Muffie on Markets

Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for prestigious and accredited investors only, employing an actively managed, long-short strategy.

So as I am sure you know, I used to work at a Highly Prestigious Investment Bank. I won’t name it, but you know the one I mean. It was a pretty tough environment, and being from Harvard just doesn’t do as much for you as you thought it would when you first called Daddy in the Cayman Islands to tell him you got accepted. Back then you thought that crimson colored ink on the parchment meant everything. It still means mostly everything, but life can really make you jaded, and reality can be disillusioning.

Part of the thing, I think, is that there are a lot of Harvard people at the prestigious investment banks. You sort of got the impression at school that you would stand out, but you sort of don’t at the best banks, since they are full of other Harvard people. It is hard to shine.

Competition was really thick at the Prestigious Investment Bank I joined, and unless you want to work ten hour days, or worse (I know what you are thinking, but some Associates were working fifteen hours a day for most of the week and going to the office Saturdays and many Sundays) you had to find other ways to stand out. Fortunately, not everyone’s father is one of The Bank’s best customers. I started off with a lot of clout and I got lots of perks, especially during orientation. Really, all that review on the numbers and stuff, who needs it? It was easier just not to go. And that, dear friends, was something I could shine at. How? I found a sponsor.

Sponsors and mentors are really the most important career tool a girl can bring to the table. Sponsors can bend the rules, angle you into the right assignments, and get you out of working on them too hard. Just like professors at school, with the right kind and amount of attention, your life gets much easier. Greasing the wheels is part of the game. And, why not? All this talk about work ethic is really just a disguise for the illusion that work is important. Getting things done, is what is important. And if getting things done means getting your sponsor to assign someone else to pick up an extra few hours a day so you can go with him to the Hamptons early on Thursday, well, that’s just effective task management and delegation.

But, like most things, sponsors have risks too. And while it may look like the best move is to pick the highest flying star at The Bank as a sponsor, that can easily backfire. High flying stars are also high volatility stars. Your statistics or financial instruments professor probably had a hard time convincing you that understanding volatility was critical, but the volatility mistake I made burned that lesson in permanently.

Like most Highly Prestigious Investment Banks, my former employer maintained a Very Exclusive Hedge Fund, mostly geared towards employees at The Bank, but also available to a select few outsiders. My sponsor, and pay attention here girls, was one of the younger stars within the Very Exclusive Hedge Fund. Well, as I am sure you have heard if you watch the Fox Business Channel, some non-Harvard types who run less exclusive hedge funds and a bunch of foreigners stupid enough to trade their dollars for crazy foreign currencies pretty much killed the Very Exclusive Hedge Fund’s performance this year. It was no one’s fault at The Bank, really. I mean who can predict was crazy foreigners will do? Personally, I think many of the outsiders we let into the Very Exclusive Hedge Fund lack a certain amount of backbone. They all ran like rats from a sinking ship.

Anyhow, the upshot is that the Very Exclusive Hedge Fund lost like a third of its value in 2007. And, well, some guys with grey hair at the bank needed someone to point fingers at. I tried to explain to them that those times that the phone was ringing in his office during the great 48 hour panic of the spineless outsiders he was helping me fix my Range Rover, but my pleas fell on deaf ears and they fired him. Although, here at the Very Prestigious Investment Bank they don’t call it that. They don’t fire anyone. They “invite him to leave.” Except, it’s not really an invitation. It’s still really polite. Now that’s class.

After it happened it seemed pretty obvious that I was going to have to find another sponsor. Unfortunately, sometimes if you get too close to a sponsor, you are forever linked. I know it sounds romantic, but really, especially if you are young like me, you can’t afford those kinds of commitments at a young age. And, apparently, there was some policy about employee relations and infidelity or something, a rule honored more in the breach than the observance, I suppose. So, if you can believe this, several people (none from Harvard, of course, Columbia grads, you know what I mean, right?) said they didn’t want to work with me anymore. Can you believe that? I was one of their most efficient employees, if you look at the hours I worked versus what tasks I was assigned were completed by others. Jealousy is a cruel fact in such places. And then, to top it off, the folks at DealBreaker said they no longer wanted to work with me either. It seems, that unless I could give them the inside gossip on my Very Prestigious Investment Bank, I wasn’t worth keeping around. And to think that DealBreaker was only interested in gossip. I couldn’t believe it!

Daddy was really nice about the whole thing. He called a few people and got this one guy with lots of grey hair (so much he stopped even bothering to dye it, I mean everyone knew anyhow) fired, but he told me it would be better if I didn’t go back there again.

I know you know how it feels to lose a really good career opportunity because a bunch of outsiders have no spine and think that a 30% loss is a big deal (I mean you must not have much money if a 30% loss bothers you, right?) and I felt just that way. I cried and cried. I spent three days at the ‘rent’s place without getting out of bed except to call the maid to get me strawberry ice-cream and to go to the Newport Creamery for Awful Awfuls. I was totally inconsolable. Daddy tried to console me anyhow. He offered me a new car to replace my Range Rover and the Bentley, but I really was so so sad. Then he told me I could have an Austin Martin, if I wanted. I was really tempted, but I told him that a car was just not going to be enough to replace my career. He said he’d get me a new one. I didn’t believe him. He said it would be better than a bank. I thought that was totally absurd. I loved the bank and my Sponsor. How could anything be better. Then he dropped it on me.

What about my own hedge fund?

Oh my god, I thought I had died right there. I spilled my Awful Awful all over my sheets (Mumsie was so pissed because they were Egyptian cotton and she went on and on about thread count until I almost cried again and she finally stopped when Daddy glared at her).

Why not, he said. I had all the experience from being around all the people at The Bank. I must have gotten something by “osmosis,” he reasoned. Who was I to argue? And if all went well, I could buy my own Austin Martin!

And so, here we are, just a month later, and I have my own hedge fund! And Daddy says if I do really well, some of his friends will invest before long, and I won’t have to worry about Sponsors or husbands or men at all. Independence, as a woman, is a critical thing, Daddy said.

Of course, running a hedge fund is a complicated thing. It’s not for everyone. But I’ve decided to share my experience with all my fans, and all my trading strategies and even my portfolio and performance! So, I invented Muffie on Markets, so you can keep up with my investment ideas, my ideas about the market, and the topsy-turvey world of hedge fund managers!

For those of you who don’t remember the DealBreaker days, well, I’ve brought over a special treat for you, my first post from way back when!

Already I’ve gotten some people asking about investing, but, sorry, Muff Cap, LLC is by invitation only. Sorry, but standards are an important part of life.