Age and the Portfolio Manager

Portfolio managers are creatures, in large part, of their times. It’s worth considering, therefore, that today’s typical 40-year-old U.S. portfolio manager was …

  • … 31 years old in 1997 during the Asian financial crisis
  • … 24 years old in 1991 when the Japanese real estate bubble imploded and the longest peacetime economic boom in U.S. history began
  • … 14 years old in 1980 when the last commodity boom ended
  • … 7 tears old in 1973 during the oil crisis when prices quadrupled

Related posts:

  1. A Fund Manager and His House
  2. Reality TV, Enron, & the Real Estate Bubble
  3. Boots Boots Bonds in Pension Portfolio
  4. Lunch with Robert “Irrational Exuberance” Shiller
  5. Another Endowment Manager Bites the Dust

Comments

  1. lancey says:

    can you take criticism? this is useless. i expected to see better stuff here

  2. Arthur Salzer, CIM, CFA says:

    I guess you miss the point. Portfolio Managers are shaped by their experiences. If more PMs are of a certain age, then their mentality will potentially be more alike than an older or younger PM – ergo “the heard mentality”.

  3. lancey says:

    obviously you would never be a good pm. any good pm will not let his or her experience shape his investment decisions.
    it would be obvious to anyone who profited during these times without the benefit of experience of an event that has yet to pass.
    i will concede that there are few good investors. but that will always be the case.
    and heards are not age specific.

  4. Deepak says:

    I think what paul is bringing up is that PM have been pretty fortunate that worked with a limited set of variables and new variables have entered the equation as mentioned: increasing commodities and a dollar that has weakened against major currencies.

  5. Andi says:

    Economic events, particularly severe events shape our times, our culture, our art.
    The formation of the Fed was a direct result of the panic of 1907.
    The hard times of the early thirties made fascism and World War II possible.
    These things are important only because as you pull on these threads you unravel our entire civilization…
    Sad that practitioners of our day are only enlightened by the events of their own lifetime. But then those are the lessons that are learned best.

  6. lancey says:

    andi,
    what you say is true. but since practitioners of our day suck, then it doesn’t matter much what they have lived through. the unexpected and undone will always happen.
    the presumption is that the typical PM sucks. and i think everyone agrees. that data certainly does.
    my point is and was that we know this. and that is why i and others make money.
    but a PM’s age and experiences don’t matter they will suck either way.
    and to think that experience will help you is also dumb.
    to the idiot it will help, to the mediocre it will hurt (behavioural finance) and to the great it wouldnt matter either way

  7. Arthur Salzer, CIM, CFA says:

    lacey, why all the negatives comments? and why the personal jab? are you saying that from your experience that you never learned anything? part of the trick of managing money is understanding what shapes others investment making decisions – and when they are using emotion and subjective thinking – believing recent past history will occur again…that is the time to usually bet against the herd…and ultimately make clients outsized returns….by the way, has anyone ever trusted you enough to hire you to manage their money?

  8. Andi says:

    The behavior of the herd (the majority) is influenced most greatly by recent history and an analysis of parallel events from the recorded distant past can usually give one insight into that behavior.
    But first hand experience is the best teacher, one will cavalierly pick up a hot iron only once.
    These things make Paul’s post important. lancey I’ve read your post three times, I don’t understand it. You seem to be saying that nothing matters.

  9. lacey says:

    arthur, answer yes and a large amount and i prefer not to.
    andi’s comment is useful. firsthand experience can be dangerous. our brains weight these events irrationally.
    learning from experience is ok. when history might echo i think its best to learn from other peoples history.
    but people will be on both sides of this. do PMs have too little experience or too much?
    why all teh negative? well its funny when daniel loeb does it. right?
    the initial post remains the same drivel that gets recycled on tv every few years. but maybe the discussion is useful. do you think the Pm’s experience helps them avoid risk or do you think it makes them too fearful of it repeating.
    either way. only the great can remian objective after experiencing such events. the average PM