Time is a curious thing. We say time passes, yet rather than simply pass, time tends to dissolve. Once gone, it dissolves leaving an imprint behind. At times, it’s a clear impression of a moment, as if that snippet of time was a clay mould, and the memory of it is a bronze sculpture fashioned permanently around it in your mind. Yet, on other occasions, that imprint which time leaves, is hazy, a blurred recollection, imperfect and incomplete.
For once this article is not about burgers, but about something else, because I’ve failed to find a burger analogy in this instance. Exactly twenty years ago, on 14th July 2005, I started my first full time job in finance at Lehman Brothers (see photo of Saeed in pre-Lehman times). Casting my mind back over those twenty years, my memory is a mishmash of both indelible moments and those that are less clear, somewhat fuzzy. I only remember that date, because 14th July is Bastille Day and also Iraqi independence day. On 4th July, I was in Boston (and yes, of course, I remember that date too). As an aside, what is it about the plethora of independence days that fall in July? I recall ringing the senior tutor at Imperial College from my Boston hotel room, eager to hear my final degree results. I can’t recall her words exactly but it was to the effect of “I am pleased to let you know, that you have graduated with first class honours”. All those years of hard work, culminated in a single sentence: but thankfully, it was the right sentence. Just two days later, there was the added euphoria of hearing that the Olympics was to be staged in London in 2012. Subsequently, that euphoria turned to sorrow, as the day after there were the terror attacks on London.
The first few weeks of my time at Lehman Brothers were spent in graduate training and rotating around desks. This meant trying to chase the best jobs, which in retrospect turned out to be the worst. Yes, the CDO job was the one we all wanted, which I did not get. I still have some relic of a CDO book somewhere as a reminder. I managed to land a quant strategist role on the FX desk in research at the end of the process. Looking back, being a quant has been advantageous, as the quantitative approach to markets has become ever more important over the years, especially with the advent of AI. I am certainly not going to attempt to suggest I had some foresight about how markets would become more quantitative. If there’s one thing I have learnt it’s this: if you’ve been lucky, just admit that!
I knew nothing about FX, but at least it was something tangible. After all, we’ve pretty much all done an FX trade at a Bureau de Change! I must admit, whenever I travel somewhere and withdraw foreign currency banknotes, it is still somewhat exciting (ok, I’m probably the only one). I remember spending the first few months of the job, having no idea what going long EURUSD meant. I was totally oblivious as to when Jean-Claude Trichet was giving his ECB press conference. I had no clue why it was EURUSD instead of USDEUR. If you ever see anyone writing USDEUR or saying forex, it’s probably the best indicator that their view should be faded. I thought that you only really needed to make one trading strategy and you’d sit and do nothing for the rest of your career. The last point was probably the most incorrect observation I have ever had at as a quant: in practice you never finish your model, rather you have a prototype model, which you improve continually. No matter how much you think you understand FX or indeed markets in general, there is an ever increasing amount, which you certainly do not know. If you think you’ve figured out the market, you’re either Jim Simons or wrong. None of us are Jim Simons.
When anyone says FX is a waste of time over my career, it seems to be precisely the exact moment when the whole market blows up. Obviously FX markets are not exact replicas of history, but over time I do tend to utter the words “here we go again” with increasing frequency. Yes, FX markets have changed and as mentioned there is always an ever increasing amount to learn. However, they still react to what the Fed does, where inflation is, what politicians say and do (ok, maybe a bit more than before) etc. Themes change, but the trick is to identify a theme early: but then again it’s always been like this.
At the start of my career, there was a lot of chatter about the Homeland Investment Act, spurring flows into the US. Now, it’s about flows out of the US, and the (possible) end of US exceptionalism. All the body of FX research and systematic trading strategies that folks have developed over the past twenty years is still relevant. These days we also have mountains more data to understand the market and economy, as well as machine learning to number crunch this data. We’ve taken advantage of the data we have available and machine learning, at Turnleaf Analytics, which I co-founded with Alexander Denev, to forecast inflation.
I owe a real debt to Jim McCormick, Alexei Jiltsov and Anne Sanciaume for teaching me so much in my 3 years at Lehman Brothers, whether it was about currency conventions, the intricacies of FX options markets, creating systematic trading strategies and so much more. Of course, 2008 then came and went, and so did Lehman Brothers. Whilst I was out of a job, I was lucky enough to be offered a job relatively quickly at Nomura, like many of my other colleagues at Lehman Brothers. I learnt a lot about FX from the traders at Nomura, in particular Brent Donnelly and Will Johns, as well as Jens Nordvig on the research side. If there’s one book you should read about FX, you should read Brent’s book!
As a quant, we often want volume. We want to trade a large cross section of assets, we want to trade at higher frequencies, to maximise the numbers of bets we make. By contrast in real life, we can’t make hundreds of bets about our career. We have to choose one path in our career. We either take a job or we don’t. We then assess over the coming years whether it was indeed the right decision.
Of course, you can change your mind, and pivot to something else, but you can’t do that everyday. With hindsight, did I make the right decision to join Lehman Brothers, instead of continuing the graduate recruitment process with another bank? Would I have still been working at that bank today, had a been given an offer? Obviously, it is impossible to answer this with much certainty, because we are dealing with counterfactuals. However, I can say that I did enjoy my time working at Lehman Brothers, despite the way it ended. I also subsequently enjoyed my time at Nomura, and I was genuinely touched when the FX desk started clapping during my last morning meeting all those years ago. I obviously can’t comment on other desks, but in both institutions the FX desks were friendly, and filled with a lot of smart people.
After Nomura, I started to work independently at Thalesians, publishing research notes for three years. The timing for doing independent research was probably off, given it came before MiFID II. As a result, I ended up living off trading FX systematically on my personal account. Trading my own money was an invaluable experience, and yes, it involved waking up sometimes to check my P&L, perhaps one of the less pleasurable parts of trading. Those days where my models faced the biggest losses, I can recollect with uncanny accuracy, whether they were in a bank or trading on my own. Yet, I have no memory whatsoever of the best days from a P&L perspective. However, aside from that, it was a different feeling to be being in a bank, and seeing your model trading the market. Of course, had I lost money trading my personal account, I might have had a different view on the benefits of that experience. I do think more broadly though, having trading experience has helped me greatly in trying to understand traders and
I also continue to help organise Thalesians meetups with Paul Bilokon, indeed our last meetup was in June. I’ve really enjoyed being part of Thalesians, which was Paul’s brainchild, and Matthew Dixon was also part of the founding team. I’ve met so many folks in the industry through Thalesians (and if you’ve never attended a Thalesians meetup, please come to the next one in New York, run by Harvey Stein, or the ones in London, which we organise). I then did consulting for a few years independently after that at Cuemacro. I’ve also been lecturing part-time for the past few years, which has been fun. It also provides a bit of a contrast from my day job. In the coming weeks, I’ll try to write a bit more about my startup journey.
I know articles are supposed to espouse some sort of simple takeaway, and I’ll endeavour to deliver one in the following sentence. If there’s simply one criterion for whether you stay in a job or move, it’s this: if you aren’t learning anymore, that is the moment to try something different in my view.
I am now focused on inflation forecasting at Turnleaf Analytics. I still do a bit of research in FX, in particular trying to understand how our forecasts can be used to trade FX. Inflation of course is still pretty macro like FX, so I do think FX has helped me in understanding inflation. Twenty years ago, I’m not necessarily sure that I’d have predicted I’d still be doing some FX. Somewhat (or incredibly) naively, I thought I’d be retired by now. This was of course pre-financial crisis, so I’ll try to blame that, as opposed to my naivety. I’m very happy where I’ve ended up at Turnleaf Analytics. I am hugely excited by what we’ve built in economic forecasting, both from the aspect of collecting such a huge amount of data to describe the global economy and also the advances the team has made in modelling inflation. I can see us also improving how we can understand inflation in the coming years. There are so many areas of research we have planned.
I’ll leave you with one last question. Will I be writing a blog article, forty years in financial markets? Let’s see what happens in the coming twenty years. I suppose by Warren Buffett’s standards twenty years in financial markets isn’t really that long at all.