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  1. Tuesday, February 7th, 2017
    point of view

    If you are of a certain age and have attended a significant number of plays and concerts in your time, something is easy to remember about any one of them:  where you were sitting and what the scene looked like from your perspective.

    The details fade over time, but a general impression remains.  And that impression is anchored in your location and your point of view.

    Recently I attended The Front Page on Broadway, a production featuring a handful of big names and a number of recognizable faces who have supplemented their theater work with appearances on Law and Order and other television shows.

    I happened to get a ticket in the front row.  When John Slattery made his entrance and slid a suitcase across the stage, I thought it was going to end up in my lap.  I was one of only a couple of people in the theater for whom it was a possibility.  (It didn’t happen.)

    In fact, although I saw the same play as those in other seats, I saw it in a different way.  Neither better nor ... continues

  2. Tuesday, December 6th, 2016
    the investment ecosystem

    I first wrote the phrase “the investment ecosystem” in one of these postings more than eight years ago.  It has appeared often since then and, when counting emails, presentations, and meetings, the total number of times I have used those words is well into the thousands.

    In my consulting business, I work with a variety of investment organizations, including asset managers, institutional asset owners, investment advisory firms of various kinds, research organizations, consultants, etc.  By doing so, I get a multidimensional view of that ecosystem and of its evolution over time.

    We are at an important stage of that evolution.

    Over the past several decades, the investment industry has thrived.  Despite some significant hiccups along the way, the market environment has been relatively benign, with a secular trend of disinflation leading to the low interest rates and generally high equity valuations that we enjoy today.  Globalization, favorable demographic changes, the ... continues

  3. Thursday, October 20th, 2016
    watching the flows

    It has become a monthly ritual to scrutinize the amount of money gushing out of actively-managed funds and into passively-managed ones.Morningstar | Here’s the latest monthly summary from Morningstar.  Asset managers are rightly concerned about the persistent trend.  It feels like twilight, following four glorious decades of managing other people’s money.

    I’ll leave the dissection of that to others, at least for now.  (I will soon be writing a white paper on critical issues for asset managers to address in today’s environment, which will be distributed via my “investment ecosystem” listThe Investment Ecosystem | Sign up on the site to receive the white paper.).  Instead, this posting considers some other critical aspects of asset flows.

    As the available research shows (and anyone with experience in the business knows), flows follow performance.  To varying degrees, it is true in every part of the investment world.  Individuals and ... continues

  4. Wednesday, September 21st, 2016
    in the company of women

    The first analyst day I attended was at the Vista International Hotel in the World Trade Center.  When I walked out into the hall during a break, there were long banks of pay phones jammed with analysts delivering the bad news to trading desks and clients.  The price of Control Data stock probably never saw that level again, but I was so clueless that I didn’t have any idea what had happened.

    The other thing I remember from that day was standing behind the rows of analysts in the ballroom and seeing a sea of gray and blue, with two splashes of color, one red dress and one brown.  There were a few other women in attendance as well, but they had adopted the corporate colors of the time.

    At the hundreds of conferences and large meetings I’ve attended since, there has rarely been more than ten or fifteen percent of the attendees who were women.  Last week, the shoe was on the other foot at a CFA Institute conference, “Alpha and Gender Diversity: The Competitive ... continues

  5. Wednesday, September 7th, 2016
    the tests ahead

    In the aftermath of the financial crisis, there was a great hue and cry about how we had become slaves to our models and that they had proven to be imperfect — tragically imperfect — masters.

    It is, then, quite ironic (and very surprising, at least to me) that we seem to be more reliant on those models than ever before.  Well, perhaps not those models, but the new-and-improved ones that have taken their place.

    The investment business has gotten more quantitative and more automated, so that’s certainly part of it.  It’s hard to become more qualitative in your approach and more thoughtful about the proper context in which models should be used when you’re handing off much of the decision/execution process to machines.the research puzzle | Here’s a posting that considers “programmed” versus “nonprogrammed” decisions.

    The financial crisis was a watershed event for investment organizations, as you might expect.  Significant ... continues