A well-governed business works like a partnership, and regards its capital providers as partners, too.

Back in March, I wrote about how important a strong corporate culture is in making a good business. The idea came to mind again 10 days ago, when one of the best-known chief executives in the world lashed out against the “boring, bonehead” questions he was getting from analysts on his quarterly earnings call.

Elon Musk is without doubt one of the most creative, inventive and visionary entrepreneurs at work in the world today, and Tesla has the potential to be an epoch-defining company. But those earnings-call antics, and his similar April Fool’s Day stunt, raise serious questions as to whether he is suited to managing a $40 billion company—especially when that company’s revenues are 100 times smaller than those of the similarly valued General Motors and investors are worrying that it needs more cash.


When I moved from investment banking to investment management, it was to a firm working predominately in equities. In hindsight, that was useful experience.

Fixed income people like me are not used to getting regular, unimpeded access to corporate management. Surrounded as I was by talented equity portfolio managers and analysts, however, I got used to it, learned a lot from it, and grew to value it.

One of the earliest lessons was to be wary of “messianic” CEOs who nurtured a cult of personality. A cult of personality can quickly degenerate into a doctrine of infallibility, and infallibility is a dangerous delusion in the ever-changing world of business and markets. A vision is great. Every company needs long-term strategy. But no one ever reached the long term without first being flexible and practical enough to survive the short term.

These practical questions are what the “boneheads” tend to be getting at on analyst calls. Does a business have free cash flow? When might it start to do so? What can management tell us about the potential for this or that investment to generate revenue? As allocators of our clients’ capital, we understand that we are often investing for long-term returns—but we also want to know that corporate management is stewarding that capital responsibly and efficiently over the near term in pursuit of those returns.


Being wary of personality cults does not mean avoiding charismatic CEOs, or getting lost in day-to-day details, or allowing a management free-for-all. No one regretted investing with Henry Ford in the early 1900s or with Steve Jobs in the early 2000s.

Recently I caught up with someone I knew many years ago when he was a fellow bond salesman at Salomon Brothers. Today, he is the CEO of a major financial institution—but in important ways, he still comes across as that hardworking salesman working in the trenches of the bond business. If you didn’t know him, it would have been difficult to pick him out as the CEO as he worked the room of senior executives, board members, clients and their guests. In each of his career roles, however, he has led teams to impressive results in often very trying circumstances.

We got talking about corporate culture, and especially building and nurturing a strong culture in a very large business. There are no shortcuts, he said.

The first key is to define your business mission and values in a straightforward fashion and deliver that message in simple terms repeatedly and consistently. He quoted former GE CEO Jack Welch: “In leadership, you have to exaggerate every statement you make and you’ve got to repeat it a thousand times.”

The second key is to make sure that the management team is completely aligned with the long-term message and with shorter-term goals and objectives as well. Inconsistencies and breaks in the line from leadership create confusion and can be very counterproductive.

Lastly, the mission, values, goals and objectives aren’t simply those originating with the CEO. While he has an important voice, it should be the result of collaboration and input from throughout the organization. Done right, it will resonate with the hundreds or thousands of people who meet customer needs and keep the business alive and adapting through every day of change in its market.

A company that thinks of itself that way—as a partnership with a clear, shared mission— is more likely to translate that sense of partnership to clients, vendors and, in the case of a public company, to its capital providers. It should regard those capital providers as partners in the mission, too, rather than simply the people who hand over the spending money. And in a partnership, as the saying goes, there is no such thing as a bonehead question, only bonehead answers.

Brad Tank is a Managing Director, Chief Investment Officer, and Global Head of Fixed Income at Neuberger Berman. He is a member of Neuberger Berman's Operating, Investment Risk and Asset Allocation Committees. To learn more, see Mr. Tank’s bio or visit www.nb.com.

In Case You Missed It

  • U.S. Producer Price Index:  +0.1% in April month-over-month and +2.6% year-over-year
  • China Consumer Price Index:  +1.8% year-over-year
  • China Producer Price Index:  +3.4% year-over-year
  • U.S. Consumer Price Index:  +0.2% in April month-over-month and +2.5% year-over-year (core CPI increased 0.1% month-over-month and 2.1% year-over-year)

What to Watch For

  • Tuesday, 5/15:
    • U.S. Retail Sales
    • Euro Zone 1Q18 GDP (second estimate)
    • Japan 1Q18 GDP (first estimate)
  • Wednesday, 5/16:
    • U.S. Housing Starts and Building Permits
    • Euro Zone Consumer Price Index
  • Thursday, 5/17:
    • Japan Consumer Price Index

– Andrew White, Investment Strategy Group

Statistics on the Current State of the Market – as of May 11, 2018

Market Index WTD MTD YTD
S&P 500 Index 2.5% 3.1% 2.7%
Russell 1000 Index 2.5% 3.1% 2.8%
Russell 1000 Growth Index 2.6% 4.2% 6.1%
Russell 1000 Value Index 2.3% 2.0% -0.6%
Russell 2000 Index 2.7% 4.2% 5.1%
MSCI World Index 2.2% 2.4% 2.4%
MSCI EAFE Index 1.6% 1.1% 2.1%
MSCI Emerging Markets Index 2.5% 0.1% 1.1%
STOXX Europe 600 1.8% 1.0% 1.8%
FTSE 100 Index 2.4% 3.2% 2.3%
TOPIX 1.3% 1.0% -0.3%
CSI 300 Index 2.6% 3.2% -3.8%
Fixed Income & Currency      
Citigroup 2-Year Treasury Index 0.0% 0.0% -0.3%
Citigroup 10-Year Treasury Index -0.3% -0.3% -4.1%
Bloomberg Barclays Municipal Bond Index 0.2% 0.7% -0.8%
Bloomberg Barclays US Aggregate Bond Index 0.0% -0.1% -2.3%
Bloomberg Barclays Global Aggregate Index 0.0% -0.5% -0.7%
S&P/LSTA U.S. Leveraged Loan 100 Index 0.0% 0.0% 1.8%
ICE BofA Merrill Lynch U.S. High Yield Index 0.3% 0.2% 0.0%
ICE BofA Merrill Lynch Global High Yield Index 0.2% -0.3% -0.5%
JP Morgan EMBI Global Diversified Index 0.3% -0.8% -4.0%
JP Morgan GBI-EM Global Diversified Index -0.3% -2.0% -0.7%
U.S. Dollar per British Pounds 0.3% -1.6% 0.2%
U.S. Dollar per Euro 0.1% -1.1% -0.5%
U.S. Dollar per Japanese Yen -0.2% 0.0% 3.0%
Real & Alternative Assets      
Alerian MLP Index 2.6% 2.1% -1.9%
FTSE EPRA/NAREIT North America Index 1.6% 3.3% -3.2%
FTSE EPRA/NAREIT Global Index 1.6% 1.5% -0.1%
Bloomberg Commodity Index 0.1% 0.6% 2.7%
Gold (NYM $/ozt) Continuous Future 0.5% 0.1% 0.9%
Crude Oil (NYM $/bbl) Continuous Future 1.4% 3.1% 17.0%

Source: FactSet, Neuberger Berman.