In The Dark Knight Rises, the masked, bulky anti-hero Bane bursts onto the Nasdaq trading floor, randomly firing weapons and taking the entire trading floor hostage. Bane approaches one of the trembling traders, who shamelessly tells him, This is the Stock Exchange. There’s no money you could steal, to which Bane smirks: Really? Then why are you people here?
I had the same question—what were they doing on that floor? As a sophomore still exploring possible career options, I decided to check out the M&T Trading Simulation for a crash course in trading and a trial of mini, fast-paced trading simulation.
There was a good number of people present at the event, mostly freshmen and sophomores. Two well-dressed M&T seniors, Xiaolei and Jerry, led the session. Xiaolei initially took the lead with a general introduction to the key terms and concepts and an overview of the range of skill sets required for a successful career. He also talked about the gruesome lifestyle of arriving at the office every morning by 6am, which didn’t sound too bad given the two years of my disciplined lifestyle in the South Korean military. Jerry also contributed to the session with insights that reflected his personal experience at work and his general perception of the industry.
After a cursory review of the most basic concepts used in Sales & Trading (S&T), we immediately progressed to simulations. Each of the three simulations had a different product: a Penn hat, a Tesla Model S, and Beats headphones. We could choose to be a “market maker,” a company that quotes a buy and sell price and makes profit from the difference between the two prices, or a “price taker,” an investor who buys and sells at the given price. Whenever a transaction was reached, the price and quantity of each transaction would be revealed to the entire floor, of which everyone took into account their decision-making.
Only bits of information were given about the product—“it comes in red and blue” or “it’s sold at the Penn bookstore”—from which we strived to make our best guess for the appropriate price. Troll investors sometimes crashed the floor, throwing around irrational estimations of price and dumbfounding the already confused group of novice traders. Yet through multiple sales and trades, most of us became much more adept at making quick decisions. By the time I seemed to have fully understand the subtle inner workings of the trading floor, however, the simulations were over. It was time to decide the winners.
There were not many people who made profit, and those who did mostly won the prizes. In the end, I made a net loss of $300,000 during the three rounds, a dismal performance that would probably get me fired at any rational, profit-seeking firm. I was nowhere close to getting the coveted collection of classy M&T gear, but now I feel confident enough to respond to Bane’s insightful question. Why are the people there? They’re there to make money—sometimes a lot of money—and it’s probably more complicated than you think.