"…Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit."
Gordon Gecko's famous speech about the merits of greed in the blockbuster movie Wall Street is considered one of the greatest of all time. It certainly had an impact on a young trader new to the floor during the penny stock heydays of the early 1990s. When Jordan Belfort walked on to the trading floor for the first time on Monday, October 19, 1987—also known as "Black Monday"—he had one goal in mind: to get rich quick.
Over the next decade, Belfort, CAS/BS '84, became involved in fraudulent stock trades that amounted to investor losses of more than $1 billion, eventually serving 22 months in prison. Belfort spoke to an audience of American University students and faculty about his past—and the ethical lessons he learned along the way—as the keynote speaker for the annual Kogod Lecture on Fraud and Forensic Accounting.
As much as Belfort admired the fictional Gordon Gecko when he started out, now he wishes he could correct that famous speech and hopes young people will remember his version.
"Gecko was wrong, greed is far from good. Greed doesn't clarify a thing. Greed destroys," he said.
Belfort instead believes the key to succeeding, and succeeding ethically, is ambition.
"Ambition is healthy, ambition is what cuts through and provides clarity [to work]," Belfort said. "It's ambition that drives you to add value to business [exchanges]. Ambition is the engine of capitalism."
Greed doesn't only apply to money, according to Belfort. Greed for power and recognition, not just wealth, drove him over the edge.
"Like many celebrities…I thought getting rich and being considered successful would make me feel better about myself, that it would fill some hole I had inside me," Belfort said. "But that's not what happened. I didn’t feel better and I started to panic and get desperate to fill that hole and, like many others, I imploded."
The Need for Value
The most dangerous pitfall of the Wall Street culture, according to Belfort, is making money without creating anything. In his younger days, he was "making money hand over fist" without seeing any tangible products or value from his transactions. To fix this problem, he tried to "assign" value to the money by buying expensive cars and using drugs.
"It was a slippery slope. I thought if I bought a Ferrari [making illegal trades] would be more worth it," he said. "But it wasn't enough. So I bought a boat and that still wasn't enough, and it all went downhill from there."
Belfort says he needed to assign value to his life beyond making money. For him, that clarity came after his prison sentence, when he began his consulting career helping corporations assign value to their businesses.
"If you truly want to be satisfied with your life and especially with your work, you have to find some way to bring good into the world," he said. "I'm not saying everyone needs to go out and be Pollyanna, but you have to find a way…without getting caught up in just making money."
Go With Your Gut
The biggest trap people fall into, Belfort said, is believing unethical behavior is a one-time action.
"The human brain is a powerful thing; you can convince yourself of almost anything," he said. "It's easy to say 'I'll just make this trade under the table for a bag of cash once and never do it again' but that's not how it works."
"Every time you tell yourself 'it's OK, I can do this just this one time' you move your line for ethical behavior," he said. "The changes happen in tiny steps and before you know it you’re looking at life from an entirely different perspective."
Belfort likened the process to being submerged in a bathtub of scalding water: dipping a toe in seems intolerable, but by the time you're all the way under it feels fine.
"You think it's not you, it's the water, it's cooled off—but that's not the case. The water is still hot, you've just gotten used to it."
The key to maintaining ethics, as Belfort told the students in the audience, is following your gut.
"There's no middle ground with ethics and integrity, not in business and not in life," he said. "You're either doing it right or wrong and, no matter how much rationalizing you do, deep down you know which it is."
The film version of Belfort's best-selling memoir, The Wolf of Wall Street, starring Leonardo DiCaprio and directed by Martin Scorsese, will be in theaters this December.