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  • The 13.4 million people who have been hired into the financial-services industry since 2009 represents the scariest number in finance, in the view of David Rosenberg, Gluskin Sheff’s chief economist.
  • That’s because their careers have existed only in an expansionary phase of an economic cycle.
  • “Your world has been rocked this year, and don’t expect that to change any time soon,” Rosenberg said.

13.4 million. That’s the number of hires into the financial-services industry since 2009, filled with people who may never have worked during a major economic or market crash.

For David Rosenberg, Gluskin Sheff’s chief economist, this is the “scariest number of them all.”

It’s sourced from the Bureau of Labor Statistics’ monthly Job Openings and Labor Turnover Survey, and it includes people who were hired after being laid off and company transfers from other locations. The BLS unfortunately doesn’t break all of these categories down, so it’s hard to deduce how many of these millions of people were newbies to the industry.

But clearly, there’s a sizable crop of traders who joined the industry after the financial crisis and have worked in only the good times of an economic cycle. That’s Rosenberg’s primary concern.

“These poor folks, and the soon-to-be-poor investors who have their money with these people, have only one cycle under their belt,” he said in a note on Thursday. “They have only known economic expansion; uber-low or negative interest rates; extremely low levels of volatility; deflation or ultra-low inflation; endless rounds of quantitative easings; globalization; and central banks having your back at all times.”

It’s not an entirely new concern for the industry; at every crash exist some traders who weren’t around for the previous one. Perhaps what would make the next one a little different is the severity of the Great Recession — the worst US downturn of the postwar era — and how much quicker technology is changing the way markets are made.

The question of where we are in the cycle has become a market refrain akin to kids on a road trip asking, “Are we there yet?” The answer, unfortunately, is still anyone’s guess. But investors are becoming more comfortable with the idea that the US economic cycle is closer to its end than to its beginning, as growth slows in pockets of the world and central banks reverse years of stimulative policy.

Inevitably, Wall Street will face another downturn, both in the economy and in financial markets — how soon depends on whom you ask. With no prior experience to draw on, it’s little wonder why old-timers like Rosenberg are concerned for the youngest traders.

“Your world has been rocked this year, and don’t expect that to change any time soon,” he said.

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