Brian Portnoy is the Director of Investment Education at Virtus Investment Partners, where he develops the firm’s content on behavioral finance and investment solutions. Mr. Portnoy has worked in the mutual fund and hedge fund industries for the past 18 years.

Prior to joining Virtus in 2014, he held senior investment and strategy roles, including at Mesirow Financial and Morningstar. Brian is the author of The Geometry of Wealth: How to Shape a Life of Money and Meaning. Published in summer 2018, the book explores how money figures into a happy life. He also published in 2014 The Investor’s Paradox: The Power of Simplicity in a World of Overwhelming Choice, which helps investors make better decisions about both traditional and alternative investment strategies.

He has spoken to audiences globally about investing and decision-making and has lectured at the U.S. Securities and Exchange Commission as part of its Leading Authors series on the history and future of hedge funds. Mr. Portnoy pursued his research and teaching interests in political economy at the University of Chicago, where he earned his doctorate. He earned a B.A. from the University of Michigan. Mr. Portnoy is a Chartered Financial Analyst (CFA) charterholder.

In this episode, Brian shares his worst investment ever story. Their portfolio manager invested the fund in the US financials. Despite the capital market rollover during the Q4 of 2008. The portfolio manager ignored the due diligence and assessments that they presented. Unfortunately, Brian and his team cannot do anything. Their money was in a three year lockdown period.

“You really have to check yourself. You’ve got to have your own discipline, but then you have other people around you, coaches and counselors and colleagues and peers who say, ‘Do you know what you are getting into? Is it really worth it?’.”

- Brian Portnoy

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Topics Covered:

00:54 – Brian Portnoy’s professional and investment background

03:25 – Sharing his worst investment story when he was Mezirow’s Head of Research leading a hedge fund’s due diligence

04:51 – Building up their companies’ global book with an emphasis on European and Asia equities

06:00 – The dangers of scarcity: an invitation-only opportunity that retrospect part of the investment problem

06:30 – The mosaic process of piecing together the history of trade the portfolio made, digging into the investment performance and investment process as part of the due diligence

12:20 – Projection of the success of their portfolio manager based on what he did in the past and the type of scenario they have

14:22 – The nature of the stop loss discipline, their portfolio manager ventured in the US financials of Q2 of 2007 until Q4 of 2008 buying at every tick down

19:15 – Andrew’s Takeaways

19:15 – Brian’s actionable advice based on what you learn from this that he recommend to the listeners take to avoid suffering the same thing

Main Takeaways

Lesson 1: “It's sometimes it's easy to blame the person. The reality is financial professionals. We do the best that we can.” – Andrew Stotz
Lesson 2. “Maybe scarcity is really more of a marketing thing and we have to be careful not to fall on the influence of someone saying this is a limited time only, a limited number of people. Scarcity is something to be careful about.” – Andrew Stotz
Lesson 3. “Running a small business is so different from working within a company. You need structures and sometimes large companies have the burdensome structures that we don't like, but they can be valuable.” – Andrew Stotz
Lesson 4. “When you're making concentrated bets, you've got to have stop losses. If your plan goes wrong.” – Andrew Stotz
Lesson 5. “When you make mistakes, especially when you make mistakes with other people's money, you can learn things and end up in a better spot.” – Brian Portnoy
Lesson 6. “Sometimes you just have to force yourself to walk away and say, I'm not going to do this today.” – Brian Portnoy

You can also check out Andrew’s books

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