How Barry Ritholtz became the prickly prophet of Wall Street: The Ladder

Barry Ritholtz rejects the premise of this article. In "The Ladder," we ask successful wealth managers what key decision — which rung of the career ladder — was key to getting where they are now. 

Ritholtz would have none of it.

"The world doesn't work that way," he said. "It's a horrible question. It's a terrible theory. It's not how the world works, and it puts people in the wrong intellectual framework."

The answer was characteristic of Ritholtz, an iconoclast who has made a career of rejecting popular premises in the world of finance.

It's been a successful career. In addition to being the head of Ritholtz Wealth Management, an RIA with $4.3 billion in assets under management, Ritholtz is also a widely published commentator on the follies of Wall Street. He's been a regular columnist for Bloomberg and the Washington Post. He's the host of Bloomberg's long-running podcast, Masters in Business. And he's the author of The Big Picture, one of the internet's most popular blogs covering the financial industry.

How did it all get started? Ritholtz doesn't like the idea of a crucial moment. But there was a beginning.

In the early 1990s, Ritholtz was not a wealth manager or a columnist, but an attorney. After graduating from the Cardozo School of Law in New York, he had a small practice and was doing corporate litigation work — and hating it. So when a chance came along to switch careers, he didn't hesitate.

"One of my clients was the predecessor firm to E-Trade, and I had an opportunity to sell my practice and join the firm as a trader," Ritholtz said. "And I did that."

Suddenly, Ritholtz was spending his days surrounded not by lawyers, but by traders. And he noticed something: Some of the guys on his desk made money far more frequently than others, which got him thinking.

"What is driving all this variability?" he recalled asking himself. "What are the factors that have led to a handful of people making money — I don't want to say consistently, but regularly — and other people being all over the place?"

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This curiosity led Ritholtz "down the rabbit hole" of behavioral finance, the study of how psychology affects investing. He began asking — and researching — many questions: Why do investors repeatedly make the same mistakes? Why do people feel the pain of losses more deeply than the joy of gains? Why do they accept information that confirms their worldview, but reject new facts that clearly contradict it?

Ritholtz continued working as a trader, but his focus began to shift — from investing to understanding investing. 

"Everything pivoting to behavioral finance and becoming fascinated by it. … I think that completely changed the tone of my career," he said.

In the late 1990s, Ritholtz got an opportunity to switch tracks again, aligning his work more closely with his interests. He landed a job as assistant to the technology strategist at the firm Prime Charter (now owned by the investment bank Oppenheimer & Co.). That led to other work in strategy and research, and in 2002 he became chief market strategist at Maxim Group, a Manhattan-based broker-dealer.

The new job was ideal for Ritholtz in a number of ways. It gave him a place to apply his knowledge of behavioral finance, helping brokers understand their clients' needs. And, crucially, it allowed him to present his views at Monday morning meetings — and then publish that content in a blog.

"Here's one thing that really was a game changer," Ritholtz said. "I would talk to the brokers about the markets — here's what's going on, here's the economic news. I would kind of write that up and put it on the blog. And to their great credit, the general counsel of Maxim Group let me publish that way."

That blog became The Big Picture. And as the 2000s continued, it became the loudspeaker for Ritholtz's growing list of concerns — which included derivatives, credit and an emerging housing bubble. Thanks to Ritholtz's gleefully contrarian personality, he had no problem voicing opinions that ran directly against the bullish conventional wisdom of the time. And thanks to his public platform, he had a track record of calling out dangers that others missed.

So when the markets came crashing down in 2007, Ritholtz was well positioned to explain what was happening. And people listened. By his estimate, in the peak years of the financial crisis The Big Picture was receiving about 3 million page views per month.

"That really led to a number of tremendous opportunities," Ritholtz said. "Writing in public not only helps you organize your thoughts, but anyone who wants to talk to you about their assets, their portfolio — they have a lot of insight into what you believe."

One of the first opportunities was a book deal. In 2009, Ritholtz adapted his real-time coverage of the crisis into "Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy."

READ MORE: The Ladder: Scott Ford, U.S. Bank's wealth head, on how not fearing 'no' helped him to the top

"The author writes with the fury of an insider mortified by the behavior of his heretical peers," the New York Times wrote in its review of the book. "There is much to be said for the book's irreverence. Mr. Ritholtz has written an important book about a complicated subject, and yet you could still read it at the beach."

From that point on, demand for Ritholtz's commentary seemed to overflow. He made appearances on CNBC and Yahoo TV. In 2011, the Washington Post invited him to start a regular column. Bloomberg followed in 2013. In 2014, Samantha Bee interviewed him on The Daily Show. (By his own admission, he ruined several takes by cracking up at Bee's antics.)

Along the way, he founded Ritholtz Wealth Management in 2013. So by the middle of the decade, Ritholtz had two thriving careers humming along in tandem: as a wealth manager and as a commentator on wealth management.

Which career is more important to him? He doesn't feel the need to choose.

"I think they work hand in hand and they reinforce each other," Ritholtz said, partly because "all of the media appearances and podcasts and YouTubes generate interest from prospective clients."

And while Ritholtz refuses to pinpoint a key moment that made his career, he can easily point out a key quality: curiosity. Asking questions, whether about investor behavior or a precarious economy, unlocked the biggest opportunities of his working life.

What will Ritholtz do next? One answer is definitely not on his list: Retire.

"Why would I ever retire?" he asked. "I have the greatest gig in all of finance."