How have you been a change agent at your organization? What have you done that you’re particularly proud of?
Through my willingness to question the dogmas of our industry. Throughout my career, I have had the privilege of learning from and working with some truly impressive investment minds. The person and investor I am today is a direct result of being influenced by these great innovators. They showed me the powerful results which come about when one is willing to challenge the status quo.
What is the asset class or investment that keeps you up at night, and why?
No single asset class, instead it’s the under-appreciation of risk that is currently baked into the market’s psyche. In my career, I have witnessed two bubbles form and then pop, both with the same narrative, “The good times will never end.” It does end, 100% of the time, and badly for the Bulls. I think about: What will break the existing narrative? How is my portfolio positioned for the various forms the broken narrative can materialize through? And are there unintended risks sitting in my portfolio? I am by no means attempting to time the market, I just don’t want to forget the lessons of the past.
What methodologies have you adopted within your institution?
I try to focus on convexity—maybe because it’s a big word that makes me sound smart in meetings. Plus, our goal is to efficiently compound returns. A convex profile helps.
Where do you fall in the passive vs. active debate?
Is today Wednesday? Then I’m with the Actives… check back again tomorrow. Either way, it’s asset allocation that explains the vast majority of a portfolio’s return.
What are some changes you’d like to see the institutional investing community make in 10 years?
I would like the industry to be less focused on short-term and peer-performance metrics, and stop being so asset-only focused (asset-only returns do not consider the risks within or purpose of the investment being made). My biggest hope is to see increased collaboration among investment teams (within internal silos and across organizations). We are long-term investors, our ability to meet our objectives is not limited if others understand our strategic decisions/thought process/investment rationale. In fact, collaboration will hopefully lead to an improved process, for the ultimate benefit of our stakeholders.
Who is a manager you don’t currently work with whose brain you’d like to pick?
Benjamin Graham.
Ideally, where would that meeting take place?
Well, if time travel was allowed for the last answer, I think I would enjoy seeing the future. Maybe Mr. Graham will meet for coffee in 2150… Will they still be drinking coffee in the future?
What is the software investment tool that helps you most?
Good old Excel. I focus considerable time on the sensitivity of outcomes to tweaks in assumptions. While I do use multiple third-party software products, I like the ability to understand the assumptions driving my outcomes. I have found that many off-the-shelf tools, while quite robust in their construction, leave users with a false sense of precision.
What would improve the relationship between you and managers?
They are too busy pushing products. The ones I have the best relationships with spent time learning my investment goals, before helping me work to achieve them. They are not selling me a product, but a solution.
Why did you choose your current path?
I really enjoy what I do and I worked very hard to get to where I am. But I feel like “my path” was not of pre-design but the result of many small decisions made throughout my life (some good and some bad).