Name: The secret of Stifel Financial's 25 years of astounding growth in up and down markets
Uploaded: 2021-12-15
Duration: 8 min 31 s
Description: CEO Ronald Kruszewski: The key is investing in downturns and the firm's Midwestern values.

CEO Ronald Kruszewski: The key is investing in downturns and the firm's Midwestern values.

The secret of Stifel Financial's 25 years of astounding growth in up and down markets

CEO Ronald Kruszewski, Stifel Financial Corp. 

Leadership

Stifel Financial's 25 years of growth in up and down markets

Ron, Great to join you here on your trading room floor and to talk about your company, Stifel Financial. You know, investors were counting on 2021 to be the year of the post pandemic rebound in the U. S. Economy and also on the stock market. And it looks that way for a while. But these last couple of weeks, there have been Big sell off. There have been mixed messages and a lot of confusion. What's your take on what's going on? Well, first of all, it has been a good year for markets. The S&P 500, as we're sitting here today, is up about 25%. That is a good year. Historically, today, though, we do see volatility. It seems like The market can be up 500 points one day and down 500 points. The next thing that's confusing to a lot of people and investors asked me what's going on and what it's many things that are that are really going on. But the biggest thing to me is just the amount of money that's been put into this economy by government, both fiscal and monetary and investors that had no alternative. They weren't going to put in savings accounts. So they put in equities, and that's driven the values of assets. Today. Interest rates might rise and people are thinking, Well, maybe I won't be in equities and that's causing a lot of volatility. What about for next year? I mean, Steve Powell has done rather well you say that the S and P has been a 25%. Your stock has been almost 50%. So you're making all of the right calls. But looking ahead to 2022 what are we going to be saying about the economy in the market? What's your prediction? First of all, it is. Historically, it is the midterm elections of a first term president that generally is volatile for market. So it's in fact, it's often not good for markets. Now that's historical going forward. I think it will really depend on what the Fed does on one hand and what could happen geopolitically, on the other hand, so there are some uncertainty you're reading about Ukraine, Taiwan, all of the potential things that could happen. So I think this uncertainty, My prediction is 2022 will be a volatile year. You mentioned inflation as being one of the big worries. Higher interest rates that come with that. Of course, there's this new omicron variant. I'm sure you're getting a lot of calls from your clients. Uh, saying you know, what should we do with our portfolios? What are you advising them to do? Be diversified, be diversified first and foremost, do not panic and keep you need equity exposure. You should have fixed income be diversified. And the biggest thing today is do not get caught up in what I call fomo. So the fear of missing out I have clients calling me all the time saying, Oh, should I invest in this latest? What about these n f t s? And what about crypto? Sure, to a certain extent, everyone should have exposure. But don't be getting into the fear of missing out and piling into something you don't understand. Well, let's talk a little bit about cryptocurrencies because that's the big craze. Right now, a lot of people are saying this is the future and others are saying gloom and doom. What do you tell your clients? I think that Blockchain is the future and, uh, and and everything that goes with that. So just think about all of the deeds across the United States. We shouldn't have to get title insurance. You should be able to record a home sale on a Blockchain, and that is technology that will change the world cryptocurrencies in the speculative phase that's going on now That's, uh, that is a short term thing, and I'm not saying that Kryptos won't be around. But today, when they fluctuate in value 50% in six months, that's a speculative asset class. That's not a store of value today, So you have to be a little careful when you're thinking about that as an investment class. Ron, I want to pivot a little bit to talk about your leadership and your amazing track record. Leading us Steve. Many of our viewers might not realize that you've been CEO for 25 years. I mean, that's really unusual in corporate America, And what's also unusual is that every year during your tenure, steeple has posted record revenues every year for 25 years. When you came in 1997 revenues were just $100 million and now you're closing in on almost $5 billion. What's the secret to your success? I think of my mom. I really did, because my mom told me that early on to treat people as they want to be treated the golden rule. And I believe that. And I believe that that has truly been, uh, an ingredient to our success is treating people well, which has allowed me to go from 800 people to 10,000 partners of people. Well, you know, you've led the firm also through some very difficult times. Many market cycles bull market, bear market during crises like 9 11, the great recession, the most recent covid pandemic and Steve will still grows and is still making money. So from a leadership perspective, what's the most important thing that you've done as the leader of the firm that gets you through these difficult cycles? So the advice that we give our clients is the advice that I inherited myself, which is diversification. You know, Steve is a diversified firm. We have wealth management, we have investment banking, we have a restructuring business, we have a bank and we have international operations were very diversified, firm and so when you when you put that kind of firm together like a portfolio, you can weather the downturns. But on the next thing is in those invariable downturns that occur, we're always growing. We're always looking for opportunities and in difficult times we really invest. We invest in our business and we're growing and people want to be with an organization that's growing. They don't want to be with an organization that's cutting back every time there's a down cycle. I understand that you do a lot of acquisitions. And usually when the deal closes, the CEO leaves, but not at steeple. Most of the CEOs have stayed on, so what's that all about? I think it's the same thing. But think about, I will say, 18 deals in the last 15 years that a CEO I negotiated the deal with 16 of those CEOs still work here and why I ask them, Why do you do that? And they give me the answer I just gave you. They said This is a great place that listens to input where you feel valued and you feel that your contributions are valued, and I think that that is the secret sauce of our success. And my leadership, I think, is that we, uh we treat people right. To what extent do you think your success is also that your firm is not based on Wall Street? Um, Steve Old headquarters are in ST Louis. You know, I think it does. Steeple was formed in 18 90. There is something about the Midwest and in particular I have to tell you the number one thing here is don't take yourself so seriously and I don't And I think that matters to our people. For example, every year I will do something in front of all of our associates of steeper employees where I do something crazy and self deprecating. I have danced to thriller. I've come in on a high wire. I wrote motorcycles. I have just do crazy things, and what that does is it just makes you relatable to your people. They believe in your leadership. So what I say is, just don't buy your own publicity and your own bs B Real Ron. It's clear that you do have very strong values and beliefs when it comes time for you to choose your successor. What are the most important leadership qualities that you're going to be looking for. I believe that that is probably going to be. My most important decision is having someone that will succeed me, that shares these values, of treating people right, of being able to listen to different viewpoints and to have an entrepreneurial environment. And I'm working on that and I will tell you so I don't have that figured out yet. I don't want to go anywhere, but that's going to be a big and important decision. Uh, and those the person that takes my job, I assure you, will have those characteristics.