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Monday, May 16, 2005

Brad DeLong Discusses Chet the archetypal investment banker.

Alamedia of unfogged asks him for a consult

I have known many investment bankers in my day. ... All of them ... have the same basic character type, which I will call "Chet". Chet is a hail-fellow-well-met sort, cracking jokes all the time (some of most of which may be "politically incorrect", because he doesn't care about things like that). Chet is tall, probably tan, and has big white teeth like a mouthful of chiclets. If Chet does not play golf, it is only because he has ascended into the super-Chetosphere and plays polo. Chet is a member of country clubs, and has a thin wife, and two adorable kids, etc. etc. ... Finally, Chet has an incredibly high opinion of himself. He is confident to the point of arrogance, but friendly, outgoing. There is one thing Chet is not, ever, in my experience, and that is particularly bright. Really. Not an intellectual powerhouse, is where I'm going with this. Not, in all likelihood, able to perform complex mathematical operations.

[big snip]

5. Why do they all have to be irritating Republicans who are convinced there is some very real sense in which they have earned a multi-million-dollar bonus, when it's so clear to anyone that they cannot possibly, ever, have done enough work to "deserve" all that money

Brad analyses the value of Chet's to investment banks. I guess that his example of valuable chetting by Felix Rohatyn is very untypical. I would guess that the key to Chet is to be comfortable with rich people and act confident, because any sign of doubt scares off the investors. Brad thinks they are good at sizing up other people and guessing how much they are willing to pay and thus drive good bargains. This is a very valuable skill and clearly very different from judging how much an asset is worth that is making trading strategies.

Brad's answer to question 5 seems wrong to me. He jokes "As to why they're all Republicans who believe that they generally deserve all their wealth. It is very annoying, but it's inevitable given what humans are: all our successes are due to our skills and industry, and all our failures are do to bad luck, right? "

I don't think the irritating sense of entitlement is just human nature. I think it is key to Chet nature. People who think they have been unfairly fortunate don't drive good bargains. The sense that they deserve everything they can get is necessary for them to get everything they can for their firm. People who think rich people generally are unjustly fortunate don't get along with rich people. People who can't hide the fact that they think investment bankers' incomes are absurd definitely can't squeeze money out of investors.

One other thing. I don't know any Chet's. I know one or two investment bankers and they are very very smart. Guess I must be hanging out in the wrong clubs. I wonder if Alamedia knows the salesman type investment bankers and I know a couple of trader faces.

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