The Year He Became a Banker

Las Vegas — History books will commemorate 2008 as the year America faced what some people are calling its greatest financial crisis since the Great Depression.

Stephen Christoffersen, 23, will remember it as the year he became a banker.

As such, he belongs to a curious breed of people — a generation of financiers entering their profession at a time when once-revered financial firms are meeting their ruin one by one, plummeting from mile-high pedestals back to earth.

Five years ago, when Christoffersen began college, investment banks such as Merrill Lynch and Lehman Brothers were the kings and envy of Wall Street, posting record profits and handing traders multi-million-dollar bonuses.

Fortunes have shifted with astonishing speed. Lehman, where Christoffersen applied this summer to work, declared bankruptcy in September. Merrill, where he interned from May to August, is being sold to Bank of America.

The crisis has so sobered some of UNLV’s 500 or so finance students that they’re wondering if they chose the right field.

But for Christoffersen and fellow stock market junkies, the most important aspects of Wall Street haven’t changed. The exhiliration of a good trade, the thrill of a gamble, the excitement of winning profits — all of that remains.

In the past few weeks, as other Americans watched their retirement accounts shrink, Christoffersen saw his grow by 45 percent.

“It’s an everchanging thing,” said Christoffersen, who graduated from UNLV in August and is training to be a financial advisor at a local firm. “It’s always exciting.”

“There’s always a bull market somewhere,” he added, quoting a Wall Street adage. “It’s challenging, it’s time consuming, but it has its rewards, and I’ve been able to feel what it’s like to get the rewards. You go out there, you spend hours and hours and hours, reading and reading and reading, and you make an educated decision and you get the reward.”

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The downfall of Wall Street’s titans holds lessons for young finance professionals.

Mark Chatfield, director of UNLV’s MBA programs, thinks newly minted bankers will, in general, adhere in the near-term to more conservative investment strategies, taking fewer risks. How long that caution will last is up for debate.

“Unfortunately,” Chatfield wrote in an e-mail, “many people have short memories and are all too willing to jump on the bandwagon as times change. Just look at how many companies invested in those risky bonds backed by subprime mortgages because they didn’t want to miss out on the high returns.”

But not everyone will be quick to forget the mistakes Wall Street made.

Of the mortgage trainwreck, Christoffersen said, “You get a good understanding of what not to do. If something’s too good to be true, it probably is.”

“It was fascinating for me learning about mortgage-backed securities from professors who knew it front and back, and having them almost predict what would be the ramifications of the subprime boom.”

At UNLV, his teachers explained how financial companies, eager to create and sell securities backed by mortgages, purchased mortgages en masse from lenders. That alleviated banks and brokers of financial responsibility for loans they made, including those given to aspiring homeowners who had bad credit or provided no proof of income.

“It opened the door for greed,” Christoffersen said.

“No one was assuming responsibility. Back in the olden days, the bank was assuming responsibility for the loan. What happens when the bank didn’t assume responsibility?”

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Despite the turmoil ravaging Wall Street, Christoffersen is upbeat about his career prospects. As long as people have money, he explained, they’ll need people like him to help them manage it.

“It’s not something you can just learn overnight,” he said.

Christoffersen made his first stock trade at 17, investing in a golf club company using $500 he made cleaning golf carts at a course in Broken Arrow, Okla., outside Tulsa. He reeled in a 28 percent profit over two years and says he’s been “more or less addicted” to playing the stock market ever since.

As a college freshman he bought an $800 stake in an oil and natural gas pipeline company and more than doubled his money in under two months.

Even with markets jittery as they await a House vote on a bailout plan asking taxpayers to buy up to $700 billion of risky assets including mortgage-backed securities from financial companies, Christoffersen believes there are still winning bets to be made.

Many profitable businesses got pummeled recently as panicked investors fled stocks. It’s companies like these that have low debt and lots of cash that could be a good purchase as their stock prices bounce back, Christoffersen said.

Investing in firms such as Walmart and Proctor Gamble that sell staple, low-cost products could also be smart, he added: “It doesn’t matter if it’s World War VII. People are still going to have to buy toothpaste.”

“This is what I wanted to do,” Christoffersen said of banking. “For now, I know it’s long hours and I know it’s a lot of stress, but I love the challenge. … Every day is different. It’s not all one thing. What was three weeks ago is not the same as today. It’s crazy.”

So despite the barrage of bad news slamming Wall Street in recent months, he’s not ready to abandon the industry he chose to make his own. He still dreams of one day managing hedge funds — “If,” he said, “they’re still around.”

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Story written and reported in October 2008.