I'm Out of Their League

Today’s Who’s Who on Market Street is one of the reasons the Wall Street financial industry has always earned my disrespect and I’m not sure if I can resolve this internal conflict. From what I can tell, if you do a really bad job they pay you $161.5 million in restricted stock options and benefits to get you the eff out of there.

Merrill Lynch & Co.’s ejected CEO Stan O’Neal though just might have enough millions to overcome the suffering for being a failure in the industry’s eyes. I guess that’s why most love this business because you win even if everyone thinks you’re a loser. I guess it is good for many but it’s insultingly excessive to my mind. In addition to his millions, O’Neal will receive an office and an assistant for three years. It’s not to difficult to comprehend how he will survive; and this is him being ripped off, according to some commentators.

According to the Wall Street Journal (WSJ), “Merrill directors didn't offer Mr. O'Neal cash severance or a bonus for 2007. They and he agreed he had accumulated considerable wealth during his 21-year career, made a lot of money last year and didn't deserve extra rewards on his way out the door.” So, this is what is status quo and the ousted chief executive officer is not getting anything that he doesn’t deserve but it sounds like some think he deserves more.

Keri Smith at Keri’s Life blog thinks he's being treated poorly because he's black. She said:

Stan O'Neal, the 56-year old CEO of Merrill Lynch & Co. has been forced to leave his job due to a significant multi-billion dollar write-off he announced last week. Although his departure was rumoured to occur, it was surprising how quickly the board was willing to oust Mr. O'Neal.

Mr. O'Neal became the highest ranking African-American on Wall Street - rising from the cotton fields of Wedowee, Alabama, to the top position at Merrill Lynch.”

Respondent lance williams, sr at Nat Turner’s Revenge blog said...
“O'Neal got too slick. He's a cold fish and if he'd just come clean with the board and the big shareholders all at once, he'd be OK.”

Lisa there said: "Will the big stockholders now avoid black CEOs? It's always disparate when it comes to us--they judge us by a few. In corporate America this kind of housecleaning happens all the time but there's "judgment" aspect. It's the same with female CEO on the way out,too."

The Nat's blogger Christopher Chambers, said the chief executive has been criticized for “leading the world’s largest brokerage to its biggest quarterly loss since it was founded 93 years ago.”

Being so new to this industry, first of all I didn’t even know the man was black when I started writing this blog and in fact, this morning as I thought about taking a paltry profit on some of my stocks, to keep me to breaking even, I recalled an interview I saw with O’Neal. I was unaware who he was at that time and didn't realize it until I opened these blogs this morning, which are linked to the WSJ article.

My thought this morning was that it’s better to be safe, which is what O'Neal was saying in the interview that I recalled this morning. Risk management was what O’Neal was talking about in the interview a couple of weeks ago on Bloomberg TV. I liked what the man said and remembered it this morning over coffee. I was thinking I would take the profits from two stocks to total $200, which would bring me close to my beginning capital to break even. I’m definitely not much of a risk taker and told myself that though he was being criticized on the show, I believe in his philosophy.

In the interview the interviewer seemed to be grilling O'Neal about his philosophy when he explained how important it is to resist greed; O'Neal stressed how important prudence is in this business. So, in trying to make a decision this morning I figured I should just stick with my original plan to just make $80/day. That would create an income of $20,000 for the year. (Still, being at this since June, I haven’t been able to make anything, even though I do make some profits but I also lose just as much.)

But enough about my profits and losses because in the final analysis I am once again reminded that what I think this industry is--is not. When I started this post this morning, and not knowing this was the very same guy I saw on the Bloomberg interview, I was thinking this guy is one more greedy guy. I was reminded how excessive it is when I read this type of news; how much money losers make when you work with the big boys.

I am still going to use O'Neal's philosophy too because I respected it when I first heard him and I respect it now. Maybe Merrill and most investors aren't so patient or maybe there are things about this story I don't understand, which is highly probable.

This morning as I pondered that interview a few weeks ago, I had the sense that in the end, it will pay off. I’m sure there’s more to it though, as noted in the WSJ article I linked above, regarding the credit fiasco banks are going through and the Securities and Exchange Commission's investigations into wrong doing. Whose wrong doing it is though I don't know and I will look into that and maybe save it for another post as this one is dragging on too long.

And in the final analysis, I know there’s so much I don’t know. That's about all I really know. There’s still so much to learn. Sometimes I just want to quit. In fact, for the last week and a half I have just turned away from it because it became overwhelming. But last night I had a dream that made me sense that I need to get back to it. But that’s neither here nor there and though O’Neal is black and some suggest that he’s being treated poorly because he’s black, I still know that $161.5 million is a lot no matter what color or gender you are.

That he’s being ousted possibly because he had losses in the third quarter may be a racial issue, as Keri suggests. Still, I remember a few peon jobs where I definitely increased profits and you can be sure I didn’t get anything when they wanted new blood in the company. And that's another thing I know: this may be more to do with the huge gap between the rich and the rest of us peons.

Anyway, my head is hurting already and the market hasn’t even opened. I need to get back to looking into what I’m going to do today and let the big-time players hack out whether they think it’s fair to oust someone with a $161.5 million severance package. I’m clearly out of their league.

Maybe just for good measure, I will spike my coffee this morning with some B& B, a blend of Benedictine liqueur and French cognac. I think I should sit in the last rays of Indian Summer sun with some homemade honey sweetened oatmeal with local Empire apples and cinnamon. (I may get out of my pajamas in an hour or so.) I think too it’s a good time to read the next chapter in former Fed Chairman Alan Greenspan’s book titled, "The Age of Turbulence; Adventures in a New World.”

Life is sweet♥



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[Update Nov.4, 11:07 a.m.: According to my print version of the Nov. 3 Barron's Review & Preview, page 18, "O'Neal is leaving after a $2.24 billion quarterly loss; some analysts say Merrill faces a $4 billion writedown in the fourth quarter."]