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May 31, 2001

No High School Grads Need Apply: As Wall Street firms demand more college graduates, trading has be

By Sanford Wexler

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  • No High School Grads Need Apply: As Wall Street firms demand more college graduates, trading has be

Are traders born or bred? According to industry pros, it's both.

A generation ago many traders only had high school degrees. They worked their way up the Street, starting out as messengers or in the mailroom.

Today, the typical young trader has at least an undergraduate degree and strong computer skills. An increasing number of pros have advanced business degrees in economics or finance. Some even have doctorates.

Still, as Jack D. Schwager, who interviewed dozens of traders over the past several years for his "market wizards" book series found, the key to becoming a successful trader is gaining lots of on-the-job experience, regardless of educational credentials.

As one veteran trader told Schwager in his latest book, "Stock Market Wizards: Interviews with America's Stock Traders" (HarperCollins), "You can't expect to become a doctor or an attorney overnight, and trading is no different."

For Aldo Parcesepe, "having a college education today is important, yet it's not as important as applying yourself." Parcesepe, who began his career some 30 years ago in the order room, added, "I think traders become good traders if they have a passion for the job."

Traders must have the ability to make split-second decisions and know how to anticipate the changing forces of supply and demand. Most head traders agree that a college education, especially a business or finance background, can mentally fine-tune a pro in assessing the barrage of information that comes across the trading desk.

"When I started in the 1960s having a college education was not a prerequisite to getting a [trading] job," said E.E. "Buzzy" Geduld, president and chief executive of Herzog Heine Geduld, a Merrill Lynch company, in Jersey City. "That's all changed. Nowadays, at a minimum one has to have a college education. We wouldn't even think of interviewing someone without a college degree."

Jim Toes, a director of Nasdaq trading at Merrill Lynch and president of the Security Traders Association of New York, said that when he started about 15 years ago he was one of the few traders who had a college degree on his desk.

Business school graduates are no longer thumbing their noses at trading. In fact, at many business schools today, becoming a trader is now considered a prized career.

"Years ago students who had MBAs from better schools only wanted to get into corporate finance and M&A," Geduld said. "Today, we are finding that the best schools in the country have candidates who would love to get into sales and trading. Trading has become a much sought after occupation."

Art Form

To be sure, a college education, whether it's an undergraduate degree in finance or an MBA, can only accomplish so much. "Trading is an art form," Parcesepe said. "The more experience you have with gauging the real supply and demand structure the better you get at it."