NBIM Talks to Citadel CEO: The U.S. Economy, the AI Bubble and Business Philosophy

This interview is Central Bank from Nicolai Tangen, Chief Investment Officer at Norges Bank Investment Management, on the podcast In Good Company. Norges Central Bank Investment Management manages the world’s largest sovereign wealth fund, the Norwegian Sovereign Wealth Fund, which has reached 16 trillion Norwegian kroner (10.78 trillion yuan coins) as of the beginning of this year, and according to Prism statistics, its return will reach 16% in 2023, and the annual floating profit will be 2,222 billion Norwegian kroner (1.5 trillion yuan coins), a record high. To use a more intuitive perspective, it is equivalent to giving 5.534 million people in Norway, each earning 270,000 yuan coins.

Norges Central Bank Investment Management is arguably the largest buyer in the financial sector on the planet, which allows Nicolai Tangen, as chief investment officer, to interview almost any industry bigwig, and today’s protagonist is Citadel CEO Ken Griffin. It can be said that Citadel was the brightest star of China Street in the last round of US dollar issuance cycle, and in 2022, it recorded a revenue of $28 billion.

As CEO, Ken is like a rock star, with his buy-and-buy news almost every month, buying the most expensive apartment in U.S. history for $238 million, trying to acquisition the NFL Miami Dolphins and their home Hard Rock Stadium for $7.5 billion, and buying a stake in the F1 Miami Grand Prix. In addition, Ken Griffin also has a lot of fate with the crypto industry, and its market maker business Citadel Securities began to participate in Crypto Assets trading early on, becoming one of the mainstream liquidity providers.

At the end of 2021, Ken Griffin also won an auction for a copy of the U.S. Constitution for $43.2 million, snatching the precious artifact from People Dao. Even many industry practitioners believe that Citadel is behind the collapse of the Algorithmic Stablecoin project Luna/UST in 2022, and Ken Griffin personally led the operation of shorting UST in May 2022.

In this conversation, Ken Griffin talks about the current state of the U.S. economy, the impact of remote work on tech companies, and how he views the AI bubble, as well as the Citadel philosophy, the principles of recruitment, and how to navigate today’s unpredictable market.

The following is the full text of the interview:

The financial road of the giant crocodile

**Nicolai Tangen: Welcome to today’s podcast, and we’re honored to have Ken Griffin, one of the best investors of all time. Ken began his financial journey in his dorm room at Harvard and founded Citadel with the great ambition to become the most successful investment firm of all time, which is exactly the kind of ambition we love. Welcome, Ken, it’s a pleasure to have you on board, and thank you so much for taking the time to join us. So first of all, what made you enter the financial deposit industry? **

Ken Griffin: I’ve always been interested in the stock market, and I don’t quite understand it myself. When I was in my third year of junior high school, I wrote an essay saying that I wanted to understand how the stock market works. So I’ve been on this path for almost 40 years (Ken is 55 years old), but I still feel like I’m at the beginning of a learning curve. The global equity market is full of interesting and complex questions, and the intersection of business models, returns, and investor psychology is truly endless. I’m always learning, trying to understand how to evaluate the value of a business, and how to be a successful investor in the stock market. It’s simply the most complex game in the world.

Nicolai Tangen: What was your vision when you started in your Harvard dorm room? What do you think the industry might look like? **

Ken Griffin: One interesting thing is that I bought two put options contracts for HNSI (Home Shopping Network, delisting 2017) in my college dorm room during my freshman year. In a way, I’d like to thank excellent journalism, and it was Forbes’ Gret Morgenson who wrote an article that allowed me to launch my career. In her article, she made the point that HNSI was the meme stock of the time. I liked her point of view and bought these two put options contracts. Luckily, from my career development standpoint, the stock then big dumped and I made a few k dollars.

Ken Griffen at the 1989 college commencement ceremony, photo courtesy of The Harvard Crimson

But you and I both know that when you’re a freshman, making $2,000 or $3,000 is already invincible. When I sold these put options, the market maker offered me less than its Intrinsic Value, which made me interested in pricing derivatives. I realized that I was lucky enough to buy those options after the stock big dump, but the market maker made a risk-free profit. I was very, very interested in understanding the pricing of derivatives, so I started to understand the pricing of convertible bonds, which was the beginning of my understanding of the hedging fund industry in my college dormitory.

Nicolai Tangen: Do you think the market opportunities are as long today as they were when they started? **

Ken Griffin: I think the opportunities are different now than when I first started in the industry. Clearly, pricing derivatives is well known, and there are a large number of master’s and doctoral programs around the world, as well as degrees in financial engineering. So the level of knowledge of the whole society in terms of investment has indeed improved a lot. But on the contrary, today’s market size is long larger, and it is global, and the long of products is more diverse. So there will always be some niche opportunities for investors to gain insight and gain a competitive advantage in trading.

Nicolai Tangen: What mistakes did you make when you started your career, and what did you learn from them and improve on them? **

Ken Griffin: I’ve made pretty much every mistake I could, and unfortunately I made some mistakes two or even three times. But the key to finance is to try to learn from your successes and failures. I think a common mistake people make is not to study their own successful trade, they don’t try to understand what they did right in that successful trade.

Let’s be clear, in finance, where you make money when you have successful trades, we all tend to place too much emphasis on learning from failure and far less emphasis on learning from success.

Nicolai Tangen: So, what is your trading strategy that has had great success? I mean, if you were to summarize your trading strategy, what would be the most successful thing? **

Ken Griffin: The most successful thing about us as investors is that we have a clear competitive advantage in absorbing information, processing information, and reacting to information. That’s what we do best. So, we structure our company based on the principle of “research business”, and the core of this business is research, whether it’s stock selection or weather forecasting for commodity trading, the first thing is to research the business, and trading is just how we monetize our research, it’s as simple as that.

The U.S. economy, online work, and the AI bubble

Nicolai Tangen: So based on all the data and research you’ve gathered, where is the U.S. economy at today? **

Ken Griffin: If you look back at all the data that we have, we’re in very interesting uncharted territory. You and I have been studying economics in some form or another all our lives, and let me ask you a question, have you ever imagined that American society is at near full employment, inflation is around 3%, and at the same time the government is spending on a massive scale?

Nicolai Tangen: No, I wouldn’t have expected that. **

Ken Griffin: We’re in uncharted territory, we’re at that stage of the cycle right now, trying to pay off government debt, trying to clean up the finances in order to have fiscal flexibility when the rain inevitably comes, and yet, at this very moment, the U.S. economy is almost at or beyond rise capacity, and the government is still spending massively.

Massive fiscal stimulus is leading to higher inflation in the economy than we expect to see, putting the US in a more dangerous long-term position, and it will give us less freedom to deal with the next crisis, even the unfortunate Great Depression.

Nicolai Tangen: You often emphasize the crisis of the fiscal deficit, why are you so worried about it? **

Ken Griffin: You and I both grew up in an era of fear of crowding-out (the fear that excessive government borrowing and spending would lead to an long oversupply of capital, making it difficult for private companies or individuals to get enough money to invest or grow), where the size of government deficits around the world would replace the need for capital in the private sector. Of course, for those who think about a very long-term process, this concern remains. How do we make sure we don’t crowd out the private sector to boost government spending?

But there is another important point, and that is the issue of fairness. You know, there’s a lot of focus on equity all over the world today. For example, is our income inequality too high? In a way, we are borrowing money from the future, from our children and grandchildren, right here and now, to maintain a standard of living that is incompatible with productivity or the work culture that is developing in advanced economies. From the perspective of intergenerational equity, it is really unfair that we are spending so long much money in our current form.

Nicolai Tangen: If you were giving advice to the president, or if you were actually in charge of dealing with this issue, what do you think are the country’s top priorities? **

Ken Griffin: I think the number one priority is that we need to be more productive in the Western world, and there’s nothing more important than that, whether it’s in Europe or the U.S., which is an important path to sustain prosperity.

Nicolai Tangen: How can we increase productivity now? **

Ken Griffin: You and I both know that we need to improve our education system, especially in the U.S., where K-12 education puts our children at a substantial competitive disadvantage compared to the rest of the world, and more importantly, they are also at an absolute disadvantage in life, where they are not exposed to ideas and concepts that will allow them to win rich careers.

The second point is telecommuting, a lot of telecommuting phenomena are undoubtedly reducing mentoring, collaboration, leadership development, and innovation, and it’s time for our people to get back together to collaborate, mentor, and develop leaders so that in 20 or 30 years’ time, we’re not in the terrible situation of a serious lack of leadership in the Western world because of the way we work today, and I’m concerned about that.

So at Citadel there was no working from home, we were all back in the office, and even better was the mental health impact, remote work made it hard to separate life and work, and it was great to see my colleagues working passionately and happily at work, while maintaining the separation of personal and professional life.

**Nicolai Tangen: What else do we need to do besides education and return to the office? **

Ken Griffin: Education, a return to the office, and prudent government regulation to encourage entrepreneurship and entrepreneurship, to rise small and medium-sized enterprises, and to drive increased economic competition are all very important. The West must continue to develop trade policies that truly realize the benefits of free trade between North America and Europe. So some of the tendencies towards protectionism, we really need to think about taking back and creating greater economic integration between the two continents.

Nicolai Tangen: Now when we look at all these things, is the stock market in a bubble? Or what do you think about the stock market? **

Ken Griffin: You know, it’s always very difficult to determine if you’re in a bubble, because even if you’re in a bubble, you’re going to have a very clear price on your assets. You and I can look back at the dot-com bubble period, what we were all talking about at the time, and do you remember some of those conversations?

We were talking about how e-commerce was going to revolutionize the way we acquired goods, and metrics such as “how long eyes stayed on a page” became the dominant metric for securities pricing, but we created a whole set of terminology, vocabulary, and frameworks to justify and rationalize the existence of a bubble at the time. Now, it’s interesting to note that 20 years later, all long things that we thought were going to happen in this revolution have actually happened, and many of the long biggest companies in the world today are actually businesses or similar businesses that symbolically represent the Internet phenomenon that we originally envisioned.

So what’s interesting is that we have the right arguments, we have the right ideas, but people just lose their minds about valuations for a while.

Nicolai Tangen: Are we in the AI valuation frenzy again? **

Ken Griffin: The AI frenzy is truly amazing, and it will be interesting to see how quickly the success of AI fits into our daily lives and the way our businesses operate. However, the second trend that is happening now is that the importance of your CIO or CTO in management and the board is rising again. People are starting to really focus on digitization and using software and analytics to improve their business.

So what’s really interesting is that when you talk to the CEOs of the business, they’re going to tell you how their companies are embracing AI and how it’s having a profound impact on their business. But if you dig deeper into these stories, you’ll see that AI isn’t involved at all, but the adoption of modern technology capabilities and digitalization is something that can really improve and enhance businesses in the U.S. and Europe.

So, one of the really great things about AI that I’ve found is that it’s getting entrepreneurs to refocus on the importance of technology and to be more efficient in delivering goods and value to consumers. At Citadel, we use AI in longest ways to improve the day-to-day productivity of our team members, and we’ll spend the next two or three years using AI to help draft emails, summarize research reports, understand or write memos, and other documents needed for day-to-day business.

For example, we use AI to help label data and then use it for some very important tasks, like how to help our software engineers be more productive. So in our company, we have all sorts of uses of AI. If we look at machine learning, it’s arguably arguably the most important part of AI’s evolution. At Citadel, we’ve been using machine learning for about eight to nine years, and machine learning plays a very important role in how we think about asset pricing, and occasionally in how we think about asset Risk Management, but when it comes to asset pricing, machine learning does play an important role.

How to manage a portfolio?

Nicolai Tangen: Ken, I want to go back to your vision when you founded Citadel, what kind of vision did you have for the company? That’s when you started the company, what did you think it might look like? **

Ken Griffin: Well, it’s a journey back in time. At the age of 20, I had the opportunity to manage a million dollars for a Chicago-based fund company.

They promised me that if I did well, they would help me set up my own fund and help me raise money. So Citadel started a little longest a year after I graduated from college, and we raised about four and a half million dollars in November 1990, and we started a strategy of trading equity-linked derivatives, convertible bonds, and warrants. That’s where Citadel came in.

Now there are some key things in this story that are important, the first is that I believe you can use math and software to help understand these pricing relationships, an area where the world of large long is still using pen and paper and rules of thumb. I remember hiring a rocket scientist to help with these pricing models in those days, and one of my fren from a big bank was going to laugh when he heard how we worked, and he said, “You’re not trying to send people to the moon, you’re trying to trade bonds.”

Ken Griffen at Citadel, image via WSJ

Now, more than 30 long years later, the bank he worked for is no longer there, and Citadel and Citadel Securities are two of the most important companies in the global financial markets. In a way, we have succeeded in riding the wave of the rise of mathematics in finance, which has to some extent passed. We all now take it for granted that we make heavy use of mathematical concepts in the financial industry, and these concepts were actually first applied in our day-to-day work in the 80s and 90s.

When dealing with this wave, I think the biggest challenge is that we have to develop our own talents. In the early days, you had to hire people with very different backgrounds that were usually rare on Wall Street at the time, such as physicists, nuclear engineers, mathematicians. You have to hire people with very different backgrounds than the typical Wall Street traders, and you have to teach them financial literacy and involve them in solving problems such as the value of derivatives and the value of complex securities, and there is a knowledge gap between them, and we have to help balance the different perspectives between the people who are responsible for investing and those who are responsible for analysis, and try to bridge their differences.

Nicolai Tangen: Your ability to innovate and expand in the financial sector is quite unique, so what do you think is the reason why you’re so successful here? **

Ken Griffin: I think some of the things we do are very different from longest companies. Everyone thinks that investing is an art, but we believe that investing is also a science. As we run this company day in and day out, we really focus on the combination of the art and science of investing and how to make our investment decision-making process work well.

The second point is that I think our hard work of analysis and learning has given us the discipline to invest in, from which we have created differentiated insights and confidence in our capital deployment.

The third point is experience, which is the wisdom that comes with the loss and pain we have had. My leadership team has been through a lot of tough times in the long market together, and we’ve learned some very painful lessons, but those that have made us better investors during turbulence and crisis.

Nicolai Tangen: Another thing that has happened during this time is that passive capital and short-term capital have become more common. What do you think is the impact of this for longer-term fundamental investors like us? **

Ken Griffin: It’s very interesting to note that the rise of passive investing suggests that the market is either efficient or semi-efficient, and that investors can get exposure to a wide range of indices in the world at large or in specific industries at a lower cost without having to pay for active management. This embrace of passive investing is revolutionary for the industry, but passive investing is only effective if there is a group of people who are engaged in fundamental research and help price securities.

Therefore, the theory of passive investment needs to be realized by capable, successful and competitive traditional asset managers behind passive investment. The increase in short-term investors has helped to ensure that the market remains efficient with rapidly evolving news information, but we really should do everything possible to ensure that traditional asset managers thrive by allowing them to maintain their own research and investment capabilities, as they are crucial in the price discovery process on which passive investing depends.

Nicolai Tangen: So with all of that in mind, what should you do if you’re a regular retail investor? **

Ken Griffin: If you’re a lawyer, dentist, or teacher with a full-time job, I think the best way to make money depends on where you are in the financial markets, and you should choose to invest in a wide range of equity index products or manage a wide range of actively managed pools. For example, if you manage the Norwegian Sovereign Wealth Fund, I know that you are very focused on investing a significant portion of your money in equity indices. Over the long years, you have developed strategies around the world that allow you to achieve integrated rise and profitability for countries around the globe at a very low cost.

It’s a very deliberate way to allocate a lot of capital that you have in your hands, and you’re also investing in non-equity assets, and then using a variety of strategies based on what you think is the relative competitive advantage of your internal team and external managers. This is the way I recommend any large-scale capital management so that it can be achieved in-house in a cost-effective manner and find what you consider to be the best managers around the world to longest the portfolio.

How to build a good investment team?

Nicolai Tangen: I totally agree with you. Now, 34 years after the company was founded, we have a report card, you have been very successful, how do you stay ahead of the curve? How can you make sure you’re still hungry? **

Ken Griffin: There are longest different aspects to this question, so let’s break it down. How does Citadel continue to thrive? We have an incredible leadership team, and I have world-class leaders at Citadel who are managing our various businesses, and I’m very grateful to be a part of that team. I am also constantly working with my leadership team to improve and strengthen our investment strategy. I maintain ongoing communication and engagement with my senior leadership team on the core issues of recruiting the best talent, developing the best stakeholders, and ensuring that capital is put into the hands of our best stakeholders when the best opportunities arise.

Our first focus is on human resource development and optimal allocation of human capital, and then in everything we do, there’s a second clue, which is how to build a competitive advantage, how to better gather information, how to make better decisions.

Nicolai Tangen: One of the things that you do is have longest managers and these overall concepts, how are teams organized, how do you think about that? **

Ken Griffin: We see the business as a variety of verticals, such as global commodities, long and short equities, and various credit businesses. In each vertical, we ask our business leaders to show an entrepreneurial spirit and truly say to themselves: In a sense, I have almost unlimited capital from this perspective. In this context, what are the ways to build and leverage the most appropriate teams, the most appropriate strategies, and the most competitive advantages in today’s world and environment? That’s the way we do business, with a lot of focus on a blank slate, and what we should be doing today to be one of the most effective capital donors in the world’s financial markets.

Nicolai Tangen: Does each team decide their investment strategy? **

Ken Griffin: The investment strategy is decided by the portfolio manager, the head of the business and me, so the three of us come together depending on the nature of the problem and work together to make sure that we’ve thought through how we’re going to create the most successful investment strategy.

Nicolai Tangen: So now you’re giving me 100 million dollars and I’m working for you, what would you think of my mistakes? **

Ken Griffin: First of all, we want to give you long more money to manage. And that’s partly because, you know, we’ve gathered really good people here, and we want them to be able to get enough capital to support the teams around them to be revenue and profitable, and to support the super teams around them. We really see investing as the task of a world-class team, because within the team, you have a much healthier debate and conversation, which helps to uncover the truth, to reveal the true nature of the debate, which is so important to our business that it cannot be overstated.

So when we hire you as a portfolio manager, we take long time to understand a few things, first of all, what kind of team we’re going to put together and how to attract the best talent to your team. Secondly, we want to work closely with you to make sure that you have a replicable investment process that you can learn from, whether it’s from your successes or failures, and that you’re able to teach your team members to create your own operational leverage, so those are some of the things that we think about when you join the company as a new portfolio manager.

Nicolai Tangen: When will Citadel fire me? **

Ken Griffin: First of all, we don’t want to fire you, we want to see you have a very successful career.

Why do people’s careers go wrong and why do they get stuck? There are several reasons for this. First of all, some people just aren’t good risk takers. You can put the facts in front of them, you have a very highly concentrated portfolio, you have large positions, and you can’t clearly and unambiguously prove that you have a clear advantage in those positions. If these things go wrong, we don’t have a basis for cooperation. There are also people who, even if they know everything, are unable to help themselves and improve their portfolio structure.

Nicolai Tangen: You’ve mentioned information longest, and you’re one of the really great users of alternative data, so let’s talk about some of the alternative data sources you use. **

Ken Griffin: What type of alternative data we use depends on where we invest. If you’re investing in an shorter company, you’ll be very interested in current shorter fares; If you’re trying to predict Inflation, you’ll break down each factor that the U.S. Bureau of Labor Statistics (BLS) focuses on one by one and make their inflation projections; If you’re involved in commodity markets, you’re probably running a world-class meteorology project trying to predict short-term weather patterns or the dispersion of weather patterns. As a result, you’ll focus on using alternative data depending on the nature of the problem at hand. We’re always trying to peel back the façade of data, understand what information is critical to driving revenue or demand for a business, and then take that information in the right way, process it quickly, and make the right decisions.

How does Citadel hire?

Nicolai Tangen: You were drawn to market makers in college, and now you’ve founded Cedar Securities, one of the most sophisticated market makers in the world. First of all, for those in the audience who don’t understand the role of market makers in finance, can you explain? **

Ken Griffin: A market maker is a company that provides liquidity to buyers and sellers who are not transacting at the same time. This means that when you want to sell $50 million worth of stock, if there are no buyers in the market at the same moment, you are not pushing the stock price excessively, and the market maker will use their capital to facilitate your trade and then hope to find the ultimate buyer of your stock at some point in the future.

We do this on a global scale in terms of fixed income and equity products. You know, for example, in the U.S., 25% of all the equity that we trade almost every day. These are huge numbers, right? Citadel Securities has a daily volume of up to $400 billion per day across all asset classes.

Nicolai Tangen: What do you think Citadel Securities will look like for the next 5 to 10 years? **

Ken Griffin: I think it’s going to be very similar to what it looks like today, but we’re going to dig deeper into long offerings, diversify our business, and expand our connections with more long trading partners, and we also offer a range of other services that investors really value, like corporate finance and new issuance shares. It will expand in size and scope in the coming years as we continue to address the challenges and issues our customers face.

Nicolai Tangen: What are your thoughts on the current geopolitical situation? **

Ken Griffin: You know, you and I were very fortunate that we really grew up in a peaceful era until the last two or three years. It’s heartbreaking to watch the war in Ukraine unfold before our eyes. It’s incredible, have you ever thought that in your lifetime there will be another war in Europe? No, it won’t. But now, we’re witnessing this firsthand, and it’s really heartbreaking to see the terrible losses and devastating effects that the Ukrainian people and economy have suffered in the war that is entangled with Russia.

Of course, just a few days ago, we saw an Iranian attack on Israel. Israel has been in a huge predicament, and the situation in the Middle East may not be as surprising as the war in Ukraine. The Middle East has always been a region that is more vulnerable to geopolitical challenges, but in any case, the events of last October, the war in Gaza are very heartbreaking moments.

Nicolai Tangen: So, Ken Griffin, if someone asked you to take over the finances of the United States, would you do it? **

Ken Griffin: Look, if the U.S. has fiscal challenges, I can help the country, and of course I will.

Nicolai Tangen: Let’s talk about corporate culture, you’ve talked about the importance of talent. So, long do you spend less time hiring? **

Ken Griffin: I’ve been talking to candidates, and there’s nothing more important than the talent we’re bringing in. They are nurtured with us and lead the company in terms of capital investment and enterprise building.

**Nicolai Tangen: You have long candidates, right? I think, you have 1,500 positions in New York, but you’re getting 100,000 applications, right? **

Ken Griffin: Yes, we received about 100,000 applications from all over the world. Let me tell you, what makes me happiest is that people all over the world know that we work 5 days a week, which shows that there are a huge number of young people around the world who want to get into an environment where they will be well mentored and led to development, and they will have great careers. This gives me a lot of optimism about the future, and I hope that those of us who run businesses around the world can reach a consensus with these students and give them the experience to have a great career."

**Nicolai Tangen: Let’s say I’m one of the 100,000 people right now and I’ve managed to get an interview with you. Of course, I was a little nervous because you are a very famous person. What questions would you ask me? **

Ken Griffin: I’m going to be the fourth person you’ve met, so there’s a really great set of questions for you. I’m looking for people who are ambitious. I hope to find people at Citadel who really want to change the world of finance, who want to live impactful lives, who want to make an impact in this world. What I was looking for was strong communication skills. I think it’s very important to be able to convey ideas, and no matter what business goals you’re pursuing in life, you have to be able to express your ideas.

We always debate the pros and cons of our ideas within the company to find the truth. So I’m looking for people who are ambitious, have communication skills, and the ability to reason and rationalize in a wide range of areas, and I want to find those really good thinkers, because problem solving is so fundamental to what we do every day, and good problem solvers are people who succeed at Citadel.

Nicolai Tangen: Can you tell these traits in your resume? Or do you need to meet people? **

Ken Griffin: You need to meet people. Today people know how to write resumes that cater to the needs of employers.

Nicolai Tangen: How can you tell if I’m a good problem solver? **

Ken Griffin: “What problem did you solve?” Every student will have a problem-solving story, whether it’s the laundry service they started, their previous summer job, or the essay they wrote, there are longing opportunities for students to demonstrate their truly excellent problem-solving skills.

Nicolai Tangen: What’s the most difficult problem you’ve solved? **

Ken Griffin: Well, the most difficult problem at the moment hasn’t been solved, but you know, there’s a lot long of work going on, and one of the challenging issues is long cycle optimization. Longest optimization refers to having different views on how a stock will move in the next day, week, month, or year, and then how to create the best portfolio based on those different views at the current moment. This involves the capital allocation decisions that we have to make. This is an interesting and challenging problem that we have not yet fully addressed at Citadel.

**Nicolai Tangen: I read somewhere that you said that if you naturally like to be a good competitor, you’ll love working here. What does that mean? **

Ken Griffin: We make no secret that we want to hire people who really enjoy the competition and are good at winning. Every day, the financial markets provide competitors with a report card that tells them how well they are doing against the competition. We’ve found that people who like to compete and win like to work here because they like to see the results of their work at one of the world’s leading financial institutions and to see their research reflected in the portfolios they build and manage.

Nicolai Tangen: What are your thoughts on leadership? What does good leadership mean to you? **

Ken Griffin: Good leadership is about dealing with the realities of the situation at hand. Good leaders are very objective about the problems, challenges, and opportunities they face, and they are rational in making decisions about them, challenges, and opportunities. They are not affected by the fallacy of costs paid, nor do they lose hope when the situation is not optimistic, but are able to always make good rational decisions.

Nicolai Tangen: Are you a good leader? **

Ken Griffin: Most of the time yes. Speed is a key factor in decision-making, on the coordinate axis, accuracy on one axis and speed on the other. It is important to understand what the trade-off between the two axes is at any given time. Sometimes, it’s more important to be close to correct and fast than to be absolutely correct but slow.

The cost of changing your mind is a key factor in determining how fast you need to long. If you are planning to invest in a real estate development that will take 40 years to complete, you don’t need to be fast, you need to think thoroughly because once you start this journey, it will be a very long journey. And if you buy $500 million in Apple stock, the next day you realize you’re missing an important fact that you can act quickly to get out of the deal.

Nicolai Tangen: How do you balance analysis and intuition? **

Ken Griffin: The best intuition is actually almost like subliminal analysis. When people tell me, “I trust X with intuition alone,” what I’m thinking about is whether it’s their subconscious mind at work, they’ve had a long experience with this kind of problem, they have a rough idea of what the answer is, but they haven’t written it down yet, but their intuition is actually a more long reflection of their inner ability to analyze the problem and tell you what to do.

Some people’s instincts seem to be just: what coffee did I drink in the morning, so I should go long or short the S&P 500 because it was a good day to drink coffee. But it doesn’t apply here, at Citadel, intuition is actually a reflection of the analysis going on in the analyst’s brain, which may not have been fully formed or fully manifested.

Amateur life

**Nicolai Tangen: What happens if you leave Citadel? **

Ken Griffin: That’s a great question, and the good news is that I have longest people here who can run this business successfully, and I can do without it. I don’t want to leave, I love my job, I love the people I work with, it’s really a passion for me. So I don’t want to think about that day, but if something mishag happens, I have great partners who will continue to run this company.

**Nicolai Tangen: If you were to go back to university again, what would you study? **

Ken Griffin: Wow, so am I when I was 20, or am I at this age?

Nicolai Tangen: You are your current age. **

Ken Griffin: I’ll probably go back to college and learn a little bit about philosophy and the areas of government, which have always been issues of interest to me. Good governance is important, and having a solid philosophical foundation that I think contributes to better policymaking. I’ll probably also spend some time studying math and computer science to get a better understanding of today’s latest technology. It’s been a long time since I’ve studied math or computer science in the classroom, and it would be interesting to see how far the world has come in these fields today.

Nicolai Tangen: What are you most curious about? **

Ken Griffin: I’d say my curiosity encompasses innovation from biotechnology to computer science, so STEM (an acronym for Science, Technology, Engineering, Mathematics) is my area of interest. I am very interested in the development of STEM fields around the world, from nuclear fission and fusion to microprocessors and genetic engineering, and I have an insatiable desire to learn more about the issues and developments long these broad fields.

Nicolai Tangen: How do you relax when you’re not spending time on it? **

Ken Griffin: I’m a big fan of cycling, Miami has great bike trails, and I’m very lucky to have three young kids, all longest teenagers, so most of the time, I’m basically spending time with them, consuming all my shorter time.

Nicolai Tangen: Speaking of young people, we have k tens of thousands of young listeners, what advice do you have for young people? **

Ken Griffin: Now, you know, my advice hasn’t changed longest in thirty years, pursue what you’re passionate about, and to excel at something, you have to be passionate about the job. If you don’t have passion, you won’t excel at it, you won’t be happy with your career, and you need to pursue things that really make you want to wake up in the morning. It could be becoming a doctor, it could be becoming a lawyer, it could be stock picking, but you have to find what you want to do when you get up in the morning, what is something that motivates you internally.

If you are driven by extrinsic motivations, you will feel that life is superficial and you need to find the inner calling in life. I remember there was a young woman here, about thirty years ago, and she was very talented on the investment team, and she was with us for about a year and a half or two, and she and her manager walked in and said she was thinking about going to medical school, and I need you to convince her to stay at Citadel. I said, well, the problem is, as soon as she walks into my office, I offer to write her a letter of recommendation, the world desperately needs another good doctor, and if that’s what she wants to be, I want to help her achieve her dream.

Nicolai Tangen: So, let’s end with such a great place where you seem to have achieved your dream and you’re trying to make Citadel the most successful investment firm ever, so I have to sincerely congratulate you and thank you for coming to the show today, thank you very much. **

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