Michael Panzner: The Author of Financial Armageddon – “The Wall Street Will Not be the Same”

Michael J Panzner is a 25 year Wall St veteran with a resume oozing with credentials.  Having extensive experiences in global stock, bond, and the currency markets, he has worked for HSBC, Soros Funds, ABN Amro, Dresdner Bank, and J.P. Morgan Chase to name a few.   Furthermore, he leveraged his knowledge and published a few notable books: Financial Armageddon, When Giants Fall, and The New Laws of the Stock Market Jungle. (His Books can be found here)

Now lucky for us, we get to explore his thoughts and perspectives on the market not only through his appearances on BNN, CNBC, Bloomberg, WSJ, USA Today, Barron’s, Reuters, CNN, MarketWatch, BusinessWeek Online, and The Street.com, but also through his blog, Financial Armageddon, which he manages daily.  In our recent interview, Michael shared the personal aspects of his life instead of focusing on Wall Street related questions.  Learn about how he leveraged his programming skill to get into Wall Street more than 20 years ago.

“How did you get into the world of investing?  What did you study in school?  What led you to this career of yours as a writer, blogger, and a trader?”

It was actually pretty accidental.  In fact, I had a degree in English from Columbia University.  So it wasn’t that well planned coming out of college to walk into Wall Street.  However, investing was always an appeal of mine.  The whole notion of the market being a puzzle got my attention — I wanted to figure out the puzzle and put the pieces together.  It was certainly an intellectual challenge, and that drew me into it.

When I came out of the school thirty years ago, Wall Street had different requirements for entry. So it was more luck than skill back then to get into Wall Street with an English degree.  I actually started working in a bank first doing some programming.  So it was initially programming that opened up the doors to more opportunities.  This led me to the start of my trading career, first in foreign exchange.

“Programming.  That’s interesting!  Do you still program as a hobby?”

Not really.  I was interested in it because it was logical, but I no longer have the capability that many programmers have today. Quite frankly, I wasn’t interested in it enough to pursue further.

Wall Street is far more intriguing – it entices me to figure out where the world is headed every day.  The challenges and the mysteries of the financial markets have attracted me for the past 25 years and will continue to do so.

“So given your degree in English, it makes sense that you’re now managing a blog and writing books.  You have been able to leverage your passions together to make your career successful. “

I never knew the connection would be there between writing and markets, at least initially.  For a long time, I didn’t do much with my writing background, but it did help me communicate.  However, it may also have helped me better organize my thoughts, ideas, and approach to looking at the world.

“You have a wide array of experiences working for different firms within Wall Street.  What were some of the experiences you enjoyed and recommend? What were some of the experiences you don’t recommend?   What were some of the most valuable experiences that helped you with your development?”

One thing I’ve learned is that humans aren’t built to be good traders.  We make mistakes, we make irrational decisions, and we naturally lack discipline.  I don’t want to discourage anyone, but I think experience plays a big role in one’s success as an investor.  According to one book I read recently, called Outliers, by Malcolm Gladwell, there seems to be a commonality amongt very successful individuals.  According to Gladwell, it takes an individual 10,000 hours of effort in order to master something.  When I look back at my career, I know I’ve invested over 10,000 hours of time studying the art of investing.

Now, what I’ve learned from this experience is that you can’t just count on one thing.  I used to think I could depend solely on technical analysis to trade successfully.  However, I’ve learned that it requires a wider perspective.  You have to be cognizant of the macro picture, the fundamentals of the companies and industries involved, and the interrelationships of the world economy.  Furthermore, technical indicators should help your guidance on entry and exit points.  Lastly, you can’t always take a logical approach to Wall Street because the market is illogical at times.

“That’s a great advice.  Thanks Michael.  Now, on a separate topic, why did you start your blog, Financial Armageddon?”

Well, as you know, I’ve written several books in the past that detail my ideas about what’s ahead for the market.  However, I’ve realized that I can’t put all of my thoughts into a book because the dynamics are always changing.  So blogging was a good opportunity to expand on some of the concepts I discuss in my books.  Also, it gives me a chance to get the word out that there are things to be concerned about in the current environment.

Furthermore, blogging requires me to write about the market and my thoughts every day.  This forces me to stay on top of what’s going on around me.  I keep an eye on the derivatives market, the credit markets, politics and regulations, the economy, and the network of relationships among the global markets.   I believe many people overlook at least some of these factors every day.  So I want to increase the awareness level through my writing.

“So with everything you’re doing currently, what does your typical day look like?”

Well, I’m a trader on Wall Street during the day, but I keep that low key. Blogging and writing are completely separate from my trading career, so it’s almost like having a double life.

“Michael, it is clear what your stance on economic outlook is.  Now, do you have any suggestions or advice to the younger generation who may be pursuing a career in Wall Street or money management in general?”

The past few decades have been the exception when it comes to the size of the financial sector relative to the rest of the economy.  I don’t think this will be the case going forward.  I think the industry will shrink, and it will be harder to find the types of opportunities that were available before.

I don’t want to discourage anyone, but I think it will require more effort, passion, and determination to pursue opportunities in Wall Street in future than in the past.  However, if you approach the market with the right attitude, the opportunities can be found.

“So what drives you the most about your career?  What can the aspiring investors keep in mind to stay enthusiastic?”

I think Wall Street is a great place to be challenged.  Because of the dynamics, you’re constantly trying to figure things out.  There are factors that are in flux every day, and thinking about the market is exciting and stimulating.  Yes, the money has been good and it’s important, but I would probably have found my way to Wall Street regardless of how much it paid.  To me, it’s about the intellectual stimulation.  So if you’re looking for a challenging environment, this industry won’t disappoint you.