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Peter Oppenheimer at Goldman Sachs: The wisdom of an understated partner

When Peter Oppenheimer, the impish chief global equity strategist and head of macro research for Europe at Goldman Sachs, gave a talk to students at the London School of Economics (LSE) last week, he invited his father. When he spoke in Hampstead about the launch of his new book a few weeks previously, he invited his children and the juniors on his team. Oppenheimer, who's been a Goldman Sachs partner for nearly 20 years, is gently familial. Relatives and colleagues are part of his gang. 

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Goldman Sachs likes a culture carrier, and Oppenheimer is good at the heft. More academia than ostentation, he came into banking accidentally. "I had no idea really what I wanted to do," he confessed to students at the LSE. "I had very little interest in finance, but I did want to make some money." 

Oppenheimer's accidental financial services career began in 1985, just before Margaret Thatcher's "Big Bang" shook up London banking, and when gilt brokers still wore top hats to work and "jobbers" still made markets. In the nearly four decades since, he's presumably made quite a lot of money and has witnessed at least nine crises in financial markets. 

Right now, Oppenheimer thinks we're in the "optimism" stage of a market cycle which typically moves between despair, hope, growth and optimism. This doesn't mean that despair necessarily follows, but it does suggest a new cycle is beginning. Monetary policy is giving way to fiscal policy, demographics are changing, labour markets are tightening. Oppenheimer says we're starting the "post-modern super cycle." It's one in which returns will be harder to come by. "Big inflection points are unfolding before us. It's exciting, but can also be a bit worrying."

For the LSE students interested in going into financial services careers today, the future could be harder than the past. "A good deal of the returns in the past decade or more have come from rising valuations as a result of persistent falls in interest rates and as people pay more for all financial assets," says Oppenheimer. "Those were beta returns. But the opportunity set is shifting in a way that will force investors to rely less on an overall valuation uplift and more on alpha and the analysis of the fundamental growth of businesses over time." 

Oppenheimer studied economics and geography at the LSE. As a student, he says he had little interest in the kind of microeconomic analysis needed in the new era of fundamental discretionary investing. He was all about macro. 

Oppenheimer was, and is, a particular kind of macroeconomist: not the econometrics-obsessed reductionist type, but the inclusive, qualitative, polymath. "Social sciences are ultimately dealing with human beings, and they are not as predictable as chemical elements or physics," he says, "We are trying to understand changes in human emotions and the crowd." He holds that over-reliance on mathematical models is a mistake. It helps to have "an understanding of psychology, anthropology, all those things," says Oppenheimer, observing that he wasn't much good at econometrics anyway. 

In a world grappling with geopolitics, inequality, decarbonization and AI, economists like Oppenheimer hold the torch for human serendipity over quantitative modelling. At the LSE, Oppenheimer was interviewed by Charlie Bean, a protagonist of quantitative easing (QE) and former deputy governor of monetary policy at the Bank of England. Both agreed the future could bring more sovereign debt crises. Both agreed a need for new forms of economic weaponry to deal with the ensuing chaos. In a subsequent interview, Oppenheimer won't be drawn on what the new weapons might involve. "Humans have been very adaptive in the cycles in the past," he observes. 

Gary Stevenson, the former Citigroup rates trader, claims that economists like Oppenheimer aren't the real seat of macro knowledge in banks. Stevenson says this lies with traders like him who are paid more and who have a truer understanding of the economy. Oppenheimer says he wouldn't have made a good trader, though. "Many traders are not economists," he says. "They are different skill-sets. As a trader, you're working fast and on instinct. As an economist, you are researching and writing about your ideas." 

Stevenson burned out on Citi's trading floor. Oppenheimer has kept going for nearly four decades. In an industry known for spitting people out, his geniality has endured. "In a complicated world, it's going to be about the person who has good critical thinking skills but is adaptable and personable," says Oppenheimer. Much as he doesn't like modelling, he's the person with the formula for this approach.

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AUTHORSarah Butcher Global Editor

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