August 30, 2010
Financial Economist Reflects on Career, Offers Advice
Today Ward McCarthy ’73 (economics) is chief financial economist at Jefferies & Company, a major global securities and investment banking group in New York. But when he graduated from UMass, the economy was a mess. The stock market was experiencing one of its worst downturns in modern history and inflationary pressures were mounting. To keep pace internationally, the dollar was devalued by 10%. Unemployment was high and rising. Meat prices soared. When Arab nations reduced petroleum shipments to countries friendly with Israel by 5%, a full-blown fuel shortage ensued. Gas stations closed on weekends or limited their sales while prices rose dramatically. Lowering highway speeds and home thermostats was mandated. Cities curtailed holiday decorations, and Congress voted a return to Daylight Savings Time for the winter. On top of all this, Vice President Agnew was forced to resign because of falsifying income tax returns, and the Watergate investigation, which ultimately brought down the President, was in full swing.
“I started off teaching math at Boston English High School,” McCarthy says, “I really liked teaching, but I wasn’t able to secure a permanent job. So I went to graduate school and got my PhD in economics at Rutgers with the intention of becoming a college professor.” But when a job as an economist at the Federal Reserve Bank of Richmond came across the threshold, McCarthy decided to give it a go.
“That job opened up other worlds for me,” McCarthy says. “I learned a lot about economic and financial data, engaging in quality research and how the Fed conducts monetary policy. After a couple of years, I moved on to Merrill Lynch as the money market economist, aka Fed Watcher, in 1984.” During the next five years McCarthy rose to become chief financial economist, working in the trading room. “I found it to be really enjoyable,” McCarthy says. “Besides a lot of activity and excitement, there are also lots of questions from traders, sales people and clients that make working in a trading room challenging and fun.”
McCarthy and a colleague went on to found their own business, Stone & McCarthy Research Associates (SMRA), doing the same type of economic and financial market research but from an office near his New Jersey home. “Starting a business is both fun and anxiety ridden,” McCarthy notes. “As any business owner will tell you, it is a wonderful day when a new business attains a positive cash flow. Leaving Merrill Lynch was a difficult decision, but I really wanted to spend more time with my small children. Establishing SMRA allowed me to continue my professional interests while being a full-time dad. It was great to be able to see school plays, track meets and games. I also did a lot of coaching, including kids’ hockey for nineteen years.”
McCarthy and his partner sold SMRA to a Chinese company in 2004. Ward continued to work for SMRA until September 2009 when he joined Jefferies, one of the 18 primary dealers that trade directly with the Federal Reserve. At Jefferies, McCarthy sits in the bond trading room and is responsible for the company’s analysis of the economy, Federal Reserve, Treasury financing and fiscal policy. He also publishes the weekly Jefferies “Economic and Bond Market Insight” and contributes to the Jefferies “Fixed Income Monthly.”
“The Jefferies opportunity materialized when my youngest child was heading off to college, so that gave me the flexibility to resume working in New York,” McCarthy says. “The timing was critical, as I wouldn’t have taken the position if the kids had been younger. I am the first economist Jefferies has ever hired, and it has been exhilarating to be back in a trading room and building a research effort from scratch again with a great firm.”
McCarthy says his rise in the financial world is due to hard work, resilience and luck. “A good work ethic is most important and will help get anyone a good way down the road,” he says. “Most people are going to hit some bumps, so it is important to be able to take some hard knocks and be able to get up afterwards. Never underestimate the importance of being at the right place at the right time. You can help to make your own luck. If you work hard and stay with it, breaks will eventually come your way.”
Reflecting on UMass, McCarthy says, “I was attracted by the wide range of opportunities offered, as well as the beauty of the Pioneer Valley, plus a lot of my friends from high school also attended. Today’s students will continue to find an expanse of academic and extra-curricular activities as well as tremendous diversity among the student body. Serious students can get exposure to important research in many fields of study. And there are endless opportunities to explore the outdoors, sports, the arts and music. Anyone who needs to get off campus can hike in the Quabbin Reservoir or hit the mountains in Vermont. Neither Boston nor New York is very far away.”
McCarthy, who is a generous donor to the College of Social and Behavioral Sciences, because “I like to help current students,” also offers insights to students who think a career in finance might be for them. “Read the Wall Street Journal every day. Learn about financial markets and the institutions that participate in them. Get to understand all the financial instruments and what makes each of them different. Also, learn about the different roles of financial market participants—and what differentiates one type of financial institution from another. A great way to start a career is to find an entry-level job at a federal government agency, such as the Federal Reserve Bank, the Treasury Department, the Bureau of Labor Statistics or the Commerce Department. Such positions allow young people to gain practical knowledge that will serve them well in the future. Those who are truly serious about their careers should also think about attending graduate school.” Certainly, McCarthy—despite graduating in troubled economic times—found a way to make it.