Tag Archives: markets

We have been discussing for weeks the effects of globalization on all economies, financial markets, companies and money managers. Last week I listened to the speakers at the Sky Bridge Alternatives Conference in Las Vegas talk about the demise of the hedge fund industry. I say: Instead of dwelling on the past, let’s look at what is needed today to be a successful money manager regardless of asset class. In this article I will look at the mindsets and beliefs of a successful money manager. In the next article, I will examine the skill set and track record necessary to successfully manage money. Then in a third article, I will discuss the personal attributes necessary in the character of a successful money manager. In order to be successful, a money manager must have the right mindset and system of beliefs. To be specific, a successful money manager must: Have core beliefs that can be articulated and supported by the facts. You do not want a manager who reacts to every piece of news and trades out of his positions. Look for someone who gathers all the data; understands the inter-relationships between all markets utilizing a systematic approach; reflects and pauses before reacting; considers first the proper asset allocation with risk controls; and finally does in-depth independent research on each investment Think long term. Stop thinking as a trader. You cannot be overly concerned about daily performance, because in fact, it will impact/jeopardize your long-term returns. Market psychology is such that investors like the idea of buying low and selling high but unfortunately act in reverse. It is ironic that hedge funds were so hot after 2008 when risk management and protecting assets were the major emphasis but are so cold now as hedge funds have under-performed in an historic 7-year up market. Think globally regardless of asset class and have a holistic perspective. Linear thinkers who trade rather than invest unfortunately dominate the markets causing excessive volatility and confusion. Have cardinal rules for investing that can be applied to all economic environments, asset classes, regions, industries and companies. Think like a master chess player focusing both three or four moves down the board while contemplating the very next move. Be good for all seasons, which means protecting assets in down markets, performing reasonably well in up markets, therefore outperforming over market cycles. This is the mindset a money manager must have to be successful. He must think globally and long-term. In my next article, I will discuss the skill set of a successful money manager and also offer advice about what the track record of a manager you hire should be. Invest Accordingly!