Alan Greenberg Quotes

It is up to all of us to fight our unrelenting enemies—complacency, overconfidence and conceit.

The only statistic I care about is return on equity. After many sessions with some of our business school graduates (yes, we do have some), I think they have helped me understand the secret to improving our R.O.E. It seems that if we increase revenues and cut expenses, return on equity goes up and that is what makes me happy. Please make me happy! I can be very unpleasant when I’m not.

The developments at Bear Stearns certainly seem to be positive and as a result we will, of course, intensify our surveillance of all positions and expenses. You know how I feel about the dangers of overconfidence.

This may come as a surprise to some of you, but Federal Express is not a wholly owned subsidiary of Bear, Stearns & Co. Inc. I mention this because we have been spending $50,000 a month with them and there is no explanation to justify this expenditure unless it was an intercompany transfer.

1- Stick to thine own business. 2- Watch thy shop. 3- Limit thy losses. 4- Watch thy expenses like a hawk. 5- Stay humble, humble, humble.

now is the time not to hide from clients. It takes real courage to make calls when you know the reception might be hostile. But there are times when we must face the music. It will pay off when the market turns,

The amount of dissension rises geometrically with the more issues you have to philosophize over.

At the partners meeting two weeks ago, it was pointed out to me by Haimchinkel Malintz Anaynikal that the hors d’oeuvres had been upgraded considerably from peanuts. You will be happy to know that we are now back to peanuts. This may seem like a small saving, but it’s the thought that counts.

Haimchinkel Malintz Anaynikal recently brought to my attention certain intercompany feuds that have led to the downfall of firms smarter, richer and larger than ours. Watching for these signs of dissension will be a high priority of mine.

We are not panicking; we are not laying off people, but we are making a real effort to cut expenses. The other side of the coin is we have hired a large number of number one draft picks in the last few months. This is the time to hire good people. We have followed this policy in the past, and I am convinced that we will be proven correct once again.

When you are a private enterprise, savings on expenses go to the bottom line. When you are owned by the public, savings still go to the bottom line, but they are in turn magnified by the multiple the stock carries.

Remember that the Green Bay Packers won because they executed the fundamentals better than their competition. Trick plays make headlines, but winners execute the basics.

No.” It should no longer appear at the beginning of a sentence. That makes people think about what they’re saying before they start talking.

The year was over last Friday and it was a good one, but last year is gone. The score right now is nothing to nothing. Nobody cares (especially our competition) what we did last year. Let us go to the whip and make the month of May an indication of what we are going to do for the coming twelve months.

Take Brooksley Born, former chair of the Commodity Futures Trading Commission (CFTC), who waged an unsuccessful campaign to regulate the multitrillion-dollar derivatives market. Soon after the Clinton administration asked her to take the reins of the CFTC, a regulatory backwater, she became aware of the over-the-counter (OTC) derivatives market, a rapidly expanding and opaque market, which she attempted to regulate. According to a PBS Frontline special: "Her attempts to regulate derivatives ran into fierce resistance from then-Fed Chairman Alan Greenspan, then-Treasury Secretary Robert Rubin, and then-Deputy Treasury Secretary Larry Summers, who prevailed upon Congress to stop Born and limit future regulation." Put more directly by New York Times reporter Timothy O'Brien, "they ... shut her up and shut her down." Mind you, Born was no dummy. She was the first female president of the Stanford Law Review, the first woman to finish at the top of the class, and an expert in commodities and futures. But because a trio of people who were literally en-titled decided they knew what was best for the market, they dismissed her call for regulation, a dismissal that triggered the financial collapse of 2008. To be fair to Greenspan et al., their resistance was not surprising. According to psychologists Hillel Einhorn and Robin Hogarth, "we [as human beings] are prone to search only for confirming evidence, and ignore disconfirming evidence." In the case of Born, it was the '90s, the markets were doing well, and the country was prospering; it's easy to see why the powerful troika rejected her disconfirming views. Throw in the fact that the disconcerting evidence was coming from a "disconfirming" person (i.e., a woman), and they were even more likely to disregard the data. In the aftermath, Arthur Levitt, former chairman of the SEC, said, "If she just would have gotten to know us... maybe it would have gone a different way."12 Born quotes Michael Greenberg, the director of the CFTC under her, as saying, "They say you weren't a team player, but I never saw them issue you a uniform." We like ideas and people that fit into our world-view, but there is tremendous value in finding room for those that don't. According to Paul Carlile and Clayton Christensen, "It is only when an anomaly is identified—an outcome for which a theory can't account that an opportunity to improve theory occurs."13 One of the ways you'll know you are coming up against an anomaly is if you find yourself annoyed, defensive, even dismissive, of a person, or his idea.

the harder you work, the luckier you get.

ERROR ACCOUNT It is safe to say that our error account is running at almost 100% efficiency. We have got to do something to stop these insane mistakes, because the loss comes right off the bottom line, and you know how I feel about that particular statistic.

The time to stop stupidity and be tough on costs is when times are good. Any schlemiel* and most schlimazels* try to cut costs when times are bad.” * For those who do not speak Persian, a schlemiel is the one who spills the soup. He spills it on the schlimazel.

My point is that Federal Express is a luxury, and business can still be done by using the U.S. Mail. I can assure you that future use of Federal Express is going to be very closely monitored. The fact that it wasn’t up to now is my fault, and I take full blame.

1. Telephones not being answered promptly in certain areas. Hire more people! After you hire them, explain to them how important it is that they be courteous and attentive to anyone who calls. 2. This is going to be hard for you to believe, but it is actually a fact. I called the head of one of our major areas yesterday, and although the man was in, his secretary did not know where to find him! I know that this tests my credibility with you, but it is true. You are well aware that this violates one of Haimchinkel Malintz Anaynikal’s cardinal rules. I hope HMA* does not hear about this incident. 3. It also hurts me to report that I saw somebody throw away a used envelope before it made 22 trips around the office. I can’t stand to see people burn money.

Our experience has been that the best time to hire productive people is when conditions are difficult.

do feel that if a partner is not on vacation, he should treat Friday like any other day and show up for a full day’s work. Haimchinkel Malintz Anaynikal never took off a Friday in his entire life.

After a month like the one we just experienced, I think we should be on our guard against the negatives that go along with great success. I am speaking of complacency, sloppiness, relaxing on expenses, cockiness and just getting careless in general. This is the time to be on our guard. If the market does go our way, I want to make every dollar and leave nothing on the table. The market may turn sour again, so do not forget for a moment what the great coach Haimchinkel Malintz Anaynikal said many years ago, “when the going gets tough, the tough start selling.

Then there are Friedman’s “five forbidden phrases.” • “I don’t know.” It should be replaced with “Let me check and find out.” • “We can’t do that.” Instead, tell callers what can be done. • “You’ll have to . . .” The caller doesn’t have to do much of anything, certainly not sit on hold. Instead, the employee should say, “You’ll need to . . .” • “Hang on a second, I’ll be right back.” It’s a lie and should be replaced with “I’ll need to put you on hold for a few moments, if you are able to hold.” • “No.” It should no longer appear at the beginning of a sentence. That makes people think about what they’re saying before they start talking.

Bear Stearns has grown and prospered because capable, aggressive, money-motivated people worked hard, were given substantial responsibility, and watched their businesses and each other.

When you entered the industry, you were warned that it was cyclical but bull markets tend to cloud realism. You are now in a period that separates the men from the boys. Mrs. Haimchinkel Malintz Anaynikal suggests that when the going gets tough—go shopping! A certain officer of Bear Stearns suggests that when the going gets tough—start selling positions! My suggestion is that when the going gets tough—the tough get going! You have no option but to follow my suggestion. If you do, you will prosper beyond your wildest dreams when the market turns— and it will.

It was the prevalent thought on Wall Street that, without Cy Lewis, Bear Stearns would fade away like nomads in the night. Those skeptics overlooked one of Cy’s main attributes. He encouraged and promoted young people as fast as they warranted it. He left a group that could and did carry on.

It is absolutely essential for us to be able to talk to our partners at all times. All of us are entitled to eat lunch, play golf and go on vacation. But, you must leave word with your secretary or associates where you can be reached at all times. Decisions have to be made and your input can be important!

Some of the things that have happened to us have been due to our own efforts, but equally, some of our good fortune of late has been due to luck.

Our first desire is to promote from within. If somebody with an MBA degree applies for a job, we will certainly not hold it against them, but we are really looking for people with PSD* degrees. They built this firm and there are plenty around because our competition seems to be restricting themselves to MBA’s. If we are smart, we will end up with the future Cy Lewises, Gus Levys and Bunny Laskers. These men made their mark with a high school degree and a PSD. * PSD stands for poor, smart and a deep desire to become rich.

I am well aware that humans will always make errors. My irritation comes from the fact that these errors are not caught immediately. In many cases, this is because the producer is too lazy to look at his run the following day; too lazy to look at the registered representative copies of the confirms and too lazy to check the monthly statements. The firm has always been very understanding when errors are made. We will not be understanding if the error is not caught because of subsequent stupidity and laziness.

You are aware that I have said for years that complacency is our greatest enemy.

Haimchinkel Malintz Anaynikal just called and reminded me of something that I should have thought of without any help. The year was over last Friday and it was a good one, but last year is gone. The score right now is nothing to nothing. Nobody cares (especially our competition) what we did last year.

Haimchinkel Malintz Anaynikal just called and reminded me of something that I should have thought of without any help. The year was over last Friday and it was a good one, but last year is gone. The score right now is nothing to nothing. Nobody cares (especially our competition) what we did last year. Let us go to the whip and make the month of May an indication of what we are going to do for the coming twelve months.

success has been due to the instant availability of our partners and associates. During the past month, we have been very busy and some of us have been straying away from the fundamentals, such as leaving word at all times where they may be found. We must not deviate from the basics. I have contacted Marlin Perkins of the St. Louis Zoo and the next person that I have trouble finding will be fitted out with a radio collar. Please impress our policy on the people who work with and under you. The collars are bulky and not very attractive.

simple rules laid down by the Dean of Business Philosophers, Haimchinkel Malintz Anaynikal: 1- Stick to thine own business. 2- Watch thy shop. 3- Limit thy losses. 4- Watch thy expenses like a hawk. 5- Stay humble, humble, humble. 6- When dealing with a new account, know thy customer and know thy customer’s money is up.

You will be doing me a favor if you call me immediately anytime you think you are getting less than Triple A treatment. The support areas are under extreme pressure, but that will never be an excuse for not treating our sales force in the manner they deserve.

Haimchinkel Malintz Anaynikal also mentioned that now is the time not to hide from clients. It takes real courage to make calls when you know the reception might be hostile. But there are times when we must face the music. It will pay off when the market turns, and I promise you the market will turn.

We should not lose sight of fundamentals, such as cutting expenses and being ever alert to the fact that if we are not careful, there are some people who would like to steal the whole place out from under us.

When things are good, you should be even more careful of expenses because it is ridiculous to leave anything on the table when you hold a royal flush. We must continue to be alert, aggressive and never complacent. And last, but maybe most important, the partners of this firm must continue to work together and learn to overlook petty differences. We are all expendable and I hope that your Executive Committee does not have to prove that to any of us.

When mortals go through a prosperous period, it seems to be human nature for expenses to balloon. We are going to be the exception. I have just informed the purchasing department that they should no longer purchase paper clips. All of us receive documents every day with paper clips on them. If we save these paper clips, not only will we have enough for our own use, but we will also, in a short time, be awash in the little critters. Periodically, we will collect excess paper clips and sell them (since the cost to us is zero, the Arbitrage Department tells me the return on capital will be above average). This action may seem a little petty, but anything we can do to make our people conscious of expenses is worthwhile.

review some fundamentals: 1. We must continue doing our best to control expenses. Every dollar we save on expenses goes directly to the bottom line. That is what all of us should be concerned about, or you are at the wrong firm. Expenses should be watched at all times, but especially when business is good. 2. We must continue to be alert for scams and con artists. We must watch for unusual behavior by the people we work with. What is unusual behavior? Something subtle like somebody who drives a Rolls-Royce on a salary that can barely support roller skates. 3. Do the people you work with answer phone calls in a courteous manner? Are all phone calls returned? I couldn’t care less what a person does in his own home, but I am a nut about returning phone calls that are made to our personnel during the workday. I do not care if the caller is selling malaria. Calls must be returned! 4. Are the receptionists and telephone operators in all of our offices warm and courteous, and if they are, are they thanked appropriately? Remember that in most cases the first contact a client has with us is through a telephone operator or receptionist. 5. Do you and your associates leave word where you are at all times so that finding you is not like hunting for the Andrea Doria? 6.

A man will do well in commerce as long as he does not believe that his own body odor is perfume.” That still holds true. We must not get cocky or over-confident. Remember that the Green Bay Packers won because they executed the fundamentals better than their competition. Trick plays make headlines, but winners execute the basics.

We now have the space and the appetite to hire people if they have outstanding ability.

fundamentals of Haimchinkel Malintz Anaynikal. 1. Reinforce once again with your associates that anything unusual should be brought to the attention of a superior at once. We will never be upset if it is a false alarm. 2. Do not get conceited or cocky. 3. Check on the people who answer telephones. Are they courteous? 4. Return all calls as soon as possible. 5. Watch expenses—like a hawk. Now is the time to cut out fat! The rest of the world cuts expenses when business turns sour. With your help, we will be different, smarter and richer. 6. Reduce expenses. 7. Cut expenses. 8. Do not spend money frivolously. Every dollar we save will go to the bottom line.

1. Every cat house has its night. Those departments that are having problems at the moment will have their day in the sun, but until then our job is to keep morale up and the people in place. 2. Those areas that are coining money will have a tendency to get overconfident and a little loose and/or forgetful of the fundamentals that built this place. That is where our P.S.D. degrees come into play.

Haimchinkel Malintz Anaynikal recently brought to my attention certain intercompany feuds that have led to the downfall of firms smarter, richer and larger than ours. Watching for these signs of dissension will be a high priority of mine. Whenever you have a partnership of over 80 people, there is bound to be a person or two who is not your exact cup of yogurt. For years, the partners of this firm have gotten along remarkably well and the cooperation at this time is great. One of the things I am going to be extremely sensitive about in the future—and come down very hard on when I see or hear of it—is acrimony among partners. Honest men may differ, but when the difference becomes animosity, you can have problems. I am not going to let personal conflicts have any effect on the net income of our golden goose.

If you think back, you will discover that our best moves were made against the thinking of the masses. I truly believe that now is the time to enter the securities business—not the time to leave—but it is up to us to be leaders. It is not easy to be up when your area of the industry is down 50%, but it will turn and we must and will help the weak survive this period. It is incumbent upon us that we keep our people from thinking the grass is greener somewhere else. It is incumbent upon us to recognize who needs help. It is incumbent upon us to stress that the contrarian point of view is the intelligent course. The bottom line is: there is no substitute for leadership. Now is the time to demonstrate what I know we have.

We are going through one of those periods. Some departments are breaking records and it appears that everything they touch turns to gold. We have been around long enough to know two things. 1. Every cat house has its night. Those departments that are having problems at the moment will have their day in the sun, but until then our job is to keep morale up and the people in place. 2. Those areas that are coining money will have a tendency to get overconfident and a little loose and/or forgetful of the fundamentals that built this place.

In fact, since business is booming we will once again emphasize cost control. Remember that great poker players leave nothing on the table when they hold good hands.

Absolution can be granted for losing money but never for lying about it.

DATE: August 13, 1992 TO: Senior Managing Directors, Managing Directors, Associate Directors FROM: Alan C. Greenberg You are correct! It is exciting to be associated with Bear Stearns. The first six weeks of our new fiscal year have been a continuation of last year’s record-breaking performance. Top talent continues to join us and it looks like our head count will soon exceed the number we employed in October, 1987.

but I did hear some things about his speech that I think bear repeating: 1. He is a strong believer that people who talk too much seem to have bad luck. 2. People who do not return phone calls promptly do not seem to make the grade at a highly profitable firm. 3. People who object to end runs will never make it in football, or with successful investment banking firms. Certain groups do need to observe a “chain of command” atmosphere, but highly motivated, intelligent people do not need this handcuff. 4. A firm that has enthusiastic receptionists and telephone operators starts off with a tremendous advantage over the dummies of the world. Keep in mind that the first impression people receive from Bear Stearns is with those associates. 5. If a business person has to ask his accounting department if he is making a profit, he will not be in business very long.

Our earnings for the three months that ended March 31, 1993 were spectacular. Fifteen years ago the Equity Capital of Bear Stearns was about 40 million (and we were rolling a big tax deferral). We earned $110,000,000.00 after taxes in the last quarter! That is amazing. Our earning power has changed materially, but some things have not changed one bit: 1. We have no more layers of management now than we had in 1978. 2. We still realize the importance of trying to cut expenses. 3. We still realize how important it is to be on guard against conceit and arrogance. 4. We still are deeply concerned about the well-being of every person associated with Bear Stearns. We have momentum and our morale has never been higher. Our future is unlimited as long as we remember where we came from and how we got this machine to its present level.

The rest of our industry cuts expenses when business is bad. We try to cut expenses all the time, but particularly when business is great.

must not get cocky or over-confident. Remember that the Green Bay Packers won because they executed the fundamentals better than their competition. Trick plays make headlines, but winners execute the basics.

In fact, the only area that I think is running at 100% efficiency is the error account.

PSD stands for poor, smart and a deep desire to become rich.

After a month like the one we just experienced, I think we should be on our guard against the negatives that go along with great success. I am speaking of complacency, sloppiness, relaxing on expenses, cockiness and just getting careless in general.

Our firm has dynamic money-making potential and will continue to grow and prosper beyond our wildest dreams if we devote all of our working hours to Bear, Stearns & Co. This has led the Executive Committee to decide that no General Partners or General Partners’ spouses can make any outside investments (other than publicly traded stocks and bonds or a residence) without the approval of the Executive Committee. The Executive Committee does not want our partners worrying or thinking about any business other than Bear Stearns. Owning an equity interest in our firm is the best investment any of us will ever see; so let us give B.S. 100% of our effort.

The firm has always been very understanding when errors are made. We will not be understanding if the error is not caught because of subsequent stupidity and laziness.

The year was over last Friday and it was a good one, but last year is gone. The score right now is nothing to nothing. Nobody cares (especially our competition) what we did last year.

A successful transaction has many fathers but a dumb decision is an orphan.

He pointed out to me that the tendency is to cut expenses when things are tough and how stupid that line of reasoning is. When things are good, you should be even more careful of expenses because it is ridiculous to leave anything on the table when you hold a royal flush.