Category Archives: Portfolio Management

Uncovering the Mysteries of the Money Management Field

When I started my financial career, I was in awe of the people who managed money professionally. I thought that these people had the secret sauce to creating wealth. I wanted to know what set them apart and learn what made them so special! I craved their knowledge – and I wanted it fast! I was impressed with these high achievers and their prestigious backgrounds. Many came from the best colleges and had advanced degrees in engineering, mathematics and finance. Some had MBA’s and other impressive designations like CFA’s and PhD’s. They also had histories of success, meaning that they had done something very special in previous years that set them apart. During the typical work day, it was not unusual to be working with an Ivy League quarterback, a professional hockey player or a world famous tennis player. Some had extraordinary resumes such as running a well-known family business, designing a computer system, doing high level medical research, or even working as a rock band promoter – I mean you’re talking about some serious cocktail party bragging here!

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The Loser’s Game: Why Being Conservative Can Help You Win At Investing

Throughout my whole life I’ve always enjoyed playing tennis. I loved being competitive, and I played in all the local tournaments growing up – and even went on to play in both high school and college. In my later years, I read a book called “Extraordinary Tennis for the Ordinary Tennis Player” by Simon Ramo, who was a scientist and statistician.  His book analyzed how tennis matches were won or lost. The book would have served me well when I was competing years ago because it brought attention to the concept of risk and return. The author highlights the fact that in expert and professional tennis about 80% of the points are “points won” simply because of superior talents by the participants. This means that in professional matches, the points won are typically accomplished by brilliant passing shots and by very few misses. In our mere mortal amateur world, however, the opposite is the case. About 80% of the points won in an amateur match are accomplished by “points lost” – i.e. points that are caused by errors, missed shots or double faults by the opponent. In other words, just being consistent and conservative can help the lesser player win a match against a formidable foe with a reckless game plan.

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