Age Appropriate

Act your age!

With MF Global we had a CEO that needed to be encouraged to act—not his age—but his position.

Jon Corzine—former Goldman CEO, former US Senator, former New Jersey Governor—was enamored of trading. He loved the feel of it, the flashing monitors and emotion of the trading floor. When he visited MF Global’s Chicago office, he spent over an hour chatting up a minor derivatives trader about his trading book, as other top executives hovered impatiently nearby.

Trading is a bug that gets into your system. Traders recognize other traders. They love math-intensive betting games like Liar’s Poker and backgammon. They’re constantly calculating odds and risk/reward ratios. Trading often isn’t about personal profit, it’s about winning a competitive game.

Corzine thought that a few winning trades could build up MF Global’s capital base and help them reduce their leverage ratio. He had his own trading blotter; he initiated trades on his Blackberry; he would rush out to check the market. Corzine was a central part of MF Global’s trading culture.

There’s nothing illegal about this. But there’s something unseemly about a CEO involving himself in the day-to-day trades of a $40 billion broker. He should be focusing on leadership, on recruiting and retaining the right talent, on setting strategy and achieving mileposts. Instead he was down in the weeds worrying about his daily marks.

When the CEO acts like a trader, he’s not leading. With no one leading, it’s no wonder the ship veered off course.

[display_podcast] Age Appropriate
By |2019-02-20T12:56:16-04:00December 13th, 2011|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment