Winthrop H. Smith Jr., the former Chairman of Merrill Lynch International and the son of one of Merrill Lynch’s founders, has seen the market go through many cycles.
When he entered Wall Street in 1974, the industry was still suffering from a recession that had begun in 1969.
“It was over a decade before Wall Street started to show any sort of profitability,” Smith told StreetID. “I went through the crash of 1987. I’ve been through several like that and there were many before I entered Wall Street.”
Those experiences taught him that Wall Street is one of the most resilient industries on the planet.
“I don’t think that you have to take the attitude that the best is over and that there aren’t going to be more jobs,” said Smith. “Wall Street has always been innovative, creative, and I think it will continue to be so in the future.”
Smith, who recently authored the book Catching Lightning in a Bottle: How Merrill Lynch Revolutionized the Financial World, said that he didn’t know “how to predict” when Wall Street might return to pre-2008 levels.
“A lot of people don’t know what Wall Street is,” he added. “It’s not just the hedge funds and it’s not just the traders. Wall Street is really the intermediation function that matches savings with investment. It’s a critical part of the U.S. economy — so it has to be healthy, it has to be vibrant — if we’re going to have a healthy and vibrant economy.
“So yes, I think things will always go to the extreme, but I think they’ll be righted out, and I think Wall Street can certainly be as vibrant as it has in the past, and maybe more so. But it’s going to look different, most likely.”
Wall Street has already experienced a lot of changes since Smith retired at the end of 2001. One of the biggest changes, he said, was that a lot of firms stopped talking about customers and clients and started talking about counterparties.
“That was a real cultural shift on the Street, and I think it affected Merrill Lynch as well,” he said.
While Smith is retired from Wall Street (he now owns and operates the Sugarbush Ski Resort in Vermont), there are many lessons he learned from his father that he wants to pass on to his own children.
“It’s so important to have principles and values,” said Smith. “It’s important to not only look at people’s skill set but also their character. The best leaders I have seen in my lifetime are very smart, very talented. They are good leaders, but they really have a core set of values and integrity and they have character.”
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