2016 Forty Under Forty

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Jonathan LavyDirector of Investments,American Red Cross
(Washington, DC) 36
Jonathan Lavy
(Art by Jillian Tamaki)

“He’s incredibly bright, knowledgeable, and experienced. And he’s a fast talker, so be ready.”

Name the most noticeable generational divide in investment style between sub-40-year-old investors and baby boomers.

Baby boomers are more philosophical, whereas Gen Xers and millennials tend to be more empirical.

Your least favorite part of being an asset owner is...?

The endless torrent of solicitations. You have to basically reject 95% of what you see and that conditions you to be more pessimistic about everything than you ordinarily would—or should—be.

The manager you don’t currently work with whose brain you’d most like to pick for an hour is...?

Steve Cohen (Point72) or Izzy Englander (Millennium Management). They do something intrinsically similar to what an allocator tends to do, but with enviable results.

... and where would that meeting take place?

Citi Field at a Mets game. Cohen is a part owner so he could probably finagle a discount on a hot dog.

Describe the weirdest interaction you’ve had with an asset manager.

Hotel rooms are always awkward meeting venues. I heard a toilet flush during a one-on-one meeting once and it was hard to get past that.

What asset class or investment troubles you most right now—and why?

I worry about ‘mainstream’ alternatives. The barriers to entry are low and forward-looking return expectations are frustratingly difficult to construct or pin down. Not only could the theater get very crowded, very quickly, there’s also a certain endogenous risk.

Name your favorite food and drink.

Mom’s spaghetti and beer—something other than Dos Equis.

What’s the wildest institutional portfolio you’ve seen?

A 60/40 portfolio. With the benefit of having worked in the industry for 15 years, when you look back, some of what would’ve passed for diversification no longer suffices. A 60/40 portfolio is incredibly dominated by a single risk factor and it’s not ordinarily optimal.

Name a cultural aspect of asset management that gets under your skin.

We’re not as introspective or self-critical as we need to be. Too often when you see profit or loss attribution, gain is attributed to skill, and loss to luck. The industry tends to naturally attract confident types, and that’s a great thing, but the issue with confidence is it increases the likelihood that you might be blind to something.

Donald Trump is ________.

From Queens.

Name your four-member investment dream team for your own family office.

As I’m not wealthy enough to be a qualified purchaser, I need to lean heavily on prognosticators. I will go with Miss Cleo (infomercial psychic), Nostradamus (16th century apothecary), Paul the Octopus (undersea oracle), and Sam Champion (noted weatherman)—all clairvoyants in their own respects.

What’s the biggest investment or career misstep you’ve made?

I became an investment banker out of undergrad primarily because everyone else was becoming an investment banker—effectively following the crowd. It was the worst career choice I ever made.

What should be an investment trend, but isn’t (yet)?

Being skeptical of trends.