THE REAL EDGE IS IN PEOPLES’ HEADS (Guest: Ahmed Husain)

Kevin Muir (0:04)

It's our great pleasure to welcome to the show someone I've been looking forward to chatting for quite a while now. Ahmed Husain, the author of The Curious Mind. Ahmed, thanks for joining us.

Ahmed Husain (0:15)

Thank you, Kevin. Long time listener, first time caller.

Kevin Muir (0:19)

Now I just want to get it off the right off the bat, we're recording this a little earlier than usual. This is going to be we're recording it at the end of August, and we're going to be putting it out in the middle of September. So if we talk about things that are not quite up to date, just you'll understand why. But you have quite a great background in terms of your career. And it's very, very all over the place and very illustrious. And when I was like listening to you go on about the different places you worked, I thought, oh my goodness, like he, this is the real cat's meow of jobs that you've had.

Did you know you always wanted to be in finance? Like, did you have a plan to do this? Like, how did we get to this point?

Ahmed Husain (1:07)

It's a funny story. It's a long story, but I'll give you the super short version.

I was an immigrant kid born in Pakistan, lived there, came over to the US, luckily got into a place called Northwestern. I wanted to study computer science. My dad was like, I don't know what computers are son, how about electrical engineering? We kind of agreed to computer engineering, and then as the years went by, convinced him computer science was the way to go. And then sort of three years through the degree of computer science, I was like, shit, actually, I don't like computer science, it's a little bit boring. Actually, what I love is economics. So I got a little side minor thing in economics, and I graduated in 99, or I was going to graduate in 99, and I was like, oh wow, love economics, what can I do with this? And all the big banks used to come to the Northwestern to interview, I ended up getting a job at Lehmann Brothers. And then when you join a firm like Lehmann, as you know, they've taken a bunch of people into their start program, sales and trading program, and you go and interview with all the different desks.

And the group that I liked was the Credit Derivatives Desk, or what was then called the CDO Desk, Collateralized Debt Obligation. Wow. There I was in the Collateralized Debt Obligations Desk in the year 1999 in New York City and three World Financial Center. That's how it began.

Kevin Muir (2:26)

1989 or 99?

Ahmed Husain (2:27)

1999 1999 1999

Kevin Muir (2:29)

Okay, fair enough. So you had a ringside seat for what is about to come.

Ahmed Husain (2:34)

Yeah, so super lucky to be sitting there right on the ground floor when we were building all of these CDOs and all of a sudden, I could see our business boom, and there we were doing synthetic CDOs. I never went over the mortgage kind, so you can't blame me for blowing up the world. I only did the credit kind.

And slowly, I moved over the trading desk at Lehman, and then one day, Goldman came calling in 2006, hey, we hear that you're doing good things. Would you like to come over to Goldman? And so I was very lucky. That was a great move, buddy. That was probably the move of your career. Exactly. And there's a funny story there too. I had wanted to move to Goldman many times, and I tried to interview with them in 2001 They denied me after the first interview, tried to go there in 2003 They denied me after the first interview.

Okay, this time, you guys are calling me. So this is great news. Yes, after Goldman has this process that you have to interview with 25 people. And after two, three months of interviewing, they hired me in April 2006

Kevin Muir (3:41)

Sorry.

Can you tell people about what a CDO is? And you know, no, no, I think a lot of people would be interested in like, a lot of people might know, and they're kind of feel like they, they're, you know, aware, but why don't you just go over it? And then we'll talk a little bit about the meltdown of the financial system.

Ahmed Husain (4:03)

So the best way to think about a CDO, I guess, and I'm trying to go back in history right now, since I've tried not to think about this ever since I left that job.