M.I.T. GOES FOR MONEY
Eugene Flood’s path to principal in Morgan Stanley & Co.’s Fixed Income Division was typical and extraordinary. In 1978, he received his B.A. in economics from Harvard College. Then in 1983, the Cambridge, Mass., native received his Ph,D. in economics from the Massachusetts Institute of Technology (M.I.T). It wasn’t until 1987 that Professor Flood made it to The Street.
Flood spent five years researching and teaching finance to future MBAs at Stanford University’s Graduate School of Business, but he never got one himself. He also was the recipient of a National Science Foundation Minority Fellowship for Graduate Study in Economics and lectured at executive training programs held by M.I.T., the Nomura School of Advanced Management in Tokyo and the International Management Institute in Geneva.
Only after he attained the educational goals he intended did Flood join his former students in Gotham. Today, he is a trader in Morgan Stanley & Co.’s mortgage-backed securities area. He also holds a principal title that is one notch behind managing director in Morgan Stanley’s hierarchy. His specialty: asset-backed securities.
What Flood does is facilitate trades between institutional accounts. For example, a trust company will let several investment banks know it wants to invest in mortgage- or asset-backed securities. Flood purchases such securities from his clients to sell them for a profit. The trick is to bid low enough to make a profit later, but high enough to outbid the competition.
On the flip side, Flood must set a selling price– lower than that of his competition–to attract clients. It’s a delicate balancing act demanding an awareness of the market and knowing what is expected–or unexpected–that will impact the prices you set.
There is risk. For instance, a trader could buy several million dollars’ worth of securities and not find a buyer for them. If their value drops off, it could mean tremendous losses for his or her firm.
Flood relishes the risk. “You look at the guys on the other side of the [trading] screens as the other team. The bell rings at the start of the day and the game begins. There are days when you feel great, like you could walk on clouds; and there are days when if you can just make it out of the room any way possible, you’re thankful.”