Another newly discovered blog. Written by an experienced hand in the fund management industry. I have linked it to my blog at Value Discipline. Here’s an interesting article:
“As my profile indicates, I have been in this business for more than 25 years, in fact come April, it will be thirty years. I suspect I may be one of the older bloggers around, but I still look at myself as someone who still has a long career ahead, God -willing. I would love nothing better than continuing to come into my office well into my golden years, following the examples of Buffett and Munger, or others you may not know such as Irving Kahn, or Roy Neuberger. Despite many years of experience, having influenced billions (yes with a B) of dollars of assets, having faced numerous investment committees, and many individual clients, I still view myself as someone who is still involved in continuous learning. I would far rather think about an investment issue, or read a 10-K or Q than watch most sporting events…a tough admission for a guy, but a very honest one.
What makes a good portfolio manager? In my view, there is a passion for excellence and learning. But most importantly, there is an appreciation of risk. The investment management business has a very long apprenticeship, perhaps longer than any other occupation. An appreciation of risk from what I see, is innate rather than taught. Being able to think in probabilities of outcomes with a respect for the downside is not just a mathematical exercise, it should be practically a reflex action from a good portfolio manager.There have been times during my business career when risk capital was in very limited supply. For example, in 1982, I can recall seeing investment pools that were supposed to be fully invested with cash positions of 40%! Though prices kept getting cheaper, it seemed that no one was interested in taking on the “risk” of the market. Yet, in retrospect, the real risk resided in not being in the market. Risk aversion for me and other value buyers was overcome by great prices. [Read more…]