Alan C. Greenberg - Memos from the Chairman

These memos were written between 1978 and 1995. While circumstances changed for Bear Stearns, the principles expressed here remain true.

with a foreword by

Warren Buffett

Workman Publishing, New York

Ace Greenberg does almost everything better than I dobridge, magic tricks, dog training, arbitrageall the important things in life. He so excels at these that you might think it would give deep inferiority complexes to his colleagues. But if you think that, you dont know much about his colleagues.

In this book we finally learn where all this wit and wisdomand theres plenty of bothcome from: Haimchinkel Malintz Anaynikal. (I used to have trouble pronouncing his last name until I learned that the trick is to rhyme it with Ahaynikal.) Haimchinkel sees all, knows all, and tells allbut only through Ace, his Designated Oracle here on earth.

Haimchinkel is my kind of guycheap, smart, opinionated. I just wish Id met him earlier in life, when, in the foolishness of youth, I used to discard paper clips. But its never too late, and I now slavishly follow and preach his principles.

Many years ago, Where Are the Customers Yachts?, through a humorous look at Wall Street, dispensed some of the best investment advice ever written. In this book, Ace has applied the same treatment to managerial advice with equal success.

Warren Buffet

Contents

Epigraph

Foreword

19781988

19881991

19911995

From the time of its founding in 1923, to 1978, Bear Stearns changed from a small commission house to an important factor in the securities industry and expanded into many areas, including those that risked capital. The driving force behind that growth and expansion was Cy Lewis, who assumed leadership of the firm in 1936. On April 26, 1978 he suffered a massive stroke and died two days later; so we started our fiscal year on May 1, 1978 without the man who was credited with having made Bear Stearns what it then was. 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 Cys main attributes. He encouraged and promoted young people as fast as they warranted it. He left a group that could and did carry on.

As the new chief executive officer, I knew I needed help to implement policies that had been running through my mind for some time. It was at this point that I met Haimchinkel Malintz Anaynikal, the dean of business philosophers, who immediately became my mentor and adviser. Through memos to my associates, I communicated his wisdom and ideas about how best to strengthen our bottom line.

These memos cover the ten years from May 1978 to May 1988. They may give you some idea of our growth and the fun we had participating in the further building of Bear Stearns. Although they seem to have been written in jest, I can assure you that the points I was trying to make in these communications were things I believed in very strongly and still do. There are many ways to run and build a firm. I used those memos to express my philosophies, and, in our case and during my tenure, I think they worked.

Memo

From the Desk of Alan C. Greenberg

Date October 5, 1978

To All General & Limited Partners

From Alan C. Greenberg

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Subject

Bear Stearns is moving forward at an accelerated rate and everybody is contributing. 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!

I conducted a study of the 200 firms that have disappeared from Wall Street over the last few years, and I discovered that 62.349% went out of business because the important people did not leave word where they went when they left their desk if even for 10 minutes.

That idiocy will not occur here.

Memo

From the Desk of Alan C. Greenberg

Date March 13, 1979

To All General & Limited Partners

From Alan C. Greenberg

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Subject

The Executive Committee last night approved a group of people who will be asked to become Limited Partners of Bear, Stearns & Co., subject to the approval of the other General Partners. You will be receiving this list shortly.

Carl Holstrom has just informed me that we have signed a $12 million long-term loan agreement with a major insurance company. This will replace our loan with the First National Bank of Chicago. The implications and the actual dollar savings of this agreement are of tremendous importance to Bear, Stearns & Co.

I also just received the P and L results for February and, in my opinion, they were great. These three items will be covered in detail at the Partners Meeting on March 19th.

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.

It certainly looks like we have a dynamic future in store as long as we remember the words of the famous philosopher, Haimchinkel Malintz Anaynikal: thou will do well in commerce as long as thou does not believe thine own odor is perfume.

Memo

From the Desk of Alan C. Greenberg

Date March 23, 1979

To All General & Limited Partners and Other Potential Perfume Lovers

From Eclectic Thoughts from the Complete Works of Haimchinkel Malintz Anaynikal

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