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The unsinkable Mellody Hobson

The markets are plummeting, but that doesn't faze this Chicago mutual fund president, who has become a financial Dr. Phil in stilettos.

By Jennifer Reingold, senior writer
Last Updated: October 22, 2008: 10:43 AM ET

The market may be stormy, but Ariel Investments' Mellody Hobson, at the Chicago shore, takes a long view.
Hobson speaks to students at the Chicago school she helped found. They learn to invest using real money.
Hobson is a regular on Good Morning America.

(Fortune Magazine) -- The mascot of Ariel Investments is a tortoise, but you'd never know that from watching Mellody Hobson dash about like a hare on overdrive.

As the markets plunged in response to the Sept. 15 news that Lehman Brothers was filing for Chapter 11 bankruptcy and that Merrill Lynch (MER, Fortune 500) had been sold to Bank of America (BAC, Fortune 500), Hobson, the president of the $7-billion-in-assets mutual fund company, was in her element. She speed-dialed panicky clients to assure them that all was not lost and came across the airwaves as the voice of reason on Good Morning America, Nightline, and World News Tonight.

"It was a bloodbath. It was financial Armageddon. But sit tight," she said repeatedly. "You know that quote 'In a crisis, don't just stand there, do something'? This time I'm saying, 'Don't just do something, stand there.' Don't sell into this market!"

In a world gripped by fear, Hobson's words are a welcome tonic. A master networker, she has become one of the most recognizable names in financial services, often sought out by the media to help inform - and these days calm - investors.

Her advice is applicable, she says, to anyone from a single mom trying to get ahead to the investors in Ariel's funds to even the glitterati, with whom she mingles. Hobson, 39, is close friends with Diane Sawyer, who one day spotted her picture in a magazine and saw, as the co-anchor of Good Morning America puts it, "something in her eyes." Before long Sawyer had invited her to go on the air. Hobson is dating director George Lucas - although she won't talk about how they met - has hung out with singer Ciara, throws fundraisers for Barack Obama, and sits on the boards of DreamWorks Animation SKG (DWA), Este Lauder (EL, Fortune 500), and Starbucks (SBUX, Fortune 500), as well as nonprofits such as the Chicago Public Library and the Field Museum.

A woman who has struggled - she grew up with a single mom in inner-city Chicago - Hobson has cultivated the connections and the savvy to make it big in the white-male-dominated world of investing. "Of all the people I've met over the years," says Howard Schultz, CEO of Starbucks, "I put her in a select few that are professionally so strong and personally without fault."

At the same time, Hobson has ambitions that go far beyond the world of net asset value. She is on a quest to improve financial literacy for everyone - particularly minorities, who are, according to an annual study conducted by Ariel and Charles Schwab that Hobson initiated, significantly underinvested in the stock market. "I'm trying to make the stock market a subject of dinner-table conversation in the black community," she says.

Hobson is clearly driven by her experience as a woman who understands what it means to be poor. Yet she is also cognizant of her role as a glamorous personification of what it means to succeed. She has used both financial and emotional intelligence, along with a daunting - if a bit obsessive - work ethic to become the kind of person who moves effortlessly among different industry, racial, and class settings.

Hobson is exhibit A of the kind of people whom author Malcolm Gladwell has dubbed "connectors" - someone who can find common ground with anyone from her pension fund clients to an assembly of first-graders to fans at a Formula One race (where she cheers on Lewis Hamilton, the first black racer) to the A-listers alongside her on the red carpet in Cannes. She is both down-to-earth and a celebrity role model, a kind of financial Dr. Phil in stilettos.

Doing the butterfly at 4 a.m.

With the markets melting down, it has been a rough period for Ariel - and for Hobson - but you'd never know it as she strides into her office, briskly greeting a founder of a nonprofit who hopes that she'll join his board. Her Chicago office, located high above Lake Michigan, is filled with stuffed and porcelain turtles sitting on her desk and shelves, constant reminders of Ariel's slow and steady value-investing approach.

It's 10 a.m. - midday for Hobson, whose morning actually began at night, with a regular 4 a.m. swimming session with her trainer and another Ariel employee, followed by a run. To the great annoyance of Hobson, a hopeless perfectionist who wants to master every stroke before she turns 40, her co-worker can still beat her, despite the fact that his stroke is "flawed." "I'm like Seabiscuit," she jokes. "I get angry if I can't win."

Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
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