Dao Jones

“The Dao that can be told is not the eternal Dao.”

“Another glass of port, Professor?”

Though only a middling student at the Harvard Business School, Brad knows the answer and begins to pour the deep, sweet liquor.

Professor Green appears distracted but protests just as Brad finishes, “Oh, please, enough. I never allow myself more than one glass per evening.”

“One bottle.” Brad muses.

“This is, though,” the Professor murmurs, “a particularly good port, and since I don’t have a class in the morning…”

The Securities Markets and Modern Finance students have seen the Professor many a morning leaning, as they call it, ‘hard to port.’Teaching or, for that matter, any morning obligation never sways the professor from his nightly imbibition.

But it is an excellent port. Cambridge Liquors, located strategically between campus and the professor’s home, has one cabinet that, between the Thanksgiving and the Christmas holidays, is stocked with nothing but expensive ports. Brad purchases his requisite bottle, wondering if anyone, other than students on pilgrimage to Professor Green’s study, ever buys these expensive wines.

“Aged tawny?”

“Niepoort ’90.”

“Ah, yes, an excellent port.”

The bottle cost $129 representing the better part of Brad’s weekly food, let alone liquor, budget. But the word is: The better the port – the better the job.

For 2nd-year business school students, an evening with Professor Green is considered as critical a step towards a Wall Street job as the ultimate sheepskin. The tradition calls for the student in search of such a job to make an evening appointment with the Professor on the pretense of discussing one’s term paper. Accompanying one’s notes should be a bottle of the best port one can afford as a holiday gift – the specific holiday is not important.

Brad gives the Niepoort to the professor who decants it as Brad begins. “Professor, I’m considering writing my paper on Paul Samuelson’s article in The Journal of Portfolio Management in which he discusses an investor’s performance quotient or P.Q.The article asks why someone who consistently outperforms the market would manage other people’s money rather than just manage his or her own. Samuelson gives evidence that, in fact, successful traders with a higher P.Q. trade for themselves rather than manage money for others.”

The Professor takes a prolonged and contemplative sip.

“Yes,” he eventually responds, “it would be an interesting topic but probably difficult to come up with satisfactory data.It is, coincidentally, a concept I discussed only last week with Neil Weintraub. Do you know Neil?”

“No,” Brad responds suggestively.“Who is he?”

“He’s the head of equity trading at Whipple & Co. – quite an extraordinary brokerage firm in New York. Neil was a student of mine about 10 years ago and did his term paper on a practice called ‘market-on-close’ orders. He outlined how a trading desk can send large buy orders to the floor just before the market closes in order to increase the price of a stock. Mutual funds and other large holders of the stock appreciate these as it allows them to report better quarterly returns. Doing so, of course, is an illegal activity which, I’m sure, isn’t permitted at Whipple.”

The Professor draws another large sip, pauses, then continues.“I thought if Neil could meet Mr. Whipple, one of the most ethical people in the securities business, he would see that there are at least some pockets of honesty on Wall Street. Well, unfortunately, it turns out that Mr. Whipple went to Vermont unexpectedly on the day of Neil’s interview so Mr. Whipple’s son, Avery Whipple, interviewed Neil instead. They apparently hit it off and, after graduation, Neil joined Whipple & Co. as a trader. Now he’s the head of Whipple’s trading department.”

Professor Green engages in another long sip, then winces as if he hadn’t decanted all of the bitter tannins.

“Yes, a very successful trader. Do you know how much money he made last year? Over $3 million – over $3 million dollars - $3 million dollars.”

The professor takes a deep sip at each repeat and, as he does so, his face becomes a dark, ruddy color as if his capillaries are bringing the dark port directly to his skin’s surface.

“$3 million.More money than I’ll make in a lifetime of teaching. A lifetime of teaching. And, has he ever thanked me? No, nothing. You’d think all of my students, now traders and investment bankers making more money than they deserve, would appreciate those who set up their first Wall Street interviews. But no, they are all convinced they’ve succeeded by their own intelligence and savvy – all of them are just an army of money-grubbing, egotistical schmiels.”

Brad, surprised by the sudden heatedness of Professor Green’s outburst, hesitates. The professor, however, does not and re-fills his glass to the brim. Brad tries to remember if any of the previous students have mentioned this most concerning detour and, if so, how they got the session back on track.

The professor, over many years of teaching, has literally sent thousands of newly minted MBAs into careers in finance. Whether it was the Harvard diploma or their training doesn’t matter, what does is that most have found incredibly lucrative careers in which the professor feels he deserves a share.

Though Professor Green begrudges their success, he, nevertheless, keeps in regular contact with most of them as they occasionally ask him to speak at a conference for a significant and welcome honorarium. And the reason these Wall Street executives want to remain close to the professor is that he knows and can send to each the brightest students in his class. After all, intelligence is the most sought-after asset for a financial firm and each covets the best and brightest from graduating classes. This is the reason that the professor is still important to these alums and why this evening is so important to Brad.

Over the years, a consensus has developed among the students as to the best way of scripting the evening to ensure that both the proposed term paper and the student are presented in the best possible light. First, the student should propose a term paper topic of sufficient interest to allow the professor, as a true academic, to engage in his lecture mode of conversation. The longer he talks, the more port he drinks. If all goes well, the lecture phase should consume approximately, but no more than, one-half the bottle of port.

As the Professor slows down, the conversation needs to transition to a second phase which, through directed questions assists the professor in finding connections between the term paper topic, the student, and a Wall Street firm. The port is the midwife to deliver this nexus. Executed well, the professor volunteers to call a Wall Street executive on behalf of the student and arrange an interview over the Christmas break.

Timing, according to HBS tradition, is critical as the nexus must be made before the professor starts to gaze off into the distance, lose focus, and forgets the conversation and student. If so, the expensive bottle and evening is a write-off.

Brad senses the evening is falling off track and struggles to reestablish: “Professor, do you think the concept of P.Q. is relevant in the case of Whipple & Co.?”

“Oh, a, well…” Professor fights to recall what P.Q. means.“Let’s see, oh, yes, I remember, Neil Weintraub was talking about how much his trading desk made last year but figures his return on capital is less than that of Mr. Whipple, who doesn’t trade but only manages money for his clients. Neil says that Mr. Whipple has outperformed the trading desk in 3 of the last 4 years. So, there’s a case of someone who consistently outperforms, but chooses to make money for others.”

“That does seem to contradict Samuelson, but perhaps there are additional factors or circumstances that I should look into?” hints Brad. Perceiving no nexus, Brad becomes more direct.“What would Mr. Whipple say if I asked him why he doesn’t trade just his own money?”

“Oh, well you don’t know Mr. Whipple,” states Green.“He is quite an exceptional man and perhaps the last ethical gentleman on Wall Street. An endangered species – a combination of class, ethics, and market savvy. No, they don’t make them like Mr. Whipple anymore. It’s truly a shame what has happened to Wall Street. Now, no one cares about the customer, no one cares about ethics, everything is how much I can make for myself. Screw the customer by day and the women or whatever at night.”

The professor looks into his empty glass at the bitter dregs of the undecanted.

“At one point in my career,” Green mutters, “I felt like I was making a contribution by sending graduates to careers on Wall Street. Now, each year, I just send another flock of vultures to prey on investors.”

The Professor precipitates into a dark, withdrawn state, scaring Brad.

“The old Wall Street,” the Professor continues, “was a place where a man’s word was his bond. Where millions of dollars of stocks trade and no one ever reneges on a trade. Once someone had built a reputation, nothing could ever tempt them to lie, cheat, or steal. They were the class of New York and distinguished above all other professions. You had gentlemen like Bobby Lehman and William Salomon to name two. These are the people who made Wall Street what it is today.”

Brad panics as he has no idea how to handle this tailspin and feels himself circling the drain.

Green continues.“I graduated from the University of Berlin with a degree in economics. I was 21 and Hitler had just come into power. Suddenly, all were lies; ends justified any means. My parents forced me to take an assistant teaching position at Harvard. I left for Boston. It was the last I ever saw of them. God bless them.”

“After teaching for a year, I was offered an opportunity to sit on the trading desk at Lehman Brothers. That is when I discovered Wall Street – a small enclave of honesty and morals in an immoral world. A refuge for a refugee.A world into which I could plunge as a means to preserve any faith I might still have in humanity. Ever since, I have loved the street for what it was.”

They were halfway through the bottle with no nexus in sight.

Professor sips and persists. “It just makes it harder for me now to see what’s happening. I feel like I’ve been brought back to the ’30s and am reliving the pain of seeing, once again, the object I love turned into demagoguery. But I am an old man and will retire in 2 years. I will go back to Germany with hopes of finding some record of my parents and past.”

Brad believes he has lost the patient.

“If I were a young man, I wouldn’t go to Wall Street.It has truly lost its way.”

“Shit,” Brad thinks. “I’m toast.”

“Professor?”

The professor is looking beyond Brad to the far side of the room.

Brad is desperate.“Professor, what do you think about my visiting Whipple over Christmas for my term paper?”

“Huh? What?”

The bottle that was to have christened his career sits empty.

Brad bids the professor a despondent “good night.”

Back in his room, Brad opens and drinks a $1.10 Bud. He replays the evening in an effort to determine where things went wrong. Brad wants a job on Wall Street – wanted one for as long as he can remember. He wants the adrenaline rush of money, of trading, of deals; he wants to test himself against the best and brightest in the ultimate game where the score is kept in the billions.

Now, though, after so much effort over so many years, Brad won’t even get an interview at a leading firm. His rank in the class isn’t high enough to interest the best firms – he needs a break; he needs Professor Green’s connections and recommendation to get to the ‘show.’ Now, nothing.

The following week after class, Professor Green stops Brad as he walks past his lectern.

“Mr. Jones, may I have a word?”

“Yes, Professor.”

“I spoke with Neil Weintraub yesterday and told him that I had a student who was interested in comparing trading desk and investment management returns. Neil seems interested and said to have the student call his secretary, a Ms. Leona Mona, to set up an interview over the Christmas break.”

“Thank you very much, Professor.”

Brad pumps his fist as he leaves class.

Showtime.