Walking Out the Door - The Long Term Value of Experience

Many have commented on how Wall Street manages its human capital. When times are good, people are hired with abandon; when times are bad, the baby is tossed out with the bathwater. It may be that ambition and energy are more valuable attributes of human capital than experience and wisdom. It may also be that some of the recurring cycles the industry experiences are due, in part, to the continued departure of those who have long suffered the indignities of the markets. Given the time it takes to "learn" the markets, it seems a terrible waste to let this valuable knowledge walk out the door. Why expose the institution to the market risk of inexperience when a guiding seasoned hand is available? There are a range of functions that would benefit from their knowledge; risk management immediately comes to mind. Regulators should also be mindful of the value of this talent. Who better to understand the trading strategy of a hedge fund, than someone who traded the other side in a prior life? So the over-riding theme here is that there may be a relationship between how firms regard experience-based wisdom and some of the cycles of the industry. Read more...