This Bloomberg Markets headline (koan?) attracted puzzlement on Monday:
Gorman Embracing Vegemite in New Wall Street’s 15% Bogey at Morgan Stanley
The anecdote behind the headline is just as off-the-wall:
[Morgan Stanley boss] James Gorman doesn’t fit the image of a Wall Street titan. Notwithstanding his $10.5 million pay package, he shows up at black-tie events in a rumpled tuxedo he bought as a business- school student in the 1980s. He keeps supplies of Vegemite — a favorite Australian food that’s made from yeast extract — in the executive kitchen and eats it on toast.
He often walks home from his Times Square office to his Upper East Side townhouse and was spotted on one weekend in a track suit and sneakers waiting in line at the post office. The 6-foot-3-inch (1.9-meter), 195-pound (88-kilogram) Gorman’s favorite pastimes include reading John le Carre spy novels and taking boxing lessons weekly at his gym.
First, is this already the post-baroque, post-Lucas van Praag era in bank PR or something? Jamie Dimon’s also in the NY Observer disguising JPMorgan as Wal-Mart.
Second — Wal-Mart has a return on equity north of 20 per cent. JPM’s is 10.55 per cent. James Gorman is touting a 15 per cent ROE in the Bloomberg piece above (or “15% bogey” — whatever) and that looks pretty ambitious given the compensation ratio at MS: 54 per cent. Although here’s a good write-up by William Wright at Financial News pointing out that MS shows signs of turning into a decent, and less capital-hungry, flow business.
But hang on — wasn’t the problem in pre-crisis Wall Street that things like ROEs were seen as generally useless, myopic indicators?
Oh dear. This crud’s like vegemite.
S&P financials back trading above book value – FT