When a 17-year-old high school genius in Queen says he made $72m trading, and people believe him, then people don’t understand how finance works. To be successful on Wall Street you don’t need to be a genius, but you do need to be able to do something that no 17-year-old can do: borrow money. A lot of money, and at low interest rates.

To make money you need money, and how you get that money is the real game played on Wall Street. It is no different than any form of betting, from horse racing to lotto tickets. The more you can borrow, the more you can bet and the more you can make. To make $72m, you need to start with hundreds of millions of dollars. Wall Street is a crazy place but it isn’t stupid. Lending and investing happens cautiously and with lots of rules, written and unwritten. One of the rules is not lending to a 17-year-old high school kid living in Queens.



On my first day as a trader, my boss walked me around the trading floor, pointing out each group as we went by: “Treasury, Mortgages, Equities, Derivatives, High Yield … ” They all had swagger. At the end he dropped me off with a small group in a darker corner of the floor, filled with badly dressed folks who all needed haircuts. “Spend the rest of the week with these guys,” he said. “If they need coffee, get them coffee. If they need sex ... Whatever they need, give it to them.” “Who are they?” I asked. “The finance desk, the people who loan us money. They have our balls in their hands.”



That means if you need to trade, you need the finance guys on your side. There are two routes: find rich people, or find a bank.

Hedge-fund managers and asset managers find rich people. They spend years, sometime decades, putting together a collection of rich people willing to invest with them. Not a little money, but billions of dollars. They convince the rich with stories: a history of returning money with profits; an expertise in economics, math or computers; unique access to market information.

They then use the money to create an infrastructure: hiring other traders, back-office staff, accountants, lawyers and computer specialists. They build a company that then makes bets, obsessively, which they often wake up at 2am to check. When not watching the bets, they spend hours on the phone talking with economists and politicians and other bankers. At the end of the year, if those bets work out, they give rich people a nice profit and take a slice off the top for themselves and their employees as pay.



Another way to get money is to work at a bank. Banks have a lot of money to lend because they have a lot of checking and savings accounts. Traders at banks start by being lent a little money, and then only after having a résumé that includes a lot of school. Each subsequent year, if the trader is successful, the bank gives him more money to invest, more money to gamble with. Over years – assuming the trader makes money, the bank makes money and the financial markets are working – the trader is allowed to borrow more and and more money. Eventually the banker is able to borrow enough to make enough to get paid enough to become someone worth $72m.

Whether it’s working at a bank or a hedge fund, it takes a lot of work to borrow money, and a lot of work to make money from that money. It is not something you do on your lunch breaks.

Borrowing money is a hard, sordid business. It doesn’t make for a sweet genius-getting-rich-quick story. That narrative, played out in the media far more than in reality, elevates finance to an impenetrable science like quantum physics or pseudo-mysticism like alchemy. Wall Street also loves that story, because it inflates its worth, allowing money managers to charge higher fees: I can see the future, so pay me.



The reality is a lot less sexy, and a lot cruder. You need to find someone to lend you money, and that search is hard work. A 17-year-old can’t do that.



Oh, there is a third way to get people to lend you money: fool them and dazzle them with bullshit. That, a 17-year-old can do.