Life on “The Street”

Raising a young man in New York City isn’t easy. But Glenn Lamont McMillan Sr. and his wife, Eotha, faced challenges that were different from many parents in Harlem. At 14 years old, their eldest son, Lamont, had a year-round internship on the bond trading desk at a Wall Street firm and would sometimes fly to the Nantucket, Massachusetts, vacation home of one of his mentors. It was at Christmastime one year that Glenn says he was forced to teach his son a valuable but painful lesson about the glamorous world of money and finance that had captured his son’s imagination.

The teenager came home one evening sporting a shiny new Rolex watch a bond trader had given him as a holiday present.

“I made him give the watch back,” says the older McMillan. “I didn’t want him to focus on the trappings and materialism of Wall Street.” Recalling one of the most heated confrontations he says he’s ever had with his son, “I told him, ‘You’re not there to get watches; you’re there to learn. If you stay focused on what’s important, you can buy your own Rolex someday.’”

Sixteen years later, Lamont McMillan Jr. remembers his father’s lesson with a fond smile. Today, at 30, Lamont is a successful Wall Street bond trader managing a $3.5 billion portfolio of seven- and 10-year U.S. Treasury bonds, and is one of the youngest directors at the global financial services company Deutsche Bank. Lamont is a key member of a team of 10 traders at Deutsche Bank, which in 2010 was ranked No. 1 in U.S. fixed-income in an annual client study by Greenwich Associates, a Connecticut research firm.

Lamont McMillan Jr.’s tale is a rare one, in which brains, determination, and carefully cultivated social connections helped him climb in a world still largely closed to people of color. Indeed, less than 3% of executives in the financial industry are black, according to a 2010 U.S. Senate survey of the nation’s 500 leading global companies. McMillan credits his achievement to a close circle of mentors, advocates, and family members who helped mold and shape him. “I was afforded an opportunity at a really young age, to come in, sit with those guys, to learn about the markets, and to come up with a framework for trading,” says McMillan. “And, to the extent that I was successful, they were willing to give me more opportunities.”

FRIENDS & FAMILY PLAN

Finance is in Lamont’s genes. His father, Glenn, works for the Financial Industry Regulatory Authority (FINRA), the financial industry’s self-regulatory entity, and his mother is a former bank administrator. But it was Lamont’s uncle Jerry McMillan who introduced him to the Government Bond Trading Desk when he was just 13. Jerry McMillan was a supervisor of the Treasury Auction team at Goldman Sachs in the early ’90s and took his young nephew to work one day.

Among the first people Lamont met at the global investment banking and securities firm was Paul Jacobson, a brash Goldman partner who headed the government securities trading desk. Jacobson shook Lamont’s hand and passed him a copy of the “Credit Markets” page of The New York Times. “He told me to read it, then take a yellow marker and highlight everything I didn’t understand,” recalls Lamont. “When I was done, the whole page was yellow.” The exercise led to the first of many homework assignments from Jacobson: “He told me to go home and write a report on the Federal Reserve.”

A year later, in 1996, when Jacobson moved to Deutsche Bank to become managing director in fixed-income securities, he took Lamont along as one of several minority students in an after-school mentoring program. Jacobson created the unofficial internship and initially funded it out of his own pocket. “It was very informal,” says Jacobson, who explains the program consisted of simply allowing the interns to spend time on the trading floor. Traders would help interns with their homework and give them assignments to complete. They let the interns peer over their shoulders as they executed trades. The interns fetched coffee too. “We were tough on them. We hazed them and treated them the same way we did business school graduates,” says Jacobson who today is CEO of Thorne Research Inc, a dietary supplement manufacturer.

Bond traders aren’t known for being a particularly coddling bunch. In fact, they have a reputation for being short-tempered, highly competitive, and filled with super-sized swagger. The traders at Deutsche Bank were no different. Most of them were more than twice Lamont’s age, and almost none of them were black. Still, they became Lamont’s main social circle during his teen years as he proved to be a standout among the interns.

“Lamont was very studious and really serious and l

aser-focused,” recalls Scott Gewirtz, one of the traders Lamont bonded with early on who now serves as a managing director in government bond trading at Nomura Bank in New York. “He fit in with us. He just showed a great interest and ability to grasp complex trading concepts.”

THE WORKING MAN
By the time Lamont was in his mid-teens and enrolled at Brooklyn Technical High School, one of New York’s top public secondary schools, it was clear he had a facility with numbers. Lamont had athletic talents too. He played youth-league football through eighth grade, but decided to forego sports in high school to focus on finance. And all through school, Lamont stuck to a single routine. He took a roughly 45-minute subway ride from Harlem to Brooklyn in the morning. On the way home, he stopped at Deutsche Bank for a few hours. Once he was home, he’d finish his school assignments and delve into a few additional hours of Wall Street homework. At night, he’d study how markets worked and read economics textbooks. During his summers, he’d spend the whole day at Deutsche Bank, hanging out with the traders, peppering them with questions. While on the trading floor, Lamont would take notes.

He began to see how the math he learned at school applied to the trading environment. “A lot of times, kids at school didn’t understand why we were doing a certain math problem, or why calculus was useful, or why we learn linear equations,” says Lamont. “But coming onto the trading desk, I saw firsthand where those things could be used. To be a good trader these were the concepts I had to master.”

A bond is essentially an I.O.U. that a company or institution, such as the U.S. Treasury, issues when it wants to borrow money. When an investor buys a bond, the bond issuer promises the investor two things: payment by a specified future date and interest payments to be delivered in the meantime. Traders are essentially professional investors who buy and sell bonds on behalf of their financial institution and their clients. Various economic factors, international events, and news can affect bond prices in the marketplace. For instance, when interest rates rise, bond prices fall. When interest rates fall, bond prices go up. Amid all the rises and dips, a trader’s job is to anticipate what’s likely to happen and help maximize returns for clients–and of course minimize losses.
“That’s one of the challenges of trading,” Lamont explains. “It’s our job to understand the risks that are in the portfolio. You can never immunize against every single risk, but it’s important to know how each development is going to affect the market and affect your position.”

Though the pressure on traders is great, no one should feel sorry for them; they are well-compensated for what they do. The average bond trader in New York City earns a base salary of about $150,000, according to job search website Indeed.com. Their annual bonuses, which comprise the bulk of a trader’s earnings, can often be eight to 10 times their base salary.

The “A-HA” MOMENT
Lamont says he was about 17-years-old when he developed a real grasp of the bond market. He started to make predictions about where the market was headed based on the economic news of the day. And often he was right. “That’s when I knew that my dream for him had become his own dream for himself,” says Lamont’s uncle Jerry, who today is the director of Deutsche Bank’s Global Business Services Group. “Down went the posters of Michael Jordan and Barry Bonds. On the wall in his room, he suddenly had pictures of Stan O’Neal and Warren Buffett–and a lot of charts with bond yield curves.”

The summer before Lamont left for Colorado College, Deutsche Bank’s bond traders set up a training simulation for the teen. Each day, they would watch Lamont make fictitious trades based on real-world events. At the end of the summer, they judged his skill based on how much “play money” he had in his portfolio. “I was allowed to do about 10 trades a day, recalls Lamont. And by the end of the summer? “Let’s just say, the portfolio made some money,” he laughs.

Even as Lamont absorbed all he could about trading, there were lessons his Deutsche Bank mentors couldn’t teach him about being black and successful on Wall Street. For that, Lamont had his uncle Jerry and Joseph Curry, a former managing director at Bear Stearns. Curry was one of the youngest managing directors in the global investment, trading, and brokerage firm’s history (and one of few African Americans to hold that position). He met Lamont at a Wall Street benefit in 1995 and the two developed a friendship. Curry says he was impressed by Lamont’s rare combination of humility, intelligence, and confidence among other qualities. Curry and Jerry McMillan sought to preserve those qualities in Lamont, while helping him master a Wall Street

social scene in which professionals often woo wealthy clients at dinner parties and other gatherings. “The trick is to be ‘in it,’ but not ‘of it,’” says Jerry. Explains Curry, now co-chairman of Orbit Holdings L.L.C.: “There are a lot of people in our business that are being taught selfishness and elitism. I wanted to be part of helping to mold a young man to achieve his potential understanding that there are no shortcuts to greatness. Don’t live your life to evade struggle; embrace it, respect it, and learn from it.”

When Lamont graduated from college in 2003, there was little doubt in anyone’s mind where the English/economics double-major would go next. Deutsche Bank, the firm he’d worked for after school and every summer since he’d entered high school, offered him a position–allowing him to begin training for the position he holds today.

STAYING GROUNDED
Lamont hasn’t seen a dull moment on the bond desk in the last few years. Government bonds, Lamont’s specialty, have been active due to record bond issuances from the U.S. Treasury as policymakers try to fund government expenditures and counteract exploding deficits. More recently, the markets have been volatile as the U.S. Federal Reserve embarked on a “quantitative easing” program, purchasing Treasuries to keep interest rates low and, it hopes, to boost economic activity. Lamont balances the pressure by staying connected with family and old friends. He unburdens himself in frequent talks with his mother, who he calls his “prayer warrior.” When Lamont got engaged earlier this year, Scott Gewirtz was one of the first people to hear the news. The trader also stays grounded by mentoring teenagers, exposing them to the world he fell in love with years ago.
One worry Lamont never has is a sense that he may have lost his childhood in pursuit of an adult dream. “It was never a tremendous sacrifice to me,” says Lamont. “I was sitting with people who I wanted to hang out with at work and outside of work, and I was doing something I loved. That’s the way trading has always been for me.”

Of course, along with the risks come many rewards. Just as his father predicted years ago, Lamont now earns more than enough to buy his own expensive watch. But, Lamont’s father, Glenn, says, “Sometimes I’ll tease him, ‘Hey that pricey Patek Philippe [watch] says the same time as my very inexpensive Bulova.’”