Bloomberg Broke Two Of The Eight Cardinal Rules Of Wall Street

Fight Club

1st rule of Wall Street: You do not talk about what goes on here.

2nd rule of Wall Street: You DO NOT talk to ANYONE about what goes on here.

3rd rule of Wall Street: If someone stops out, get a margin call, or go broke – it is over.

4th rule of Wall Street: Only two counterparties to a trade.

5th rule of Wall Street: One monster trade at a time.

6th rule of Wall Street: Fancy shirts, fancy shoes.

7th rule of Wall Street: Trades will go on as long as they have to.

8th rule of Wall Street: If this is your first day on Wall Street, you HAVE to trade.

Bloomberg LP, as a financial services company, broke rule 1 (and 2) when they let Bloomberg News, a journalistic entity snoop on traders, banks, brokers – and even Central Bankers. 

Bloomberg as a company has been a phenomenal growth story, much like Apple, in which there was really no other alternative in the market place (sorry Reuters, but it’s true).

Also, much like Apple, Bloomberg is a notoriously difficult company to deal with – complete with 24 month lock-in and an over $20,000 per year per user cost. Typically the only way to get out of a Bloomberg contract is to go out of business.  

However, much like Apple, it seems like this growth and market power might be peaking.

Case in point:

* NY Post recently reported that Goldman Sachs is looking to build its own chatting system

* Today CNBC is reporting that Citi has banned its traders from attending Bloomberg chat groups (a key feature of the terminal)

These are just the two stories we know of. Imagine how many stories like these we don’t know of.

This is what I think will happen:

For the next years, the growth at Bloomberg will slow down and it’s 300,000+ userbase will eventually start to shrink. 

In the meantime, a number of new proprietary services will rise up inside the different banks. However, the new terminal of choice is most likely not Reuters, but some other service we don’t know of – that might not even be a service at this point. 

This new service will probably be of MUCH lower cost, similar capabilities, more openness and much other cool stuff we can’t think of.

All I know is, I no longer long for a Bloomberg terminal. At least, not that much. For us independent guys, $20,000 per year is a complete no-go. It’s good. But it’s not that good. 

So in five years from now, maybe we look back at this moment as when Bloomberg stopped being the unbelievably dominant force it is.

PS: If you think the first and second rules of Wall Street seem like a joke, they are not. They are used as part of the the training at one of the biggest banks in the world.

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