This week I had a chance to attend a lecture and discussion organized by ISM on “The State of the Global Financing Markets and the Future of the LBOs”, lead by Ms. Rūta Jurevičiūtė, the Vice President at Bear Stearns & Co. Inc., an investment bank in New York (USA).

Ms. Rūta left Lithuania right after the high school, finished university degrees in US and afterwards over next 7 years had an amazingly successful career climbing to VP position of a top US investment bank. On the challenging side her career included more or less occasional 100h-working weeks, which are not what many of us would choose voluntarily, unless we really love what we do.

The lecture was about the investment banking challenges and happenings in the light of financial events in US and the rest of the world.

The audience was a mix of specialists and generic crowd like my brother and I, which resulted in a good mix of questions.

Some points I took from the lecture:

1. Successful careers like one of Ms. Rūta are really inspiring.
2. Increased complexity and efficiency in processes (here example, financial markets) reduces the transparency and have inertia. It results in crisis even if specialists know about it, and non-specialists (like us, simple investors) are not aware. There is no space for cool brains anymore to press on the brakes, when (speculation?) sales are so successful.
3. The tools to manage complexity, transparency, and impact analysis are needed and I notice that technology plays a big part there independent on the area – being it financial markets, or enterprise IT management (where I specialize).
4. Globalization aspect: even if LBO market and its financial tools and instruments are mostly in US, when crash comes it goes globally as money used in the game is from all over the world.
5. Financial engineering could easily bring a lot of money without any actual service or product innovations, i.e. just by pure speculation. This is the part which I do not like about financial investment – gambling on expectations. Why they feel like not properly earned money?
6. Crisis cycle covers big profits and then a crash. On average, profits equalize over the time, thus resulting in moderate and good profits over the combined time of pre- and post- crisis. How is that different from venture capital, where huge profits of a few companies are equalized with the up to 90% of failed companies? Final bottom-line is what counts. We tend to believe, that venture capitalists have better controls over their portfolio, while you never know how financial crisis will end up time-wise and impact. But here you have more control on the pre-crisis profits, right?

I really enjoyed the event, and now looking forward for another lecture from ISM.