Dann Bibas – The Case for Passive Investing. Fewer Grey Hairs, Better Returns

Dann Bibas is a co-founder at Fountain financial services in the United Kingdom, a digital wealth manager combining new technology was certified advisors to make personalized investing more accessible. He was formerly an equity derivatives associate at Citigroup, working closely with some of the world’s largest financial institutions on equity, cross-asset and volatility products. He is also a member of the Founders of the Future community in London, the Tech Nation Founders’ Network and is a regular speaker at start-up and fintech events. 

 

“Stock picking, for myself at least, is really difficult” 

- Dann Bibas 

 

Die-hard passive investing fan adds key points  

• Dan truly believes that investment in the market for the long term is the maker of winners 
• He has felt this way most of his adult life since the following story of loss 
• Started to invest in stocks when he was a student majoring in finance at McGill University (Bachelor of Commerce)  

 

Watching a stock closely becomes a nightmare of ups and downs  

• As he learned micro and macroeconomic and other financial concepts, he and his friends became interested in investing as they were learning a lot about markets and how to evaluate balance sheets.  
• Early forays involved using small amounts of money earned during summer jobs through a friend in his group’s TD Ameritrade account. 
• They bought a few hundred dollars of shares in Citigroup (a fact Dann used later on during his interview for Citigroup’s graduate program.  
• This was the first ever investment he actually took seriously. Perhaps too seriously, because his strong memory was that it was very anxiety driven, because he was focused on this one company, watching everything that was happening to it. 
• He had a clean thesis and thought he would become rich quickly. Then the stock was hit by an earnings report that was negligible below expectations.  
• Then some macroeconomic event happened and it fell further.  
• Then there was positive news and it bounced up.  
• But the stock can also be affected by other banks’ earnings reports, impacting the sector.  
• So he went from thinking he had an effective thesis but his stock was getting “hit on all sides” both up and down.  
• How’s the sector doing?  
• How’s the broader market doing?  
• How are its peers doing?  
• Is there a specific event that was not factored into the share price that is now happening?  
• There were too many variables.  
• Also stressing him out was a Forex issue. The money he was earning was in Canadian dollars, and his band of brothers was investing in US dollars.  
• So on top of all the above, he was having to look at how the USD/CAD was trading.  

 

“I think it’s safe to say I was very, very overwhelmed. I think we just about sold out of our positions to break even … my first one or two gray hairs came from those couple of weeks or months of investing.” 

- Dann Bibas 

 

• Definitely after this experience, he follows what Warren Buffett preaches, he converted his investor style from active to passive investments 
• And, he’s very happy with it.  

 

Lessons learned 

1. Stock picking is really difficult: Because: 

 a. Accounting for all the many variables is a lot of hard work 

 b. Coping emotionally with the ups and downs of a stock and all the elements that have an impact on a single stock is also very difficult  

2. Full conversion and commitment “to the faith of passive investing”  

 a. Because of the long-term benefits  

b. Investors do actually end up outperforming stock pickers 

c. He much prefers reading about wider economic growth than looking into the balance sheets of individual companies 

3. Such lessons drive the advice he now gives clients at Fountain 

 

Andrew’s takeaways 

1. Work and investing habits must suit your personality. Some people in the market just like to watch the price changes rather than beat the market “What makes you happy?” 
2. It’s amazing how many people put money down (investing) without knowledge of the market. It’s a little bit like jumping in the car not knowing what a seat belt is or figuring out what the gas pedal is, just treading on the gas pedal.  

 

“The end result of that is that you’re taking on risk that you don’t necessarily  know about for that person. And the world doesn’t care.”