Stories of Capitalism: Inside the Role of Financial Analysts

Stories of Capitalism Stories of Capitalism InsIde the Role of fInancIal analysts Stefan Leins The University of Chicago Press Chicago and London publication of this book has been aided by grants from the bevington fund and the swiss national science foundation. This work is being made available under the Creative Commons Attribution-Non-Commercial-No Derivatives 4.0 International License (CC BY-NC-ND 4.0). To view a copy of this license, visit https://creativecommons.org/licenses/by-nc-nd/4.0/ The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London © 2018 by The University of Chicago All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission, except in the case of brief quotations in critical articles and reviews. For more information, contact the University of Chicago Press, 1427 East 60th Street, Chicago, IL 60637. Published 2018 Printed in the United States of America 27 26 25 24 23 22 21 20 19 18 1 2 3 4 5 ISBN-13: 978-0-226-52339-2 (cloth) ISBN-13: 978-0-226-52342-2 (paper) ISBN-13: 978-0-226-52356-9 (e- book) DOI: 10.7208/chicago/9780226523569.001.0001 Library of Congress Cataloging-in-Publication Data Names: Leins, Stefan, author. Title: Stories of capitalism : inside the role of financial analysts / Stefan Leins. Description: Chicago ; London : The University of Chicago Press, 2018. | Includes bibliographical references and index. Identifiers: LCCN 2017031750 | ISBN 9780226523392 (cloth : alk. paper) | ISBN 9780226523422 (pbk. : alk. paper) | ISBN 9780226523569 (e-book) Subjects: LCSH: Financial analysts | Financial services industry—Employees. | Finance—Social aspects. | Investment banking—Social aspects—Switzerland. | Banks and banking—Switzerland. | Business anthropology. Classification: LCC HG4621 .l45 2018 | DDC 332.1—dc23 lc record available at https://lccn.loc.gov/2017031750 ♾ This paper meets the requirements of ansi/NISO Z39.48-1992 (Permanence of Paper) Contents Acknowledgments vii 1 · Meeting the Predictors 1 2 · The Problem with Forecasting in Economic Theory 15 3 · Inside Swiss Banking 29 4 · Among Financial Analysts 49 5 · Intrinsic Value, Market Value, and the Search for Information 69 6 · The Construction of an Investment Narrative 95 7 · The Politics of Circulating Narratives 119 8 · Analysts as Animators 136 9 · Why the Economy Needs Narratives 154 Methodological Appendix 161 Notes 165 References 173 Index 189 Acknowledgments The fieldwork for this study began long before I planned my actual research project. To finance my studies in anthropology, I spent sev- eral years working part- time in banks. The first bank I worked for, a French institution, has now become well known as the field site of Vincent Lépinay’s Codes of Finance (2011). The second bank was a US bank in Zurich. I did not choose to work in banks because of a par- ticular interest in financial markets. Rather, my decision was based on the fact that banks paid better salaries to working students than bars or archives did. From the very first day on the job, however, the cultural features of finance intrigued me. I remember the first time I dressed as a banker, participated in one of the drinking rituals, and experienced the feeling of finger- counting one million US dollars that a US client wanted to pick up in cash. These experiences were made possible by a number of banking practitioners who trusted me and al- lowed me to become familiar with their working environment. Later, at Swiss Bank, the main observation site of my research, another group of bankers made it possible for me to do fieldwork inside the bank. I had the good fortune of being supervised by excellent mentors with a sincere interest in anthropology and in a critical as- sessment of current financial market activities. Furthermore, many of the financial analysts helped me by providing information, explain- ing their working routines, and allowing me to become part of their professional lives. Without these individuals, this research would not have been possible, and I gratefully acknowledge their support. It is common in ethnographies to omit the real names of these door openers and interlocutors. I trust that they will nevertheless be able to identify themselves. [a viii ] cknowledgments My academic mentors, Peter Finke and Ellen Hertz, accompanied my research project from the beginning and substantially contributed to the completion of this book. I want to thank Peter for opening the doors to academia for me, for believing in my project, and for his ongoing support, academically as well as personally. Similarly, Ellen showed incredible support and shared her great expertise throughout the entire research and writing phase. It was Ellen’s idea to send the manuscript to the University of Chicago Press—something I would probably not have dared to do. Thank you, Ellen! Heinz Käufeler also deserves my gratitude. As director of the Swiss Graduate School in Anthropology, he gave a whole generation of young researchers like me the chance to meet and discuss our research projects. In addition to that, Heinz was always there for an inspiring talk on anthropology and actually everything else, from daily politics to hipster culture. Swiss Bank’s research program funded the fieldwork phase of my project. The Forschungskredit of the University of Zurich provided financial support during the writing phase. Both these institutions al- lowed me to fully focus on my academic interests, while at the same time providing me with the financial means to do so. I thank everyone involved in the decision to fund this project. While I worked on this project, many people helped to improve my study by sharing their comments and ideas. At the Department of Social Anthropology and Cultural Studies in Zurich, my colleagues contributed to my work through countless inspiring discussions and informal talks. As part of the Swiss Graduate School in Anthropology, Jean and John Comaroff, Aldo Haesler, George Marcus, Richard Rottenburg, and Heinzpeter Znoj commented on my project. At Gold- smiths, Rebecca Cassidy, Claire Loussouarn, Andrea Pisac, and Alex Preda provided useful input. In Jena, sociologists working with Oliver Kessler, Jens Maesse, and Hanno Pahl helped me to strengthen my line of argumentation. So did Karin Knorr Cetina, who commented on my research at a workshop held in Zurich in 2015. Carlo Caduff and Bill Maurer provided valuable comments on the original research outline. Sandra Bärnreuther read parts of my revised manuscript. And Emilio Marti was kind enough to read my introduction and theoreti- cal discussion to check whether my line of argumentation made sense to a scholar from organization and management studies. Laura Bear of the London School of Economics anthropology de- a cknowledgments [ ix ] partment, where I spent two terms as a visiting researcher in 2015, was an invaluable mentor and provided a wealth of insightful comments on my study. She also coordinated the Programme on the Anthro- pology of Economy that gave me the opportunity to discuss my work with some of the world’s leading economic anthropologists. I thank Ritu Birla, Maxim Bolt, Kimberly Chong, Elisabeth Ferry, Karen Ho, Caroline Humphrey, Deborah James, Stine Puri, Gisa Weszkal- nys, and Caitlin Zaloom for their comments during the workshop on speculation that took place at LSE in May 2015. I also thank Juan Pablo Pardo- Guerra and Leon Wansleben, who offered their comments at various times. Furthermore, I am indebted to the Zurich- based Economy and Culture reading group that met regularly to discuss the history of economic thought from Mandeville to Mankiw. As part of our curriculum, Nina Bandi, David Eugster, Dominik Gross, Michael Koller, and Julia Reichert read and commented on an early version of the book. At the University of Chicago Press, Priya Nelson shared my en- thusiasm for the book’s topic and helped me turn my first manuscript into a readable and hopefully enjoyable book. I am indebted to Priya, the editorial board of the University of Chicago Press, and the manuscript’s reviewers for believing in my book and helping me to improve it. Daromir Rudnyckyj, who agreed to reveal his identity, was one of the reviewers. His detailed and inspiring comments are now reflected in many parts of the book. Last but not least, my family and friends provided me with un- wavering support during my research and motivated me at times when it seemed hard to continue. I thank my mother Dominique and my father Thomas for their unconditional support and the great amount of love they have given me and my siblings, Miriam and Robin. Your beautiful ways of promoting creativity, curiosity, and open- mindedness have been the very foundation for this book. Finally, and above all, I owe my gratitude to Nadja Mosimann. With- out your intellect, your passion, and your unparalleled personal support, none of this would have been possible. Thank you, Nadja—for no less than everything. This book is dedicated to you. · 1 · Meeting the Predictors In spring 2010, it seemed as if the financial crisis had come to an end. Governments had bailed out many of the so- called systemically rele- vant banks, and stock markets appeared to be slowly recovering. The tragic effects of the financial crisis were visible, however, in struggling industries and growing unemployment. Countries such as Greece and Spain reported youth unemployment rates of more than 50 percent, while at the same time governments lowered their spending to un- precedented levels. Furthermore, as a direct consequence of housing market speculation, approximately 10 million homeowners had lost their homes in the United States alone. Most financial market par- ticipants claimed, nevertheless, that the financial markets seemed to have overcome the crisis.

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