Finance lessons from America's most powerful CEO

Welcome to Wolf Financial!

Here’s what we have for you today:

• Stories of the Week

• Lessons from Larry Fink

• Meme of the Week

Let’s get started!

Stories of the Week

• Argentina’s president plans to close its Central Bank.

• SBF is trading fish in prison to pay for services.

• Binance’s CZ pleads guilty and has to pay a $50 million fine.

Larry Fink’s Guide to Finance

Larry Fink is one of the most notorious men in finance.

Just saying his name invites countless conspiracies and controversy.

But we are not here for conspiracy talk.

We are here to see what we can learn from the man himself.

We have to start at the beginning, at First Boston, an investment bank where Larry Fink got his start.

He was a star at the bank because he expanded the market for MBS, which is a financial instrument that combines mortgages and sells them as bonds.

It was all working well for Larry…

Until it wasn’t.

In the early 80s, interest rates increased quicker than Fink and his team expected, which led to substantial losses.

How substantial?

Over $100 million, according to some.

So, if you have ever lost money, don’t be down on yourself, Larry is just like the rest of us.

Larry Fink didn’t let the setback destroy him.

Rather, he learned from his mistakes and focused on risk management.

With that in mind, he created BlackRock in 1988.

It’s built around the concept of risk management.

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Now back to the lessons!

Over time, BlackRock developed its own risk-management system called Aladdin, which stands for:

• Asset.

• Liability.

• Debt.

• Derivative investment network.

The platform combines portfolio management, risk analytics, operational tools, and trading, which helps BlackRock and its clients have a complete view of their assets.

Because Aladdin has so much data, it can simulate different market scenarios to see how they would impact BlackRock and its clients’ portfolios.

This approach helps BlackRock find holes in its investment strategy and diversify well.

So, if we had to summarize Larry Fink’s investment approach in three key principles, they would be:

1. Always manage your risk - he built BlackRock around the concept of risk management.

2. Invest in technology - BlackRock developed Aladdin, one of the most sophisticated investment platforms.

3. Diversify - good risk management is built on diversification.

Meme of the Week

Hey!

Tanyo here, I wrote this piece.

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