This week, we speak with Dennis Lynch, Head of Counterpoint Global at Morgan Stanley Investment Management, running $130 billion. Several of the funds Lynch runs — Inception, Discovery, Growth, Insight, Advantage & Permanence — have doubled YTD in 2020. Their long-term track record has been similarly outstanding.
Lynch describes the group’s 19 products as concentrated globally in just 200 companies. Their process is to identify a company they want to own, and then figure out which product would be the best home for it. This is the opposite of most mutual funds, which have preordained and well-defined parameters that limit what they can buy.
He also explains why they run regular personality tests on their staff. More than creating a company-wide bonding opportunity, it can shed insight into how one’s personality type might impact their decision making.
Lynch is not looking for growth to continue its torrid pace over the next few years. His group remains long-term bullish on the growth space but warns that investors should ratchet back their future expectations. The economy should be substantially larger in a few years than it has been during the pandemic and lockdown, but much of that is already reflected in current prices.
In hindsight, the relative momentum of tech stocks during the 34% drop in February and March 2020 was very strong, and quickly translated into absolute strength once the market began to rally.
A list of his favorite books are here; A transcript of our conversation is available here Monday.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Greg Fleming, founding CEO of Rockefeller Capital Management based on the prior Rockefeller Family Office. They have about $43 billion in AUM. Previously, Fleming was President of Morgan Stanley Wealth Management and served as Chief Operating Officer of Merrill Lynch, where he ran Merrill’s Global Investment Banking business.
Dennis Lynch Favorite Books
Range: The Key to Success, Performance and Education by David Epstein
The Ethical Algorithm: The Science of Socially Aware Algorithm Design by Michael Kearns and Aaron Roth
The Art of Learning: An Inner Journey to Optimal Performance by Josh Waitzkin