Interview with Anton Kreil of BBC Million Dollar Traders
PM: = Paul Mullen (Interviewer)
AK: = Anton Kreil
PM: What do you do in the city ?
AK: Well, I used to be a trader at various investment banks. I worked at Goldman Sachs, Lehman Brothers, and J.P. Morgan. I was an institutional market maker and proprietary trader. An institutional market maker trades with all the pension funds and hedge funds on an agency and risk basis, and as a proprietary trader the bank basically assigns you a pot of money to trade with, in whatever you see fit. A traders market making account is called the front book and the proprietary trading account is called the back book. They’re kept separate.
I did that for seven to eight years, then left the city in May 2007, then did a bit of travelling and took a break. The timing was obviously pretty decent but I kind of knew the markets would be in trouble. I was offered several positions to stay in the industry but decided to leave.
I then came back from travelling after a year and filmed the TV show Million Dollar Traders. Basically we set up a hedge fund on television and found eight people who had never traded before; we gave them two weeks training and one million dollars to trade with, during the summer of 2008. It was a lot of fun to do that at the time. I'd been travelling and wanted to come back and get back working, but essentially I didn't want to go straight back into the city. It was a nice project for me to ease myself back into London. I now trade my own money and run the Institute of Trading and Portfolio Management.
PM: How did you get started in the industry ?
AK: I started really young. I started trading from home in the mid-nineties as a teenager. I got my mum to open a trading account for me with a stock broker when I was 16. Luckily my voice had broken by then and I used to call up the stock broker and pretend I was Mr. Kreil. Naturally when you start making quite a bit of money you start getting really interested in it, so I started to do a lot of research and realised that I better go to university and get a degree, otherwise I wouldn't be able to get into the city. At university, I applied to become a trader at a few investment banks, got rejected for summer internships by most of them, and was hired in 1999 for a fulltime graduate position by Goldman Sachs.
PM: What qualifications do you need to do that ?
AK: This is a big question at the moment. There are a lot of people out there who make ridiculous claims that you don't need to have a top degree to work at the big banks or hedge funds. I think people get confused with the two messages about what makes a good trader and what gets you into an investment bank or a hedge fund to become a trader "in name".
If you want to work for a big investment bank or a hedge fund, you will need to have a strong degree to get in, but that doesn't make you a good trader. What people have to understand is the big banks are all public companies and many of the big hedge funds are too, or have mandates from public companies. They can't just go out and hire one hundred people that don't have a piece of paper that says they're smart.
Public companies have hiring benchmarks that are competitive because they're shareholder facing. What do you think your shareholders would say if you were a hiring manager at an investment bank and you brought in 20 guys with no qualifications, gave them fifty million dollars each to play with, and then they lost it all? The shareholders wouldn’t like it and they would sell the company stock. The stock would go down and you'd probably get fired. If you hired 20 Harvard MBAs, and they lost the same amount of money, the shareholders wouldn’t like it, they would still sell your stock but you'd probably be branded unlucky internally and you would still have your job.
PM: So it's a credibility issue, really ?
AK: Yes, they're shareholder facing so they have to have benchmarks when they hire people and those benchmarks have to be as high as they possibly can be. A strong degree gets you through the door but it doesn't necessarily make you a good trader.
To give you an idea, the numbers that actually succeed as traders are in fact a very small percentage of those that get through the door. For example on my hiring program in 2000, after two years, there were only about ten of us left out of the original one hundred people that joined Global Equities that year at Goldman Sachs.
The reality is you actually need a degree to get in to the top places but it doesn't make you a good trader. You need to have a strong university degree and in my book you need to have a strong degree from the "university of life". You've got to have a very high level of common sense and a very strong work ethic to actually get through the first few years and to learn the business inside out. Even if you get through the door as a trainee trader that has been hired from university, you've probably only got a one in ten chance of still being there within three years.
PM: Certainly from what you said that would actually tie up wouldn't it, because you said there were only ten left out of one hundred.
AK: That's my experience. There are a lot of people out there that mislead undergraduates telling them they can go to a second rate university, get a bad mark in their degree and end up becoming a top trader at a tier 1 investment bank or hedge fund. That's possible, but it's very close to impossible. I would say only five percent of the people that actually get through would be of that profile. It would probably be because they’ve got something very unique that they bring to the table, i.e. a track record at a very young age.
If you can produce a piece of paper which says you made 30% each year for the last three years, with your own money and while at university, plus you can speak about trading in depth, as well as any trader that sits on that desk, you're probably going to get hired.