced by sustained inequality. The bigger his reputation becomes in trading circles, the more bemused he is as to why he doesn’t enjoy it.
The book ends not with a bang, but a rather slow fizzle. He wants out but Citibank have millions of Stevenson’s bonus money locked away all to be forfeit if he quits. Citibank try to bore Stevenson into submission, but Stevenson refuses to leave without his cash despite failing physical and mental health. It gives him a chance to enjoy Tokyo, where they post him to try and distract him but his prodigious work ethic is broken, and he spends weeks off sick. He lawyers up, but knows that ultimately Citibank could keep him in court for years. When Stevenson’s release finally comes, he has no idea why they finally gave in. As showdown’s go, it’s not so much a damp squib, and more a soaking wet one.
So what does a retired millionaire trader do aged 24? Well, the book doesn’t say, but a quick online search reveals he now has 170k subscribers to his “Garys Economics” YouTube channel and has become part of the Patriotic Millionaires movement and campaigns with Millionaires for Humanity for higher taxes on the wealthy.
There’s an insightful documentary here that includes his mum and dad : – https://youtu.be/LJ6ZSgkxgFQ?si=GIaYdYGUAf91XhJY
And here he can be seen on BBC TV getting right up the nose of Nickie Aiken (MP for City of London & Westminster, but not for much longer) and Annabelle Denham a Director at the Institute of Economic Affairs, a hard right “think tank” whose funding remains deliberately opaque.
https://youtu.be/e1sD80TXKwQ?si=W2MtNnkgkx7mIT5f
Length of Read:Long
Might appeal to people who enjoyed…
Greg Smith “Why I Quit Goldman Sachs”, Michael Lewis “Liars Poker” & “The Big Short”, Frank Portnoy “Fiasco”
One thing you’ve learned
The bonuses paid are not only secret in terms of how much, but also how they are calculated.
I used the box but it didn’t work, so here’s another try
Great review. Somehow I think he must have been cannier than what you set out here. BTW If he was on the short term interest rate desk wouldn’t he be trading bills and bonds rather than currencies ?
It confused me too – I thought STIRT must relate to bonds but the STIRT had a half dozen traders each with a dedicated currency or collection of currencies in a geography. He’d book profits by looking for foreign exchange swaps. As interest rates fell to zero, he was shown how he could exploit the difference between the zero interest applied to ultra short term loans and the three month rates which remained at 3% or so. So he’d loan out at 3% for 3 months and then borrow back 90 one day loans at 0%. He was far from unique in doing this but was willing to bet big – his first trade was $240m krona for dollars swap.
The canny bit was realising that the recovery was a theory that overlooked who benefited from it, and the massive inequality hidden within it. He kept hearing about how a recovery would boost the economy, but could see all his mates were still strapped for cash. The trickle down benefits of a recovering economy were stalling because those with the money had figured out how to siphon off the cash. As a consequence his predictions for interest rates differed from market expectations, and he cashed in.
My understanding is that he leant money. Say for example, if a multinational wanted a short term loan of £1Bn and certainty of the rate of interest that they would have to pay, It was his job to charge an interest rate which would make Citibank money. He had to predict what the BofE interest rate would be at the end of the loan period.
At the time he made his money the Bank of England interest rate was as low as 0%. By correctly predicting that interest rates would not rise in the loan period, Citibank could borrow £1bn at 0%, lend it at 2% and make 2% of £1bn profit. When most other traders were expecting interest rates to rise, they would be looking for a higher rate of interest (and thus less competitive) in return for the loan. His predictions were consistently right, hence his success.
I think that’s a better explanation than Stevenson manages in his book.
It’s often difficult to explain things to people when it’s bleeding obvious to yourself.
How come they always look like Millwall supporters and are always called Gary!
He supports Orient.
Very possibly. He looks like a Millwall fan!
Haven’t those city guys always been toffs or oiks?
The people you’d be least likely to see there, certainly in the dire 1980s, was either black, a woman, or (most unlikely of all) middle class.
Thanks for the digest, fortuneight. I thought it interesting that Angela Eagle, who I don’t normally have much time for – she seems a bit priggish and dense when she speaks in the Commons – had the most intelligent responses to Stevenson in that BBC clip, demonstrating in the short time allowed to her that she got what the problem is.
For reference, Gary Stevenson appeared on this site about 2 years ago, when he got a fairly similar dressing down for his appearance
Excellent review. Sounds like a good introduction to a very baffling world.
Good review, thanks.