Citywire: Mistakes Were Made

How do you become obsessed with avoiding market bubbles? Get burned by one of course!   This is the tale of GMO founder and chief investment strategist Jeremy Grantham who is today known for his bearish views on the US stock market and for avoiding the 2000 and 2008 crashes, but in a past life had a much more gung-ho approach to things that go up. He tells all to Alex and Frank.  

Mark Mobius is one of the most recognisable names in emerging markets investing. But, even the most experienced of developing world investors is not immune from the odd aberration. He tells Chris and Frank how he has been caught out in his storied career and the rules he has adopted to never repeat the same mistakes.   Mark spent the majority of his career overseeing emerging market equity investments at Franklin Templeton before branching out with his own venture – Mobius Capital Partners – in 2018.

A godfather of gatekeepers, Bob Boyda reflects on a life in manager selection and some of the mistakes he made along the way.   He tells Alex and Frank about the dangers of digging for undiscovered managers, red flags in China (pun very much intended) and reveals a killer question all fund buyers should be asking PMs.   Bob is the former head of capital markets and strategy at Manulife Asset Management. During his time there, he designed and ran the firm’s multi-manager portfolios, setting asset allocation and selecting PMs to run subadvised funds.  

Cambria's Meb Faber dials in from sunny California to tell Alex and Frank all about betting the house on a biotech stock… and losing. Spoiler alert: options are involved. As are some classic investor misbehaviors including overconfidence, a lack of diversification, and poor (well, no) sell discipline.   But, as ever, we are here to learn and Meb explains how the multiple lessons from this one early error have shaped him into the investor he is today, not least by steering him away stock picking and toward to a quantitative approach.  

Raphael Kassin, head of EMD hard currency at Itau, joins the Mistakes Were Made pod. He explains why you're not really an emerging market debt investor until you have experienced your first default. While many managers will be going through this for the first time with the Chinese debt and Evergrande crises, Kassin earned his spurs in 2001 during the Argentina default, a mistake he recounts in this episode.

Sarah Ketterer is CEO of Causeway Capital Management, the global equity shop she founded in 2001. She also runs the firm’s flagship $6.3bn Causeway International Value fund.   Sarah tells the Mistakes Were Made team what she learned from getting burned by energy stocks, the reason she doubled down on VW following the emissions scandal, and why China is the ‘new frontier’ for value investors.  

For the latest episode of Mistakes Were Made, we are joined by the Nobel Prize-winning economist Dr Richard Thaler and portfolio manager David Potter.   Thaler is pioneer in the field of behavioral economics and co-author of the best-selling Nudge: Improving Decisions about Health, Wealth, and Happiness.   Potter is a portfolio manager at Fuller & Thaler Asset Management, a San Francisco-based boutique that uses academic research on investor behavior to inform when to buy and sell stocks.   As well as their biggest investment errors, they discuss the drivers behind meme stocks (‘surprisingly dumb’), how to improve retirement saving rates (a nudge can help), and how to help Alex potty train his son (Cheerios are key).  

For the second episode of season 2, we are joined by Simon Hallett.   Simon is the vice chairman of Harding Loevner, an asset manager that specializes in global equities.   He’s also the owner and chairman of Plymouth Argyle Football Club.   Simon tells the Mistakes Were Made team about the dangers of making market forecasts, why portfolio managers shouldn’t put money in their own funds, and how buying a sports team is both the best and worst investment he has made.  

For the first episode of season 2, we are joined by Rob Arnott. Rob is known as the ‘godfather of smart beta’ for his pioneering work researching and building quantitative investment strategies. Research Affiliates, the Newport Beach-based firm he founded in 2002, offers a series of reweighted indices and asset allocation strategies and runs some $171bn of assets. Rob tells the Mistakes Were Made team how he lost a third of his net worth in a matter of days (don’t worry, he made it back!), why it’s wrong to write off value, and the importance of curiosity.

For the latest episode of Mistakes Were Made, Alex and Frank are joined by Citywire’s executive chairman and founder Lawrence Lever, AKA their boss.  A former lawyer and investigative journalist, Lawrence tells Alex and Frank about some of the mistakes he made when starting the business, what he learned from them, and how these lessons ultimately led to the success Citywire enjoys today.   Some early missteps include not taking all the advice on offer from renowned venture capitalist Hermann Hauser and trusting a rival to act honorably (spoiler alert: they didn’t!).  We also discuss mistakes that the media can make when covering investment (Lawrence has some pointers for Alex on this), what fund managers often get wrong when starting their own shops, and why asset managers are probably nicer than investment bankers.   This is the last episode in the current series of Mistakes Were Made. We’re taking a break over the summer and will be back September. Thank you for listening.