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JUSTINE UNDERHILL: Welcome to How I Got My Start in Finance. Peter and Jon Najarian are two notable names in the finance industry. As the co-founders of TradingMonster.com, Investiture, and as former NFL players, they've seen the chaos and the risks that come with playing the game at the highest level. In this interview with Tony Greer, the brothers shared how they went from the football field to the trading floor and beyond.
JON NAJARIAN: Everybody always asks, Tony, well, you guys, twins?
TONY GREER: Right.
JON NAJARIAN: And I always, say, no, six years apart. Not sure if that's a flattering thing for me or not. Flattering for me.
TONY GREER: Is it a volatile spread, or does that spread look pretty much tied to six years the whole time? It looks good. You guys look good. That looks right.
JON NAJARIAN: And I came out of playing football for the Bears. Played four games For the Chicago Bears. Got cut. I don't know why I was so surprised when I got cut. I was surprised only because I played in the preseason, and Singletary held out on his contract. He was the guy they drafted in the second round. They drafted Van Horn in the first. Both these guys started and had long pro careers, and Singletary is in the Hall of Fame.
TONY GREER: Yeah.
JON NAJARIAN: But once they figure it out, you know, his skill set, which was immense, they decided to cut me. And so like I say, I shouldn't have been so surprised, Tony, when I heard that-- knock on the door. But I was for whatever reason.
TONY GREER: OK.
JON NAJARIAN: But my agent gave me an opportunity. He said, do you want to come down onto the trading floor? Because I said I didn't want to go up to Canada. I loved Canada, I just didn't want to go up and try to play football up there. I know number one, they have a limited number of Americans on each team. Number two, they don't cover you at all for any injuries that occur. Only the Canadians are covered.
TONY GREER: Wow.
JON NAJARIAN: So in other words, you're going up there, you're a gladiator, you're thrown into it making no money. Because I think I would've made like, $5,000 a game or something like that. $5,000 is not nothing in 1981. But it's also not what I was going to be making in the NFL. And I figure if I'm going to risk getting hurt like that, I think I'll pass.
TONY GREER: So football was actually your connection to the exchange.
JON NAJARIAN: It was. Because my agent had three traders down on the floor that were basically running money for him. And they were all three former pro athletes. One was hockey, one was football, one was skiing. And he'd represented them in their various contracts. So when those careers ended, he said, come on down, because I'm looking for guys that have discipline.
TONY GREER: Yeah.
JON NAJARIAN: And that's one thing I think that athletes in general, pro or otherwise, have to have discipline. And it's Pete's number one thing. Mine also as far as you've got to have discipline if you're going to make it in this game, because a monkey can make money picking stocks. I used to have to go against a monkey every year.
TONY GREER: Really?
JON NAJARIAN: When I was at Fox--
PETE NAJARIAN: Back in the day.
JON NAJARIAN: Yeah. They would bring in a monkey every year. And the monkey from the zoo would get a dart and he'd either throw it at the dart board, and you know, they'd have stocks on the dart board. And so I'd have to beat that monkey. Or they'd have a monkey come in and he'd crap on a newspaper. And wherever the crap landed on the newspaper, that's the stock--
TONY GREER: Very technical approach they had.
JON NAJARIAN: Yeah.
TONY GREER: Got it.
JON NAJARIAN: So the monkey can obviously pick stocks. I'd like to say that I always beat the monkey, because I did. But the reason I beat the monkey, at least partially, is because, Tony, I know just like you as a pro trader, I know when to cut my losses. You've got to have discipline.
TONY GREER: Risk management skills.
JON NAJARIAN: Yep. And if you can't cut your losses, you're not going to make it. Because even the monkey can pick a stock that goes got 12%. But can the monkey cut the losses and/or does the monkey take the profits. Anyway, so that's what got me onto the floor, was my agent was putting traders on the floor.
TONY GREER: Very interesting. What ring did you start in? On what exchange?
JON NAJARIAN: I started on the Chicago Board option exchange as a runner. And so I literally you know-- it's a euphemism. They didn't let you run, but you walked fast-- from the booths at the periphery of the floor to wherever an order needed to go in the middle of the floor, usually, to a broker. I couldn't execute or anything like that. I was just basically going back and forth as a runner, bringing orders from the desks at the periphery-- remember, this way before cell phones. And so all the guys have got like, the two phones to their ear, like in our Wall Street with Michael Douglas, and Charlie Sheen, and all that.
TONY GREER: Yeah.
JON NAJARIAN: Pretty similar, except that was of course, upstairs, where you did a lot of what you did, Tony.
TONY GREER: Right.
JON NAJARIAN: And this was down on the trading floor, but same idea. So that's what I did-- was basically learned what was going on for about three months.
TONY GREER: Right.
JON NAJARIAN: And then I started taking tests and getting ready to become a trader.
TONY GREER: And then you got your badge, stepped into the ring started trading options in open outcry.
JON NAJARIAN: Yes, sir. And when did your brother join you?
JON NAJARIAN: So then Pete joined about six years later. Because like I say, I'm six years older than Pete.
TONY GREER: And paved the way for him a little bit. You said, come on down, little brother, right?
PETE NAJARIAN: Kick it through and everything.
JON NAJARIAN: He'd been trading-- or not-- he'd been investing. And he'd come through Chicago. I'll let him tell you about that, though. On his way, he was playing for Seattle, and the Vikings, and Tampa Bay. And on his way to and from some of those gigs, he'd come by the trading floor in Chicago.
TONY GREER: OK, so what struck you about the trading floor? Was it the activity level, excitement level, competitiveness? What turned you on?
PETE NAJARIAN: All of what you just said. Everything. Absolutely everything about it. I was intrigued early on. I was playing for the Vikings, Jon mentioned. And eventually, I was down in Tampa. And whenever I'd do the trip back and forth, bring my car down for the year, I would stop in Chicago for a couple of days. Join him on the floor, and watch, and be confused beyond words, because it's the most confusing thing, ever.
TONY GREER: It is.
PETE NAJARIAN: I think people that have never been on the floor or seen it in person-- it's not only confusing, but you have to understand that people are called market makers. You know, which, I don't think very many people really get that. They think you go to the floor, and you buy a stock, or an option, or whatever, and that's really not the case. You're making the market. And that's what John had been doing, and I watched him. And it's the most confusing thing you'll ever see in your life.
TONY GREER: I know.
PETE NAJARIAN: To watch in person, as you know. You know, but it was. Intriguing and I was lucky enough that I played in something called the World Football League. I actually did make a trip up to Canada as well. So I kind of played everywhere.
TONY GREER: Right.
PETE NAJARIAN: I was asked-- not long after I came to Chicago, I was asked to be a player-coach in the Arena Football League, which would have been cool. And I didn't do it, but Gruden's younger brother, who is now the head coach of the Washington Redskins, did it. But somewhere along the way, he and I had crossed paths earlier, too, as players.
So while I was playing in the world Football League-- and first year, we did well, and I was lucky enough to be an all world linebacker-- which is much better than All Pro, by the way.
TONY GREER: Oh, great.
PETE NAJARIAN: Much better.
TONY GREER: I understand.
PETE NAJARIAN: I mean, this is the whole world.
TONY GREER: Yeah, the whole world, clearly.
PETE NAJARIAN: But then the second year, we won the whole thing, and I'd gotten injured. I got injured the first year. I got injured again in the second year. And I just decided I was almost done. Pushing 30 years old, I got to get a real job.
TONY GREER: Yeah.
PETE NAJARIAN: And as much as I loved to play in the NFL, there were guys coming out of college who didn't have any injuries, and I had a phone book version of injuries.
TONY GREER: Right.
PETE NAJARIAN: So I went to Chicago. I thought it was interesting with Jon early on. But it was the most confusing thing. Took me a long, long time. And then once you get it-- and he said this from day one-- he goes, there will come a day where you're going to say, that makes sense.
TONY GREER: Yeah.
PETE NAJARIAN: And that day finally came. And I did the same thing as Jon. I went from runner to clerk to assistant to a trader. And then eventually, became the risk manager of our firm.
JUSTINE UNDERHILL: A smart man saw a need for competitive and disciplined men. That decision to seek out former professional athletes like Peter and Jon Najarian brought their approach to a whole other playing field. For the Najarian brothers, it was a little more profitable than football. For Real Vision, I'm Justine Underhill.
