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Group think

I just want to know: Do you ask Wall Street doormen for financial advice?

Well, Mr or Ms Livs, the short answer is no. I’ve never met a Wall Street doorman, and was unaware of their existence until now.

But here’s why it might not be such a stupid idea.

We know that markets aren’t rational; they are driven by fear and greed.

Markets are also driven by groupthink. A small number of like-minded individuals rely on the same data to make the biggest trading decisions at bulge-bracket banks and major hedge funds.

And some of those decisions have been very, very wrong.

The banks who did best in recent years were those who looked beyond the conference rooms of Wall St and Canary Wharf.

Sweden’s Handelsbanken has weathered the financial crisis brilliantly, and has been described as ‘the most watched bank in the world.’ The Financial Times told this story about CEO Pär Boman (January 13, 2013):

Some US investment bankers came to sell Handelsbanken some mortgage-backed securities before the financial crisis that would offer 8-9 per cent in yield for, as Mr Boman terms it, “more or less no work at all”. Handelsbanken executives, led by him, visited the bankers in New York and asked to see the underlying documentation of the mortgages. That was not possible. So Mr Boman went to the west coast and visited some of the houses used in the bonds. “Then it was very clearly nothing for us,” he says simply.