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Finerman's Rules

Secrets I'd Only Tell My Daughters About Business and Life

Grand Central Publishing

CHAPTER 1

What Are Successful Girls Really Made Of?

I was raised a Calvinist. You might think you know what that means, but let me explain it the way my mother preached it to my three sisters and me back when we were at home: "I buy my girls Calvin Klein clothes, so that's all they know. Then when they graduate from college, they have to figure out how to pay for them themselves."

That's it—that's the philosophy. I can't tell you how many people I meet who think Calvinism is something else entirely. It worked for us.

Wendy, the oldest, went on to be a movie producer of such films as The Devil Wears Prada, Stepmom, and Forrest Gump, for which she won an Oscar. Unlike many people in the movie business, Wendy knew no one to help her get started. Through sheer will, she managed to find a job working for Steve Tisch, the producer. And it was only through her relentless perseverance and ambition that she finally got the book Forrest Gump made into one of the most successful films of all time.

My brother Mark, the second oldest, was spared the Calvinist lecture. Yet he still managed to become a real estate financier of such success and renown that I can scarcely come across someone in the real estate business who doesn't know him and tell me with a smile, "I love your brother." After a brief career as a professional tennis player on the pro circuit, Mark realized he could teach others how to play tennis to make money, or he could learn business skills and teach himself how to make money.

He went from teaching a real estate king how to hit topspin to realizing he could be the real estate mogul himself, and he already knew how to play tennis. He became the right-hand man to two big real estate players, first at Nomura and then Credit Suisse, before becoming the number-one man himself in the CMBS business (commercial mortgage-backed securities—don't worry if you don't know what that is), financing office towers and shopping malls—and he went higher from there. Yet he is still, at heart, the boy I grew up with. Even though he lives in a grown-up house in grown-up Greenwich, Connecticut, he's like Tom Hanks in Big. Mark has every toy imaginable—cars, horses, pinball machines, tree houses, go-carts, vegetable gardens, an indoor basketball court, candy machines—and he still thinks cartoons are funny.

Then there's me, the tomboy, nerd, and hedge fund cofounder.

And pulling up the rear—our two little sisters. First is Leslie, who followed my footsteps into finance after graduating from Berkeley and headed to Morgan Stanley. She then made the leap to become an analyst at a large credit hedge fund. Leslie recently took the road less traveled (in our family) and became a stay-at-home mom (for now). Leslie is the arbiter of cool in our family, the master of style. She can renovate an apartment and act as a general contractor even when nine months pregnant.

Last is Stacey, the youngest, maybe the smartest of us all, who was hired out of Wharton by Salomon Brothers, then got plucked away by RBS, and then after the 2008 market crash was hired by Goldman Sachs. After a breakup with a boyfriend, she decided to channel the energy left over after her day job to become a world- class Ironman competitor. She transformed herself into an extraordinary endurance machine. She doesn't just focus on finishing in the allotted 17 hours. She's looking to improve on her personal best of 12 hours, for the 2.4 mile swim, the 112 mile bike ride, and the 26.2 mile marathon.

Funnily, we all made our way from laid-back Southern California to New York City and its environs. It was here that we hoped we would find our success.

Instilling in her children her own brand of Calvinism, our mom didn't subscribe to the Happiness-Is-a-Warm-Puppy, Free-to-Be-You-and-Me parenting styles that were so prevalent when we were growing up. I think she may have truly believed that being only warm and loving to your children conveyed that you accepted them as they were, as opposed to putting forth the effort to make them better. She always let us know that we could—and should—reach for more, with our academics, sports interests, and our ambitions. If you had asked my mother, "Would you rather your children be successful or happy?" she would have answered, without the slightest bit of hesitation, "Successful. How can you be happy if you're not?"

Growing up, that message stuck with me. It was so imbedded in my thoughts that I don't ever remember when I learned it. It just was. Any of my friends who spent time in our kitchen (the neighborhood meeting place) heard the same message. In the way other mothers would have said, "Did you get enough to eat?" or "Any crushes these days?" my mother would say to some of my seemingly less ambitious friends, "How are you going to support yourself with no plan?"

As a teenager, rather than setting myself on a course to pursue fame (quite common growing up in L.A., the entertainment capital of the world), happiness, fulfillment, and spiritual enlightenment (also quite common), I skipped right on to trying to be successful. Let's just get on with it, I felt. "Onward" became my motto.

I wanted to get out in the world, have a great job, make my mark, and see how far I could go. And I wanted to make good on the philosophy my mother drilled into us with all the subtlety of a Lady Gaga performance. I got it loud and clear. I would need to succeed, and then I could possibly be happy.

And so I set about a career with a goal to make money, be independent, and make a success of myself on Wall Street. But as I did that, I realized that what I learned on Wall Street could be used anywhere, and in any part of my life. It's OK to have a plan, to invest in your future—for your financial security, your love life, your personal fulfillment, and even your happiness. To have personal happiness as a stated goal doesn't detract from it if you get there. Serendipity is nice, but hoping for luck and the magic of happenstance shouldn't be an excuse for a lack of proactivity. I had to learn for myself that waiting isn't a life plan.

In my journey to succeed and find happiness, I've accumulated a fair amount of wisdom as I saw what made some people quite successful, while others, who were far more talented, got stuck, paralyzed, or repeated the same mistakes over and over. I saw, too often, how women consistently got in their own way. That's what this book is about. It's my story and the lessons I've learned—with some wisdom from friends, siblings, and colleagues mixed in—about how I knew what I wanted but needed to learn to get out of my own way. Since the steps to success (in business and life) didn't come naturally to me (and really, look at the messes around you; do they for anyone?), I had to try, then fail and try again. I had to come up with principles and "rules" to add to the Calvinist ethic I got from my mother. And it's not easy, because people don't tell you what to expect—especially women, who believe they are not supposed to say out loud some of the things that other women really need to hear. I don't care if what I have to say is PC or not. As I started writing this book, I realized my children didn't know and hadn't even considered what I thought I had already so thoroughly engrained in them, which is that they will need to be independent and self-reliant. They will need to be in charge of their lives. These are things they need to know.

What I wanted was very clear to me—success. To me—and I hope for you—that does mean money. I want you to have enough money and the independence that money affords so it isn't a force determining what you can and can't do, or who you can and can't be. Plus, having money is fun. I remember the absolute, joyous freedom I felt when I first went to college: I had no bedtime, no curfew, no rules—I loved it. I was in charge. I couldn't believe I didn't have to answer to anyone.

Then four and a half years later, I would feel the same excitement when I made my first bonus. All the money was mine to spend (or save) as I wished. It was that same absolute joy of not having to answer to anyone. That $6,000 bonus was my first feeling of being successful as a grown-up. As I climbed the ladder in finance, the amounts grew, but that thrill of success at that very first bonus has always been the most memorable and meaningful.

I have spent much of my life where the boys are, first as a tomboy and then on Wall Street. Growing up, I loved every and any sport. I was frustrated by girls who didn't, so I spent most of my afternoons with the boys. In middle school, I was allowed to enroll in the boys PE—65 hardly developed boys and me. It never occurred to me that they could do anything I couldn't. And that's the way it was until high school when I joined the girls' tennis team.

In spite of my affinity for sports, as a teenager it started to dawn on me that I wasn't really going to become a professional athlete. The claustrophobic milieu and some of the overbearing parents definitely weren't for me, and somehow I was sensing that I might not be that good—that is, good enough to go all the way.

But with my mother and upbringing, I knew I needed a plan. Subliminally, I was looking for what I would be when I grew up, but I didn't have a guide.

I saw my mother as determined and passionate as a parent and teacher, but she was also a seemingly powerless mom. I had seen how the person who makes the money has the power, whether or not they wielded it with a heavy hand. My dad did well financially—as a well-known and highly respected orthopedic surgeon (and team doctor for UCLA football and basketball)—but he still struggled under the weight of all those children. The net result was that I learned that money isn't infinite—it's limited and limiting—and that I never wanted to be in a position where I had to ask a man (or anyone) for money. I wanted a freedom my mother didn't have. Money was the way to get that, as well as just a good thing to have. I remember my mother (who liked to imagine herself as a talented interior designer) coming home with a love seat she thought was perfect and my father telling her it was too expensive. I could see that she was crushed and embarrassed to have to take it back. I hated seeing her demoralized. If only she didn't need to ask him for the money.

With that desire of financial independence firmly in mind when I was 15, something caught my eye. It was a front-page article in the Los Angeles Times business section with a big glamorous photo highlighting Ivan Boesky, the famous Wall Street risk arbitrageur, long before he was convicted of insider trading. I was enthralled by the excitement and action of trading stocks of companies involved in takeover deals. He was a titan of Wall Street who sat at the center of high-stakes trading and gigantic amounts of money. And it was his for the taking, if he just made smart bets. It didn't even seem that hard; anyone could do it. In fact, I could do it.

Just like that, I knew. I wanted to be a risk arbitrageur. Ar-be-tra- zher—I loved the sound of it. I wanted to be in the action, and I wanted to be the one making lots of money. I loved the image of creating my own destiny and being in control of my world. This wasn't some fantasy future in the way lots of girls announce that they want to be a fashion designer or a singer. I had found my calling. This was going to happen. I was destined for Wall Street.

I informed my parents that I intended to apply only to the Wharton School at the University of Pennsylvania, as that was the surest route to Wall Street. If I didn't get in, I wasn't going to college.

This was one of the more memorable in a series of stupid risk/reward plans I would make in life. Fortunately, Wharton accepted me. I remember heading off to college with the implicit, though unspoken, message from my mother: "Don't come home till you've set the world on fire."

Fast-forward till now: a lot of things have worked out better than I could have hoped. I've worked hard and I've been exceedingly lucky, and I've failed more than a few times.

Here's what's worked: I have a family I love—two sets of boy-girl twins (Jack and Lucy, born in '97, and Kate and William, '01). I have a husband, Lawrence Golub, I didn't let get away, who for better or worse (and we've had both) is the love of my life. I have friends I've known since grade school, high school, college, and after who inspire me and make me laugh and accept me fully. And last, and not least, I have a career that has brought me much of what I've hoped for in terms of money, freedom, influence, and excitement, including my added role on the CNBC show Fast Money, where I get to weigh in about the market and investing.

Here's what hasn't worked: For years I thought I wasn't successful enough and worried about whether people thought I was, and it drained a lot of energy and created a lot of stress. I was pregnant with twins. Twice. For some reason, I managed to have two pregnancies that tested all of my physical, mental, and marital strength. (Who knew the fertility clinic would be the "fun" part.) I've fumbled in business more times than I care to admit, both in investing and in leading. I've dealt with the near death of our business—when we couldn't blame it on a global market crash but on our own mistakes and egos. I suffered from guilt (oddly, only mild) over being a working mom, though I'm fully over that now. And I never, never have downtime. Going forward, I know there's a future of obstacles, mistakes, and life's misfortunes ahead, but I can't worry about that now.

Here's the thing I wasn't expecting—that finding success investing and being on Wall Street could be in any way instructive to finding happiness and "success" in the rest of my life. I wasn't expecting portfolio management decisions to be metaphors for life decisions, yet that's exactly what I found. Working in a male-dominated industry only brought these insights into sharper focus. Your industry may be different than mine. Your life may be different than mine, but I want you to recognize where women are at a disadvantage and help you avoid those traps. I don't want to waste time bemoaning the disparities between men and women, or the challenges for women if you are in a male-dominated field. Learn what you can from men.

I want you to learn the value of taking away just one thing of worth from someone else's screwup or triumph. Maybe you won't need to learn from your own stupidity if you can learn from mine. And frankly, I'd be honored if you did. There are choices to be made along the road that improve the likelihood of success—both in work and in the delicate balance of work and everything else. You can actually make things easier on yourself, especially when you're honest with yourself and others. There are ways to make decisions that improve your chances of success. There is real-world knowledge about taking risks—risks that are always there, so why not consider how to handle them rather than avoid or succumb to decisions not of your choosing. And we can learn to deal head-on with our squeamishness about putting ourselves out there—which too often feels tainted or wrong rather than natural and right.
(Continues...)

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Excerpted from Finerman's Rules by Karen Finerman. Copyright © 2013 Karen Finerman. Excerpted by permission of Grand Central Publishing.
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