Who had the most influence on financial markets in the last 25 years? CNBC has released a "Top 200" business leaders today, with the goal of narrowing it down to 25, with viewer input.
It's a fascinating list, a trip down Memory Lane for those of us who were around at the very beginning of CNBC 25 years ago.
I'd like to narrow the question down to the area I spend much of my time: Financial markets. Who had the most influence on financial markets? Who had the most influence on the way we trade, on the stock/bond/insurance/banking industry in the past 25 years?
It's a narrower question, but for the people I hang out with--sell-side traders and long/short equity hedge fund traders--it's the most relevant question.
At first blush, you would come up with a list that's top-heavy with three groups of people:
- Hedge fund/money manager super star: Steve Cohen, Larry Fink, Henry Kravis, Julian Robertson, Ray Dalio, George Soros, Stanley Druckenmiller, Leon Cooperman and Stephen Schwarzman;
- Superstar/celebrity CEO: Jamie Dimon, Robert Benmosche, Lloyd Blankfein, Ken Chenault and Dick Grasso; and
- Behind-the-scenes movers: Robert Rubin and Hank Paulson
I've thought about this for a few days and talked to a few dozen trader friends. Here are the eight people I think mattered most, in no order:
First: Central bankers Ben Bernanke and Alan Greenspan, first for the rise of the Central Bank and its unprecedented power vis-a-vis financial markets...and Bernanke in particular for having staved off a nuclear financial crisis that brought the world to its knees.
Second: Sandy Weill, the former head of Citigroup who broke Glass Steagall and created the mega-bank. His dream of bringing together a bank (Citi) with a brokerage firm (Smith Barney) and an insurance company (Travelers) created the first "financial supermarket" in the late 1990s. Repeal of Glass Steagall got all the huge European Banks into the investment banking business, forced Goldman Sachs to go public to raise the capital necessary to compete with them, and was the final dagger in the partnership culture on Wall Street.
Third: Bill Gross for polarizing bond picking. It's hard enough to pick stocks that outperform, it's even tougher to pick bonds, but Gross of PIMCO emerged as a true bond superstar and amassed an enormous following around active management of bond portfolios.
Fourth: Charles Schwab. It's hard for anyone to remember, but commissions were fixed by law until 1975; the elimination of those commissions allowed Schwab and his imitators to change the way stocks are owned and traded. He has run a great retail business, offering advice (and, at times, solace) to his customers, and they revolutionized the retail business through cheaper commissions and the internet. He made E*TRADE, Scottrade and TD Ameritrade possible.
Fifth: Mike Bloomberg. Bloomberg terminals are, hands down, the finest terminals in the business. Just ask anyone who uses them and suddenly can't get hold of one. He changed information technology and the way information is disseminated.
Sixth: Ken Griffin. He created Citadel from scratch, and is one of the great pioneers of quantitative analysis. He used the most cutting-edge technology long before anyone else--trading activities like algorithmic trading and high-frequency trading were employed by his firm early on. He has survived periods of extreme volatility and turmoil that have put many of his contemporaries out of business. He was an early critic of the poor risk-management procedures among Wall Street firms prior to the 2008 crash. He has never had a serious regulatory issue that I am aware of. My one beef with him is that he is reclusive and does not like to talk to the press or anyone else, although that seems to be changing in the past couple years.
Seven: Eliot Spitzer. I know, strange choice. But he was responsible for forcing the division between research and investment banking, which included the prohibition that research analysts could not be paid out from investment banking fees. This was a sea change for the cost revenue model of every firm on Wall Street. This may be a stretch, but I also think his pursuit of Dick Grasso accelerated the move toward electronic trading because Grasso was a big defender of the NYSE floor; after his premature ouster his successors were much more sympathetic to moving away from the floor.
However, if I had to single it down to one person that I think had the most influence on the financial markets, the one I would choose i:
Eight: Jack Bogle. Heinsisted that the average investor would not, in the long run, outperform the market, and set up a mutual fund company (Vanguard) way back in 1974 around that concept, which was built on the ideas of economists like Eugene Fama and Burton Malkiel.
The indexing concept, he believed, would be The Great Equalizer for the average guy.
He won. He created the Vanguard 500 Index Fund in 1975, the first index mutual fund. It gave rise to a long string of low-cost funds, altered the way millions of Americans invest, saved those investors billions of dollars in fees, and indirectly led to the creation of the entire exchange-traded fund (ETF) industry.