When Phil Pace ’86 was nearing graduation from A&M with a degree in finance, he was offered two jobs: one at an investment bank and the other at an energy company, where he would enter an engineering training program. The banking job paid a few thousand dollars less, but sounded like it might be a better training ground for his career. “I grinded over that decision for months,” he said, eventually settling on the banking job where he hoped he’d “learn a little bit about Wall Street, a little bit about energy,” and then figure out what his career ambitions really were.
“Boy was that a good decision,” he says today, 23 years and billions of dollars in energy trades later. He recently visited Mays Business School to talk to finance students about how to manage a career in commodities trading.
“The best traders know the business. You’d be amazed at how much money gets whipped around by people who don’t know an MCF from a barrel,” Pace told students as stock information flashed around the screens surrounding them in the Reliant Energy Securities and Commodities Trading Center. “You don’t want to be the guy or the gal who doesn’t know the difference between an MCF and a barrel.” Learn all you can about the business now, he told students, because your employers are probably not going to give you time to learn all the things you need to know to be great. Pace practices what he preaches, arriving at his office before dawn each day to read up on all of the business news from around the world.
“Know what you know. Don’t pretend to be something you’re not. Because you’re competing with people who do know,” he says, telling students that the market is brutal when it comes to flushing out people who don’t know what they’re doing.
“In this business, you cannot fake good performance and you cannot hide bad performance.”
Also, learn how to use Excel like a pro, he recommends. It’s an indispensible tool for analyzing the market. “You’re going to need every trick you can find” in Excel, as well as PowerPoint, because in this business, you’ll use it almost every day.
While Pace has had plenty of good days in his careerâ€”and has made a great living in oil and gasâ€”there were plenty of bad days, too. Sometimes the stock you’ve been recommending goes from $35 to $10 per share in a day, “and you just want to crawl under a rock,” he says. But that’s the nature of high finance. “You will make disastrous mistakes. I promise. It will happen. You’ll step into something and shake your head and think “how did I get here?'” And that’s okay, as long as you can do two things:
- Be humble. Own your mistake. “If you haven’t been humbled by the market yet, you will beâ€¦that’s how you learn,” he says.
- Be logical and rational in your decision-making, so that when a stock blows up, you can defend your actions. “Be accountable to your ideas.”
“The measure of your success is how well you hold up when you make mistakes,” he told students. “Everyone is gracious in good times.”
Most of all, remember that trading is a business full of ups and downsâ€”you might make a million one day, and lose two the next. You can’t let the market determine your level of happiness in life. Instead, you’ve got to find balance, separating work from the rest of your life and shrugging off the things that are beyond your control.
Pace has built a career as an analyst at several major banks such as Morgan Stanley, Credit Suisse, and Lehman Brothers, where he worked for one week before they went bankrupt. His experience at Lehman Brothers is part of what convinced him to start his own business with fellow Aggie business partner Robert Chambers ’89. “We decided not to tie ourselves to investment decisions made by people 1,000 miles away,” he said. Over a year ago, Pace “retired,” enjoying six months of leisure (an activity he’d hardly had time for previously) before joining Chambers in the start up investment venture Chambers Energy Capital, where he wears the title of managing director.
Despite his success, Pace hasn’t forgotten his roots, keeping active with Mays. Though he currently lives in The Woodlands, he hosted the Aggies on Wall Street group several times in NYC. In 2005, he and his wife Linda established a business excellence fund at Mays to support and enhance programs and opportunities in business.