Career as a Pro Trader

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This is Anton Kreil pictured over the skyline of London where he worked at Goldman Sachs, Lehman Brothers and JP Morgan as a Professional Trader from 2000-2007 

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Anton giving a talk in London where he was a Professional Trader for 7 years

Goldman Sachs 2000-2004 

 

Kreil started his Professional Trading career at the age of 21 at Goldman Sachs. It was 2000 and the beginning of the end of the tech bubble. Kreil started work for Goldman Sachs in New York a few weeks after he left university in June 2000 and was part of the Goldman Sachs analyst program in New York that year. This is where Goldman Sachs train all their new graduates for 3 months at their offices. There would have been about 100 graduates taken on at that time from all around the world. That’s an amazingly small number when you consider the headcount globally at Goldman Sachs is around 20,000. He would have spent his time living in New York as a 21-year-old and being trained by some of the best people in the industry. 

 

Our investigation into Goldman Sachs’s role during the tech bubble of 1997-1999 and its subsequent bursting in 2000, leads us to the conclusion that Goldman Sachs was one of the lead managers on all the biggest tech IPO’s at the time. They were not only part of the chaos that ensued, but they were the chaos. Kreil would have had a front seat to all of this. He was literally on the European Trading Desk trading all of these stocks at the age of 21. It must have been both a frightening and amazing experience for him. 

 

But what did he learn in those early years? Well in financial markets traders’ terms he most definitely learnt some very important lessons early on from the tech bubble and subsequent crash. Firstly, he learnt that valuations don’t matter as much as people think. We know this because in his online education in his Professional Trading Masterclass Video Series, he re-iterates this point over and over again. People said for 2-3 years that stocks were “expensive” in the tech boom, but they continued to go up and up. Many people who took the other side by shorting these stocks over and over again lost their jobs and their careers. Kreil would have seen this first-hand. Kreil states in his education that “nothing is ever cheap or expensive. Cheap and expensive are curse words for traders, because we know that these labels mean nothing. It’s just perceived value.”

 

Secondly, he would have seen the carnage that ensued in the tech crash. Stocks were falling 90% sometimes 100% in a very short space of time. Anton would have learnt the importance of Risk Management and being able to stay liquid even in the face of a massive crisis. Thirdly, he would have also learnt how to actually make money out of a crisis i.e. shorting stocks that are collapsing. He would have witnessed the herd being bullish and now selling all the way to zero and been part of it. 

 

We do know that for the 4 years he was at Goldman Sachs as a trader, he was very profitable. He started with $10mln of capital in year 1 as a new graduate hire, and by year 4 of his tenure at the age of 24-25 he was managing $400mln proprietarily for Goldman Sachs.

 

This brings us back to his childhood and university experiences. The tech boom and crash that Kreil experienced at the time would have backed up his beliefs. By getting the offer to work at Goldman Sachs as a Professional Trader, Kreil would have been affirmed in his behaviours to land that job, as in the traits we have mentioned in the About section of this website. The main trait we would like to highlight here is that of being forced to think differently as a child. We often hear this phrase in financial markets, that the great traders of the world have an ability to “think outside the box.” We believe this is an example of that. Because Kreil had always been forced to think differently in order to add value, we believe this is where it comes from.

 

We know from interviews and his success at Goldman Sachs that Anton Kreil made a killing for Goldman during the tech crash in the early part of his career. He had the ability very early on to understand consensus opinion, to think outside the box and go against the grain to make the big bucks. Does this mean he is a contrarian trader by nature? Not necessarily. What it means is that whatever the situation he has the ability to spot whatever the opportunity in financial markets is at that particular moment in time.      

Kreil was quickly promoted at Goldman Sachs to Associate level Trader and was given his own book, essentially running his own sub business within Goldman Sachs at the age of 22/23. He had, like all the other traders in Europe at the time 2X trading books. A Market Making account for dealing with clients and a Proprietary trading book in which he would have used Goldman’s money to take bets in the financial markets however he saw fit. He did very well there hence why he was given $400mln to trade within the proprietary book by the time he was 24-25. Try to imagine for a moment the pressure that Kreil would have been under at such a young age. He was contributing to the bottom line of a public company, Goldman Sachs, and not just any public company, but the most formidable bank in the world. Every day the pressure would have been on him to perform and make money.

We would like to highlight another trait here that Kreil clearly picked up in childhood but also in his professional trading career. We mentioned the ability to stick to the facts and make decisions based on those facts earlier. This, by definition, is objectivity. Objectivity in financial decisions is the opposite of emotion. It is your head over your heart. For Kreil to be able to contribute to the bottom line every day at a place like Goldman Sachs he would have had to have had no emotion and acquired the ability to almost trade like a money-making machine. 

We do also know from Kreil’s past interviews and various sources online, that he was involved in many trades in the markets at Goldman Sachs which the industry labels as “Big Situations.” We do not know exactly what these “Big Situations” were, but what we do know is that Kreil was involved in a number of them. He became known at Goldman Sachs as a “Big Situation” Trader.

 

What does this really mean? Well, it’s very likely that these trades were due to something big happening at a company and therefore the company’s stock, meaning a big change occurs and the stock moves violently either up or down on heavy volume. Essentially, fast markets with a lot of volatility. A Big Situation Trader would be someone who was called in to trade the “Situation” (whatever it was at the time) with a large amount of capital and to then dominate the market and make a lot of money out of the situation when everyone else in the market lost money. This became Kreil’s forte as a trader. 

 

What lessons can we learn from this in terms of character traits? Well, again this harps back to some of his childhood and university experiences. Objectivity (trading on facts), the willingness to take risks that others (for whatever reason) are not willing to take and to have courage of one’s own convictions. If you are going to put yourself into a situation where the choice is to either dominate or be dominated it takes courage, conviction and a willingness to take risks in order to be the victor.

 

Why? Because Kreil has the willingness to be wrong as well as right and it didn’t faze him. If he was involved in many Big Situation trades, he would have made a lot of money and lost a lot of money, because we know as traders you can’t be right all the time. He probably just made a lot more money when he was right versus the amounts that he would have lost when he was wrong. Objectivity; willingness to be both right and wrong; willingness to take risks; courage and conviction. It’s really obvious from these career experiences that Kreil has these defining trader characteristics in abundance. 

Lehman Brothers 2004-2006 

 

In 2004 Anton left Goldman Sachs and started working as a trader at Lehman Brothers. He was headhunted to Lehman Brothers on a guaranteed bonus package. By this time Kreil had earned himself a reputation in the financial markets and was known around the market as one of the Big Situation Traders at Goldman Sachs. Lehman Brothers wanted a piece of that action. At the time they were hiring traders aggressively from around the market from places like Goldman Sachs and Morgan Stanley. So why did Anton leave Goldman Sachs? The obvious answer is for money, and no doubt that was the main reason. We also believe however, that given his upbringing there were other reasons too.

 

When Kreil joined Goldman Sachs, he joined a company that had just gone public. Prior to going public Goldman Sachs was a private partnership business. Kreil would have been hired by these partners. By 2002 most of those partners had either left or were on their way out of the company. This is because they had cashed in their chips. They were selling their stock in the company.

 

From our research into this, the pre-IPO partners at Goldman Sachs were estimated to have made between $200,000,000 US Dollars and $400,000,000 US Dollars each when they sold their stock. By 2004 Goldman Sachs was basically a totally different company to the one Anton Kreil joined in 2000. Today, Partners at Goldman Sachs are worth between $10,000,000 US Dollars and $20,000,000 US Dollars. Kreil also foresaw that the opportunities at Goldman Sachs to get paid the big bucks were disappearing. So he jumped ship to a competitor for a big paycheck and the opportunity to earn even bigger bucks. 

 

Additionally, from our research we found that as Goldman Sachs became more of a public company, they began introducing many internal processes that appear very likely to have gone against Kreil’s principles of money making, objectivity and meritocracy. Goldman Sachs is often referred to in the financial markets as “the second Whitehouse” because it is a highly political organization. Meaning that to get ahead there you have to kiss ass and be extremely politically correct. In the pre-IPO days Goldman Sachs would not have been this way. It would have been a pure meritocracy.

 

This was the firm Anton Kreil joined but within a few years, it mattered just as much for an employee to fit in culturally and politically into the Goldman furniture as it did for them to be making money. This probably didn’t sit well with Kreil as he would have been forced away from simply making money trading and been required to engage in corporate activities like “diversity training” or “peer review” exercises etc. 

 

We can tell from Kreil’s childhood experiences and university life that Kreil is what is termed in the industry as a “producer.” He gets the job done at all costs. He also learned at a very young age the concept of a value for value exchange. The new Goldman Sachs culture that he experienced valued an employee’s ability to play political games equally or over their actual money-making abilities. Lehman Brothers simply saw their opportunity to hire Goldman Money Makers (producers) so that is exactly what they did. When all said and done, a trader’s bottom line is their objective truth.

 

From his childhood experiences we believe the attributes that Kreil succumbed to in this experience were his default position of meritocracy, fairness and to his objectivity, truth and attraction to fairness and justice. As in to get paid what is fair and what you are worth as a trader. Put another way, your pay as a trader is a reflection of your abilities to add value to the bottom line of the business, not your ability to play corporate politics. Everything else is just noise. To Kreil it is pretty obvious that the meritocracy available at Lehman Brothers was more preferable to the theocracy of political correctness created by Goldman Sachs to control their employees.      

 

Kreil was the head of European Pharmaceutical and Chemical Equities Trading at Lehman Brothers and was an Associate and then Vice President. His role was a similar role to that when he was at Goldman Sachs. He traded a Market Making trading account and a Proprietary trading account using the firm’s money. He was successful there and again was promoted. But he was only there for two years. Why? We believe once he got his feet under the table, Kreil realized that Lehman Brothers was not on the level of Goldman Sachs and he was probably disappointed to have ended up there even though the money was good.  Additionally, in interviews online Kreil has pointed to the fact that he had accrued stock in Goldman Sachs whilst he was there and had swapped his Goldman Stock for Lehman Stock when he joined Lehman. Lehman Stock had doubled in the two years he was there.

 

He has alluded in previous interviews to the fact that the best way to beat the Investment Banks who try to lock employees into Golden Handcuffs by tying them into stock compensation schemes was to trade yourself away as an employee to other investment banks. Why? Because the other investment banks hiring you have to buy you out of your contract and out of your stock. This means he knew if he moved again away from Lehman Brothers, he would beat the system by getting fully paid out of his contract and Lehman Stock that had accrued in value even from his Goldman days. He had used his Goldman Stock to buy Lehman Stock and it had doubled. 

 

Kreil did just this and he was headhunted to JP Morgan in 2006. In interviews Kreil has highlighted that JP Morgan paid him out fully of his Lehman Stock for cash settlement. Meaning they literally paid him cash for the stock in order to buy him out of his Lehman contract so he would join JP Morgan. This seems to have been a genius move for a 27-year-old to pull off. The payment would have been in the millions of dollars. It is also testament to his abilities as a trader. JP Morgan were so determined to hire him they offered him cash for his stock instead of locking him into the JP Morgan stock compensation team. 

 

The traits we would like to highlight here are very apparent for success in financial markets and also show a maturing character in Kreil as he approached his late twenties. The trait of introspection is prevalent. This is the ability to stand outside oneself and be able to analyze your own situation and to make a decision to better it.

 

We have come to realize this is a very important trait when trading financial markets and this experience of Kreil’s of moving from Lehman Brothers to JP Morgan and how he manufactured an optimal move for himself displays this. He very obviously stepped outside himself, looked at his situation and realized that he was constantly being trapped by the investment banks via stock compensation schemes. So, he made sure he manufactured an exit for himself from these schemes. An example of this in trading would be swapping a stock position for cash at just the right time. In fact when we look throughout Kreil’s career, his choice of timing on big decisions is almost immaculate. Something we go into in other areas of this website. He also displays a total commitment and willingness to follow through on his convictions. Instead of just accepting his situation he changed it. This once again shows courage and faith in one’s own abilities.

 

JP Morgan 2006-2007 

 

When Kreil joined JP Morgan, he was essentially a free agent. Meaning he was not part of any corporate stock compensation schemes. He became head of European Pharmaceuticals and Chemicals trading at JP Morgan London and was a Vice President at the age of 27 having been a Vice President at the age of 26 at Lehman Brothers. It is also known from online sources and some people we have spoken to that at the time Anton was one of the biggest traders at JP Morgan in London. He had the largest Proprietary Trading book at JP Morgan in the European Cash Equities Trading Team at $100,000,000 US Dollars to $200,000,000. This meant he could take the biggest amount of risk on the trading desk.

We did a lot of digging around online and with various sources that were in touch with Kreil at the time, even some of his ex-colleagues at JP Morgan, to find out what was going on at JP Morgan at the time and why Kreil left within 15 months of joining there. He joined in February 2006 and left JP Morgan in May 2007. From what we have found out, and considering the fact that Anton was a free agent as in he didn’t have any JP Morgan stock and had been paid out of his Lehman Stock for cash, it is really obvious to us why he left JP Morgan when he did. 

Firstly, as a free agent it would not have cost him anything to leave. If he was part of a stock compensation scheme and owned a lot of JP Morgan stock, he would have lost all of this stock if he had resigned. If any of his JP Morgan colleagues did this, they would have lost millions of dollars.

 

This was the penalty at all investment banks for resignation from the firm. This is why they call stock compensation schemes “Golden Handcuffs.” The stock that an employee receives keeps them “locked in” at the firm so you simply can’t resign because it costs too much money to leave. So, as an employee you are stuck. Kreil was actually a free agent at JP Morgan and had no stock at the time as they had already paid him out cash for his Lehman stock. 

 

Secondly, in 2007 the grey clouds preceding the financial crisis began to gather. Kreil was the biggest trader in the European office. He had a front row seat to the chaos that was about to ensue. He must have been sitting at JP Morgan with a desk full of traders who were beneath him in both rank and ability and began to see the writing on the wall. He realized that even if he stayed there and made money, the likelihood of JP Morgan Europe having a profitable year if the market collapsed was very low and therefore all of the traders, including him, would not get paid a bonus. Or at least a meaningful bonus. So, if he made money, others would lose money and he wouldn’t get paid.

 

Very few people predicted the Great Financial Crisis of 2008 so we don’t want to give Kreil a major benefit of hindsight here, but it was his job to predict Economies and Market outcomes as a trader. So he must have had an inkling or insight at least. He was also the biggest trader on the desk in Europe of an American investment bank. So, he must have known the risks were increasing. If he was predicting a financial downturn at the time, there would have been no personal career upside in him staying at the firm. 

Of course, the rest is history. Kreil left JP Morgan in May 2007 and did not seek any opportunities elsewhere despite him being a hot commodity as a trader at the time and undoubtedly, he could have got a position somewhere else. Instead, from online sources we know that he decided to sell everything he owned, including properties in London, cars, personal belongings and leave the UK to go travelling around the World with one suitcase.

What does this tell us about the man? It tells us that he believed his life working for an investment bank as a trader was over. Otherwise he would have pursued another position at another firm. This does re-affirm the assertion that as a free agent and predicting some sort of financial crisis was coming, Kreil analyzed the situation and came to the conclusion that he was “getting out at the top” as in the most optimal time for him as a trader. He was right.

 

Just a few months later the financial markets started collapsing, traders globally losing billions of dollars, the GFC had begun, Bear Stearns and Lehman Brothers eventually went bankrupt. Anton Kreil had already exited though, just before the chaos began. Another thing had happened as a consequence. The role of a trader at an investment bank had changed forever. 

The traits we would like to highlight here with Kreil are street smarts (common sense) and ability to predict the future (not with certainty) with clarity and probability analysis. Kreil could see the writing on the wall. He had beaten the system at its own rules, and he knew when to “sell himself” as in he knew not to push any further and instead to make a drastic change in his career. This again shows a lot of courage and conviction to walk away from a career that over a 7-year period had paid him so well. He walked away with no emotion but pure objectivity. It was over, he knew it and he did something about it. He was 28 when he left the investment banking industry. He was also a multi-millionaire with no possessions.      

 

Kreil travelled around the World during 2007 and for the period up till June 2008, during which time the financial markets were collapsing. Whilst all of his ex-colleagues at Goldman Sachs, Lehman Brothers and JP Morgan were still sitting in their seats, losing money every day, knowing they were not going to get a bonus, Kreil had exited. Just at the right time. Impeccable timing. 

So, from Kreil’s time as a pro trader we can see that the following traits and abilities were the ones that allowed him to succeed and stand above the crowd:

 

  • Ability to think outside the box

  • Identify consensus

  • Spot the opportunity

  • Stick to the facts

  • Stay objective

  • Don’t be emotional

  • Willingness to be both right and wrong

  • Willingness to take the necessary risks

  • Street smarts (common sense)

  • Ability to predict the future (probabilistic not certain)

  • Timing

  • Faith in one’s own abilities

  • Courage

  • Conviction

  • Commitment to the bottom line

  • P/L is your truth and everything outside of that is noise

  • As a trader being liked is irrelevant as long as you make money (politics)

  • Be part of a meritocracy not a corporate theocracy

  • Take regular introspection of your abilities and emotions and how they are affecting your decision making processes, make changes if necessary, quickly and objectively