The distributed investor

These forms of valuation were taken into account only as information about opinions that could influence short-term price movements. The working day of traders at Brokers Inc. began around 1:00 a.m. in New York, two hours before the opening of stock exchanges in continental Europe. Traders read news for about an hour and then sent short emails to clients. In the largest investment management companies, buy-side traders were also working at that time, sending orders for particular amounts of shares to be bought or sold as soon as the stock exchange opened. Yet, most orders were sent at around 6 or 7 a.m. Then, and for another two or three hours, traders at Brokers Inc., in a frantic agitation, answered the phone, passed orders to buy and sell to traders based in Europe, and followed price movements that they considered would mark trends for the rest of the day.

Traders, analysts, and salespeople at Brokers Inc. openly shared the idea that trading was radically different from fundamental valuation and long-term analysis. However, the points of view of these employees varied when it came to assessing whether traders’ professional tasks contributed to the production of a truth of value and to the flow of fees paid by customers, which had an impact on everyone’s bonus. Luke, one of the two junior traders on the team working for fund managers based in the United States, often remarked that salespeople were overpaid in relation to the importance of their work for the stabilization of commercial relations with clients. In an interview with me, he stated that “everyone wants to complicate this shit, everyone wants to be intellectual in this shit, but it’s basic, it’s really basic, it’s not complicated.” He was thus attempting to undermine the idea that there was a specific knowledge required to retain clients. Thomas, the other junior trader on the team, took the opposite stance, saying that he did not have enough knowledge about accounting to do the work of salespeople. He had obtained an MBA and had probably studied more accounting than thought leader Hervé, who had learned the job by doing it. In a conversation with me, he said, however, that knowledge was what distinguished traders from salespeople: “[To become a salesperson, you] must know the companies way more in depth, you need have much better knowledge in accounting. I think really I have the intellect to do it, if I really made the effort. But practically, it’s completely different customers, you see, it’s different interlocutors, so I would have to start from scratch.”

Pascal, in his late thirties, was one of the three partners of Brokers Inc. He was also the trader who obtained the highest fees from clients and the head of the team of traders composed of Thomas and Luke. He had started the company with Juliette and André, with whom he had worked before at a bank. He often made self-deprecating jokes about himself and the industry at large. Thus, when I was first introduced to him, he said: “You’re an anthropologist? We don’t need an anthropologist here, what we need is a zoologist!” He agreed to do an interview with me but requested that we do it at the central table in the big room, which meant that we talked in the presence of several analysts and salespeople, as well as Thomas, whom he invited to listen.

In other companies in the financial industry, traders often have extensive mathematical expertise and develop trading software and methods the ownership of which they can negotiate with their employers. But even in other settings, the argument that the definition of value cannot be the result of knowledge is nevertheless closer to the valuation practices of traders. In the preceding passage, Pascal was explicitly undermining the legitimacy of the other two professions that constituted the core business of Brokers Inc.—i.e., the production of financial valuation. Yet, he accepted the idea that in order to be a good trader, one needed to form a personal opinion on stock price variations. Repeating the critique of the concept of market efficiency present in speculative valuation, Pascal considered that the arguments used in fundamental and relative valuations were factors that would influence these short-term variations but not tools that would enable one to find the true value of the company. The truth about the stock prices that he was after was that of short-term movements, for which these theories had nothing to propose, as analysts and salespeople themselves would acknowledge. Pascal’s position was thus articulated according to the tensions present in financial theory concerning the relation between fundamental valuation and the constant variation of stock prices. The way he used it to assert his position at Brokers Inc. reiterated, within the official controversy among professions, the centrality of the figure of the investor as the source of the definition of value.

Salespeople, financial analysts, traders, and fund managers have to assert that they have produced a personal opinion about value based on specific expertise. This valuation could be based, for instance, on short-term price movements for traders, longterm forecasts for financial analysts, or a combination of different forms of valuation for salespeople and fund managers. In all these cases, the procedures of valuation necessarily include the three definitions of value: fundamental, relative, and speculative. Employees thus mobilized the multiple gazes of the figure of the investor and assembled them in different ways.

The figure of the investor, multiple and contradictory, is distributed in employees’ practices, as the personal character of valuation is part of the relations of hierarchy, competition, and collaboration that they have to develop in their professional lives. The investor’s gaze does not just define the meaning of calculations and procedures. It is also central to how employees justify the application of the procedures in terms of conviction, pleasure, and sincerity. In the conflicts among professions and valuation methods, the personal opinion of the investor that each employee must express is constantly reaffirmed as a necessary condition for a truth of value to be possible. The everyday application of valuation practices thereby contributes to the legitimization of the social hierarchies effected by the financial industry worldwide within listed companies and among all the social activities that are included in or excluded from the investment universe. The application of the gaze of the investor in everyday practices is not just dependent on how employees appropriate it in their attempts to assert their positions. It is also stabilized by a series of rules and penalties. Respect for these rules and penalties, the next section argues, serves then as a further confirmation that the price of listed companies indeed reflects a value that is determined by independent investors. At Brokers Inc., this was particularly noticeable in the relation between salespeople and fund managers.