The video features Anton Kreil, a former Goldman Sachs trader, who provides an in-depth look into the world of trading, brokerage, and investment banking. Conducted at Cass Business School, the interview covers a range of topics, from asset allocation to the culture of investment banks. With over 1.3 million views, the video serves as a valuable resource for both novice and experienced traders.
5 Key Takeaways
- Asset Allocation Strategy: Kreil recommends a diversified portfolio with 65% in equities, 20% in commodities, 10% in forex, and the remaining in cash or margin reserves.
- Broker Selection: It’s crucial to choose brokers who are not aggressively taking the other side of your trades, as it represents a conflict of interest.
- Changing Culture in Investment Banking: Goldman Sachs stands out for its work ethic and innovation, while the industry has shifted from a focus on company profits to self-interest and greed.
- Risk Management: Kreil managed accounts ranging from $10 million to $500 million, emphasizing the importance of risk culture in trading.
- Work-Life Balance: The demanding nature of trading often leads to a poor work-life balance, especially during bull markets.
Asset Allocation: Diversification is Key
Kreil emphasizes the importance of diversification across asset classes. He suggests that equities should make up the majority of a trader’s portfolio due to their high volatility. Commodities and forex should also be included but in smaller proportions. This diversification strategy is designed to mitigate risk and capitalize on short-term opportunities.
The Broker Conundrum: Choose Wisely
When it comes to selecting a broker, Kreil warns against those who take the other side of your trades. This represents a significant conflict of interest and can be detrimental to your trading success. He also cautions that low spreads and commissions are not necessarily beneficial, as brokers may encourage higher turnover to generate more fees.
The Goldman Sachs Anomaly: A Culture Apart
Kreil speaks highly of the culture at Goldman Sachs, where he began his career. He describes it as a place filled with intelligent, hard-working individuals who are also highly entrepreneurial. This stands in stark contrast to the broader industry, which he feels has become increasingly self-centered and less focused on company success.
Risk: The Double-Edged Sword
Discussing his experience in risk management, Kreil mentions that he managed accounts with sizes ranging from $10 million to $500 million. He stresses that a strong risk culture is essential for success in trading. However, he also warns that risk management can get out of hand, as was his experience at Lehman Brothers.
The Grind: Work-Life Balance in Trading
Kreil is candid about the lack of work-life balance in trading. He describes grueling days that start at 5 a.m. and often don’t end until late at night. Social commitments with clients further extend these hours, making it challenging to maintain a healthy personal life.
Lessons Learned
- Risk Culture: A strong risk culture is not just about taking risks but managing them effectively.
- Brokerage Relationships: Understanding the business model of your broker can save you from potential pitfalls.
- Industry Culture: Being aware of the cultural shifts in the industry can help in career planning and risk assessment.
Final Thoughts
Anton Kreil‘s insights serve as a valuable guide for anyone involved in trading or investment banking. His candid discussion on asset allocation, broker selection, and work-life balance provides a realistic view of what trading entails. While the rewards can be significant, the risks and lifestyle demands are equally substantial. Therefore, a strategic approach, backed by a strong risk culture and ethical considerations, is crucial for long-term success in this field.
Source: YouTube Video – ex Goldman Sachs Trader Tells Truth about Trading – Part 2
Channel: Institute of Trading and Portfolio Management
Published Date: March 26, 2013
Views: 1,363,606
Duration: 12 minutes and 44 seconds
