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Ms. Clean
Jan Alexander
01/01/2008
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I covered Travelers for a while, and I think one of the
reasons Sandy ended up liking me had to do with Travelers buying Salomon. When
they combined the two business models, their earnings went up, so they took
their target prices up. In my analysis, though, I said that the underlying
driver of profitability—the return on equity—was going down, so I took my target
price down. People said whoa. I actually remember a very large investor calling
up and screaming obscenities at me after I’d done it. Sandy wasn’t thrilled. But
I will tell you Sandy was very respectful of it.
And darn if a few months later, we didn’t have the Asian
crisis. Not that I predicted it or projected it, but it actually proved out the
theory of the increased risk that Travelers brought in with Salomon. So I think
Sandy and I developed a very healthy respect for each other. I certainly had a
very, very healthy respect for his vision for the company and his derring-do.
Do you think the industry is doing research the right way now?
I do. It’s still hard for an
analyst to put a "sell" recommendation on a stock. A sell sticks out as
pessimistic, and that goes against our grain as Americans. Also, there’s a
little bit of fear that the managers know more than I do as an analyst. If
they’re looking and sounding optimistic, which they always do, I’m making a bet
against them.
I don’t think we’ll ever get sells up to 50 percent of all recommendations, though I thought about forcing that when I got here five years
ago. I managed to get us from a horrible rating system, in which a stock could
underperform or outperform, to buy/sell/hold. I wanted to rate a stock as yes or
no. We’ll never get there. But now that the banking business does not pay the
research business, we have 99 percent of the battle won.
Sallie Krawcheck on Money
& Meaning
My father had money, but my mother [grew up with] none. I grew up in a family of four kids,
and when we talked about money, it was mostly about the absence of it.
I learned about how in one moment you can make a difference in
a kid’s life. For me it was in my junior year of high school, when my guidance
counselor caught me and said, "Have you seen your IQ scores? You can really do
something with yourself, and you’re on track not to." I was interested in
running around with my boyfriend and giggling and trying to date the
quarterback. Boom. That was when I thought, "Well, I can go to the University of
North Carolina." When I got there, on a Morehead Scholarship, I thought, "I can
go to New York." But at first, North Carolina was as far north as I was going.
I studied journalism in college, but then I started thinking I
should have a specialization—maybe I should know something before I went out and
wrote about it. So I went to Salomon Brothers for a couple of years to learn
about business, figuring I’d probably go work for an Atlanta newspaper on the
business side. And you meander along and you like this job and you go to
business school. Then you like that man. Then you’re married. You’re having kids
and a cat and an apartment. And the next thing you know, you’re running global wealth management in New York City.
Almost all of the charitable work I do is based around
education. But the thing that’s very close to my heart is the scholarships my
family and I are endowing at my high school, Porter-Gaud, for very talented
young people who would not otherwise be able to afford to go there. I took the
idea from the Morehead Scholarship, which made all the difference in my
life.
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