Learn From A Billionaire: Steven Schonfeld

By | December 14, 2010

In our quest to better our lives and finances, we can always stop and learn from those who have already achieved success. Steven Schonfeld is one of them. He is the head of the Schonfeld Group, a firm he founded in 1988 and which total revenue reached $570 million in 2008. Considered a reference when it comes to day trading, Schonfeld, a self-made billionaire, ranks 371 among Forbes 400 Richest Americans of 2009.

As the son of a fabric manufacturer, Schonfeld first got interested in the stock market while in high school. He graduated from Emory University with a business degree and almost immediately started working as a broker in New York. A few years later, he took a job at Prudential Bach Securities where he was one of the top brokers for about seven years. It is during that time that he started developing trading strategies for himself. He created a database of his first 50,000 trades to help research and track different successful patterns. Moreover, given his entrepreneurial spirit, Schonfeld started building his capital base and later created the Schonfeld Group with $400,000.

Schonfeld’s main practice is to front buying power to traders who use it to rapidly buy and sell stocks.

They will then split the profits and he will pick up all the losses.

Over the course of 17 years, Schonfeld has had between 4000 and 5000 traders working for him with 1,100 at his highest in 2001.

With the economic slowdown, today Schonfeld oversees only 400 traders. He completes more than 500,000 transactions a day while trading over 150 million shares. In addition, he is continuously hiring mathematicians and programmers to put in place computerized trading systems like “quant” which brings in about a third of the company’s revenue. Today, Schonfeld remains very successful and anyone can learn a few lessons and benefit from his experiences.

What we can learn

First, it is imperative to have a passion for something to succeed. Whether it be trading, finance, or real estate, loving what you do is an important step in the right direction and Schonfeld attests to this when he says he is always working, even on vacation and it doesn’t feel like work because he loves what he does. Second, having a clear and precise vision of where you would like to see yourself in the future is crucial. Schonfeld always knew he wanted to be an owner and while he was working for others, he developed a strategy to realize his goal. Finally, it is important to be entrepreneurial and not settle for what’s safe. Indeed, Schonfeld could have chosen to stay with Prudential Bach where he was a top earner but didn’t. Instead, he put in place a plan that ultimately led him to the Schonfeld Group.

In sum, becoming a self-made billionaire requires planning, a clear strategy, and a lot of hard work and dedication. Steven Schonfeld understood that from the beginning and is still working toward achieving new benchmarks.