Want Your Kids to Get Rich? Send Them to Wall Street Now!

Have you seen the February 13 issue of New York Magazine?

I think you should, because the cover story is titled "The End of Wall Street As They Knew It."

The subtitle?

Bonuses and profits are way down. Lucrative trading desks have been shuttered. CEOs are calling for higher taxes. And Dodd-Frank is … working? High finance’s titans are now facing a deeply frightening future: a universe they do not rule.

But you know what?

It's probably the best time in history to get a job on Wall Street.

So parents, if you want your kids to get rich, don't send them to Silicon Valley to become the next Mark Zuckerberg (as if it were that simple...) -- send them to Morgan Stanley (MS) or Goldman Sachs (GS).

It's all about timing.

Last week, I finally read Malcolm Gladwell's Outliers: The Story of Success, a book exploring how high achievers get ahead.

Outliers tends to come up in discussion when people refer to Gladwell's 10,000-rule -- the idea that about 10,000 hours of practice is required to become an expert on something, whether it be playing the violin or programming code or painting.

However, the real takeaway from Outliers is the idea that enormous success happens when  passion and drive for excellence combine with external conditions that are favorable for success.

Did you know that hockey players born in January have a much greater chance of becoming successful than those born later in the year?

Why? Because hockey leagues tend to enroll kids born the same calendar year into the same level of competition..

At a young age, a few months makes a difference in size and athletic ability, and a kid born in January is older than most of the competition. Early achievements from those size and athleticism advantages result in more coaching and encouragement, which lead to even more success.

In a lot of things in life, timing makes a difference. If a kid born on January 1 had been born just a day earlier, he'd go from being the oldest kid on the team to the youngest. And younger, on average, means smaller and less athletically skilled, meaning less playing time and less attention from coaches.

How does this relate to Wall Street?

Well, would you have rather started a job at Goldman Sachs in 2003 or 2007? I'm not saying hard work and ingenuity don't count, but surely, getting in at the right time makes a difference.

Let's look at when some current Wall Street titan CEOs started their careers:

Evercore's (EVR) Roger Altman started at Lehman in 1969.

Goldman Sachs' Lloyd Blankfein started at J. Aron (later acquired by Goldman) in 1981.

Jamie Dimon, head of JP Morgan (JPM). started at American Express (AXP) in 1982.

Credit Suisse's (CS) Brady Dougan started at Bankers Trust in 1982.

Citigroup's (C) Vikram Pandit joined Morgan Stanley in 1983.

Kenneth Jacobs started at Lazard (LAZ) in 1988.

Richard Handler of Jefferies (JEF) started at the bank in 1990.

James Gorman started at Merrill Lynch (BAC) in 2001, joining from McKinsey.

And why are 1969, 1981, 1982, 1983, 1988, 1990, and 2001 interesting?

1969 was the height of American counterculture, symbolized by Woodstock.

The early 1980s were the end of hyperinflation and the beginning of a multi-decade bull market and a resurgence in American optimism.

1988 and 1990 were pretty close to the 1987 crash.

And 2001 followed the dot-com crash.

There are a few exceptions, of course, like UBS (UBS) CEO Sergio Ermotti, who started his career at Merrill Lynch in 1987.

But nonetheless, it does seem that it's a really good idea to start on Wall Street when things aren't looking so hot.

Think about where we are today from a societal standpoint. Echoes of Occupy Wall Street are still ringing in our ears, and students at prestigious universities like Harvard, Yale, and Princeton are protesting campus recruiting by financial-services firms.

At the same time, people are going gaga over the Facebook IPO and Mark Zuckerberg's 11-figure payday as symbols of the wealth available in Silicon Valley.

But you know what? The smart insiders that have been cashing out in social-media giants like Facebook, LinkedIn (LNKD), Zynga (ZNGA), and Groupon (GRPN) remind me of what we saw on Wall Street in 2007, when two kingpins in hedge funds/private equity, Fortgress Investment Group (FIG) and Blackstone (BX), came public.

The time at which these normally privacy-obsessed elite money managers cashed out to the public coincided with one of the worst times in history to start a career on Wall Street.

Meanwhile, social media was just heating up for the masses. The right trade back then was to turn down Goldman to work at Facebook or Twitter.

But in 2011 and 2012, elite VC's are cashing out their social-media investments, and Wall Street is at or near a bottom in terms of prestige and public opinion.

Whole brokerage firms are disappearing, surviving firms are laying people off in masses, and the folks lucky enough to still have jobs are having their pay slashed. On Bloomberg TV, declining wealth on Wall Street is an almost daily topic of discussion.

And now, the mainstream New York Magazine runs a cover story proclaiming that Wall Street no long rules the universe. Could it be true? Anything's possible, but think about history. In the past three decades, Wall Street has survived multiple market crashes, the dot-com bust, the Asian financial crisis, the Savings & Loan mess, the 1980s insider-trading scandals, Enron/Worldcom, Bernie Madoff, Lehman Brothers/Bear Stearns, and the destruction of the housing market.

When things get bad, Wall Street shrinks, but it never disappears, and it usually comes out stronger. And even if the pay isn't what it used to be, it will still be astronomically greater than what can be earned in other industries. Besides, lower pay on Wall Street means higher profitability for the firms, which of course returns right to the bankers because they're getting paid more in restricted stock.

The point is, the people who get in now when Wall Street is out of style will be the leaders and the real moneymakers five or 10 or 20 years from now.  Why? Because they will have gotten in when it seemed like a bad idea to the masses, and they'll be acquiring skills, experience, and connections that will prove to be relatively scarce in the coming years.

Now, for the benefit of society and our nation, I would much rather see our best and brightest pursue careers in engineering and science.

But if they want to just make tons of money, they should fade Silicon Valley and head to Wall Street.

Twitter: @MichaelComeau

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