This morning’s must read comes from Ben Carlson, who coincidentally runs our institutional practice. In a longer analysis, Ben dives deep into the differences between managers and management.
The differences are simultaneously nuanced yet pronounced:
Portfolio Managers:
- The ability to process investment ideas from a number of different sources.
- Attention to detail.
- Knowing when to admit that you’re wrong and made a mistake.
- Being flexible in your views on the markets.
- Understanding where your competitive advantage lies.
- Having a quick filter for poor ideas.
- Being passionate about the markets.
- Conviction in your best ideas.
- Knowing how to manage risk (position sizing, trading strategies, when to buy/sell, etc.).
- The ability to sell and explain your process to others.
- Patience.
- The correct temperament.
Portfolio Management:
- Intellectual honesty.
- The ability to understand a number of different investment philosophies.
- The capacity to work with many different personalities and, more importantly, judge a person’s character.
- A broad understanding of how the different asset classes and strategies generally work and interact with one another.
- A thirst for knowledge (there’s a lot of reading involved).
- The ability to effectively communicate and define your overarching philosophy and strategy.
- An understanding of the difference between being stubborn and following a disciplined investment process.
- Knowing when to make portfolio changes and when to do nothing.
- The ability to manage risk.
- Control over your emotions.
Source:
The Difference Between a Portfolio Manager & Portfolio Management
Ben Carlson
Wealth of Common Sense, October 20, 2015
awealthofcommonsense.com/the-difference-between-a-portfolio-manager-portfolio-management/
“I’ve witnessed plenty of intelligent people overcomplicate the portfolio management process by trying to get too clever with their overall strategy.”
Guilty.