Secret to Wall Street Riches Revealed

Closed-caption transcript of an investment banker describing how his firm's half-percent fee on the sale of $100 million worth of securities somehow results in the firm making $5 million, or 10 times that amount.

The interview with the banker is part of a video explaining the financial system. It plays on a continuous loop at the Museum of American Finance in New York.

Bonds. Cheese Bonds.

I just bought three Cheese Bonds from Wendy Levy, a.k.a. the Cheese Snob, to help her fund Curds and Whey, her soon-to-be cheese and tea shop in Jersey City, New Jersey.

The bonds have a face value of $10.00, redeemable in cheese and/or tea, and she's selling them for $9.00 each. That's an 11% payback right there. Plus, the bonds are callable at any time, so if I cash them in in three months, that's a roughly 44% annual return.

Of course, that 44% is not risk-adjusted. But I've been watching Ms. Levy from afar for a while. She has been methodically planning this store for over a year. There are lots of ducks, and yet they are all in their row. I am going to get my cheese.

Also, it is true that cheese and tea are a bit less liquid than cash, so I should probably throw in a little liquidity discount there as well to adjust my expected return. And then, opportunity costs: Is cheese-and-tea really the best use of my $27?*

But even given all that, we're still talking north of a 30% annual return: Beat that, Bank of America! (On second thought, Bank of America, don't try to beat that...maybe just stick to savings accounts and stuff like that for a while.)

For more info: The Roquefort Files.

*Well I do love cheese — and tea! And my household consumes quite a bit of both. Plus as I have entered my dotage, I have become a bit of an epicurean in matters gastronomic (and sartorial), so my utility function has changed from five or so years ago. In short: Yes. This is the best possible use of my marginal $27.00. You have my word on it.

Situation Wanted

I feel certain that given my current skillset I could pilot an investment bank, savings and loan, and/or an insurance company into the ground with at least as much efficiency as the Dick Fulds of the world, but at a much more reasonable pay rate.

Fuld took home in the neighborhood of $350M over the past five years; I would have been willing to croak Lehman Bros for $80K per (plus snacks of course) and I can almost guarantee I would have done it in half the time.

Business Advice Sought

Dear Ben Bernanke,

Like JPMorgan and Wells Fargo CEO John Stumpf, I am interested in buying an investment bank with the Fed's backing, but I'm not sure what to look for in an investment bank. What sorts of things are important? Also, I would like to minimize travel.