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Harin de Silva

lines on the record: 69
first: 2021-06-04
most recent: 2021-06-04
sittings or episodes: 1
sources: podcast

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“Without a doubt, Barry, for me, it would be the impact Human emissions and sentiment on markets I think at the time I did not appreciate how much that mattered. And now I see that it matters a great degree. And I think something I work very hard at is trying a way to build a way to quantify that But I didn't have an appreciation for how much emotion and people's attitude and sentiment matters in the way assets are priced. And I think that is not. Taught enough in schools.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“To invest institutional money because people tend to have longer horizons. So my piece of advice then is understand what type of investing you're interested in and whether you like doing that type of research because the hardest thing about doing research is 80% of the time it's a dead end. So, if you don't enjoy the journey, Can be really frustrating, right? I mean, think about it, think about it this way, it's sort of like being a chef, but 80% of the dishes you make taste absolutely horrible.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think the hardest thing in starting in the business right now is figuring out Whether you're actually invested in investing or you're interested in what you think is investing because investing is really about Doing research To figure out what's going on in the market and then figuring out a way to exploit that For the benefit of your clients, right? It's not about Frequent trading or moving faster than somebody else. And what I find when I talk to younger people is they're really focused on trying to get an edge by getting this short run informational advantage. That's not sustainable. And you also can't use that.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Who wrote a book called The Neficient Market Hypothesis and the Incredible January Effects, a very, very colorful character. But somebody was always willing to question markets and do unusual things to build portfolios in terms of using, at the time, large-scale optimizers and building large-scale factor models in a world where everybody, I mean, back in the 80s, we were convinced that markets were perfectly efficient. And now we know that's not the case.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The whole Keynesian world of animal spirits and how they affect markets. So he was probably, I think, one of the most instrumental people to me. And then also Sheen Kasouf, who was the founder of Analytic. He was the head of the Econ Department at the University of California at Irvine. He was very fortunate to work with him. And then also, I would say the gentleman who was my PhD advisor and also kind of a well-known figure in finance, Professor Robert Haugen.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was pretty lucky, I think, when I went to the University of Rochester. There was a gentleman by the name of Paul McEvoy, who was The dean of the business school, and I was making a living at the time in addition to going to school programming, and he hired me as a programmer for some research projects. And Paul was a very well-known economist. He was on the President's Council of Economic Advisors. So working with him, I really learned to kind of think about how to solve problems, but also think about applying economics. A much broader context than monetary policy or interest rate policy and thinking about”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Environment affects their decision making. And that's why it's really important if you're kind of an average investor investing, having exposure in a 401k, not to make decisions very often. Generally, they say, look at it once a year, but also realize what type of mood you're in when you're making that decision. And I think that's really underappreciated to make sure that you're not in a fearful state or what can cause you to be in a fearful state when you look at that. So, you know, do simple things like download your statement, look at it, you know, wait a month, then make the decision, but don't be in a hurry and allow yourself time to think about the decision you're going to make, get input on the decision. Thinking about how your state of mind affects your decision and how can you manage your state of mind?”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“About survival lessons in the wild as to how we what happens to us when we are fearful. Because if we think about investors, one of the issues that's happened is with 401ks and people having to manage their own portfolios is I don't think people realize how they're”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I think you've talked about that. I think I've seen that in your podcast. The other one that I really like that I read recently was actually by one of the people who was one of the founders of Analytic or involved in its founding, which is a book called A Man for All Markets. I think it's a book that anybody going into quantitative finance should read by Ed Thorpe, who's definitely one of the smartest guys I've ever met. And so that I really, really enjoyed reading. So I, you know, pretty wide array, but I'm really fascinated by this interaction between what we are faced with affects our decision making. And another book I read recently that I really liked was called The Nature of Fear.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Most people don't realize it, but Adrian was one of the key partners at Williams, which is now one of the worst Formula One teams. And it was a disagreement with the owners of the company that led to him leaving. So if not for that disagreement, Williams would probably continue to be the number one team in Formula One. So it kind of highlights to me one of the importance of realizing that teams are really important to a business. And if you let key team members go, that's going to have a big impact on your business. So there is a really strong tie to how to build an effective team in a very high performance environment in this book.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“From that standpoint, because I think, especially in the COVID environment, we're all working longer hours and you have to figure out a way to restore your attention during the day. And that's kind of one of the big things that got out of this book. The other book I'm reading is I'm a total Formula One fanatic. I'm reading this book by one of my favorite designers, Adrian Newe, and he wrote a book last year called How to Build a Car. And Adrian Newell, I think, is one of the, he's the designer of a Red Bull, if you didn't know, but he's one of the best car designers ever to go through Formula One. And the book goes through his design philosophy and how his philosophy evolved over time and all the different cars that he designed. But it also describes his career.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, what I'm reading now, there's two books that I'm really enjoying. One is called The Well Garden Mind It's a book on how gardening and nature affects the way we think. And this book, I think, to an investor is really fascinating because it talks about how your exposure to nature affects your decision making. So if we take two people, for example, or two groups of students and they're about to take the exam, one of them walks through an urban environment, other group walks through an arboretum, so they're exposed to nature. The one that walks through an arboretum will have 20% higher Tesco's. And that's because of something that's called attention restoration because we are all so focused in such short time period now that after a while we get attention fatigue. So you have to figure out a way to restore that. And if you are involved in trading or building portfolios, this is something that's really, really critical. So this book is a really fascinating book from...”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm a big reader. I mean, I read more than anybody else I know, so I'm probably got the world's biggest Amazon books built.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I'm going to be a disappointment on that dimension because I don't think I've watched Netflix in over a year. So I didn't grow up with televisions in Sri Lanka or screens, so I almost never watch them.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, this is actually a continuation of a trip that was got cancelled last year because of COVID. So last year I left the motorcycle I was riding in Riga. In Latvia, and I'm writing this year the plan is to write from Riga to St. Petersburg to Moscow and then next year to write from Moscow all the way to the east coast of Russia to Vladivostok, which is right next to Tokyo.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“There is considerably more distracted driving. In Southern California, actually in California, it's legal to filter or split lanes. So when you're driving down the middle of lanes, what you'll often see is the person next to you and driving a car has their phone in their lap. And I don't know why there's this tendency. If you're texting, you always put the phone in your lap and then you look down away from where you're driving and you text. And I see that probably twenty percent of the time in the morning. So that is, it is a hazard that one has to deal with And it does make it So that usually, when I get to work in the morning, I'm really awake because my adrenaline is flowing.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is a two stroke, very light sport bike. And then my favorite bike for touring is BMWs because you can get them serviced anywhere in the world. And it's almost like a train. They almost never break down.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, No, that is true. I mean, motorcycles relatively speaking are cheap. And one of my hobbies is exploring the world on a motorcycle. So I like to keep bikes at different parts of the world. I can show up. I leave my clothes on the bike and can hop on and ride. But my daily rider, because I ride to work is an electric Harley Davidson, which is actually a wonderful bike. Call a Holly Davidson LiveWire. It's quiet, it's fast And when I leave early morning for work, I don't disturb my neighbors. And we have solar panels at home, so it doesn't cost me anything to run. My favorite bike to ride on the weekends is to have an obscure Italian bike called the Bimota Vid”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“About their future earnings. So, one thing people don't pay enough attention to is looking at analyst dispersion. So if you look at an earnings forecast, everybody looks at the mean. What you should also look at is look at the difference between the high and the low or the spread between the analyst, because whenever there's a big spread, that means there's a lot of disagreement as to the future profitability of the company. And that factor is something that's going to be really important in this stage of the cycle.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“You should be looking at the ratio of price to sales is a really excellent factor right now given where we are in the cycle. Staying away from companies with a lot of debt, especially debt that is floating rate as opposed to fixed rate is something that you should be looking at doing. Going towards companies that have high operating margins in terms of their business model, that's a little bit difficult to do because of the accounting data problem for the last year. That's something that you should be incorporating into your portfolio. And the other thing that I would really emphasize in the current cycle because of the change we are seeing in the way companies do business is staying away from companies where there's a lot of disagreement.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So those aren't factors I would focus on. I mentioned trailing earnings yield as a factor you should not look at. So anything that uses trading accounting data, you got to stay away from. But if you want to look at valuation, which I think there's a lot of valuation factors that are”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I would stay away from anything that uses recent accounting data. So just to give you something tangible, people focus on things like ROE and ROA, right? Return on equity, return on assets. Those numbers are really have been affected by a company's performance in COVID.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In a portfolio, because most people don't think about it that way. But I found that with ESG factors and increasingly with environmental factors like carbon or water pollution or even something as like plastics, the company's plastic emissions, is there a way to measure that and quantify and incorporate in the portfolio? Because that's increasingly going to be something that investors care about and something that the company will have to care about in the way people assess their future profitability.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. To me, that's exactly the way to think about it because these companies have something in their behavior where there's going to be a chance that they have a bad outcome in the next twenty years But if you have a portfolio of poorly governed companies, and suppose you have 100 stocks in them, There's a significant chance that one of them is going to have a bad outcome next year. So that to me is a really key dimension in using ESG.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Risk forecasting. They're not useful in return forecasting because I think you can make the case that people like these stocks or dislike these stocks for other reasons, just like you have people like some people like Sin stocks, right? That's why there's a syn stock ETF. So I think the return aspect for me is less important than the volatility aspect.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think they're really important as risk greens. I think what we found is that if you use ESG related factors, they're actually incredibly important in describing the future return volatility of a stock. The thing that's most important is governance. And you'll find that companies with poor governance, the returns are very, very fat-tailed. And as a portfolio manager, you need to account for that because most risk models miss that. A poorly governed company has a significant chance of a really negative return. But it doesn't happen very often. It'll happen once every 15 years, once every 30 years. So in a typical risk model, it actually doesn't show up. But it does show up if you look at long Series of data. And I find these ESG factors are really, really important.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“in terms of new plant equipment. So what data can be used to capture that? That's kind of more of an intermediate long horizon factor. And the more data I can collect on that dimension, the better off I am. But it doesn't rely on me getting to some information quicker than somebody else and the information kind of dying at the next earnings announcement. Does that make sense, Bar”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when I think of data quality, I'm always trying to think about what Horizon do I need to invest with to actually use that. Now that's really useful for me in a short run trading model, but that's not the sweet spot for size because we can't turn those portfolios over enough to capture that. So I prefer data, for example, that looks at, just to pick an example of something I'm working on now is what's the carbon footprint of a company and how can it be measured? Because we know the cost of emitting carbon is going to go up in the future. That's going to be a big factor in the profitability of companies and their behavior and their need to invest.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think that type of data is really useful in terms of updating your earnings estimate forecast because that's ultimately what it comes down to. The challenge with that data is that it's really, really time sensitive.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there have been a lot of good developments. I think on the positive side, fees have come down. The trading costs have come down. So your ability to trade a portfolio mo to have higher turnover to capture factor rotation. That's become a lot easier. The costs of data have come down, but at the same time, the Amount of data available for purchase has gone up. So if you look at us as a group, as a team, our data costs is in millions, but it seems to always go up, not come down.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“To me, the duration of a stock is how sensitive a stock is in the 10-year yield. So if it's, then you'll see that it's sensitive. You'll see that it's not affected by changes in rates And when you look at individual companies, it's really fascinating you stop, when you look at them carefully from that perspective, you'll see that some companies, for example, have a lot of floating rate debt. As rates rise, their interest payments are going to rise. So those companies tend to be more interest rate sensitive than others.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right now, it's much more of a really early cycle. There's a huge focus on in the US and globally on estimate revisions. So stocks with high being revised upwards are doing incredibly well. So people are really focused on that as a factor. Small cap is doing well. Slow price to sales, stocks are doing well. Those are all things that are associated with early in the early in the cycle. If you look at interest rate sensitivity as a factor, that is something really people are really focused on because there's concern that there's going to be a rise in rates. And you should think about equities having duration. Most people don't, but equities do have duration and different equities have different levels of duration. So that's something to measure and manage in your portfolio.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I do care from the perspective of looking at things in a historical context because that's often kind of a useful guide as you're trying to figure out which factors to overweight and underweight and does it make sense. I would say given the way factors are behaving,”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a turnover is a factor that is really important right now as well. So you'll see a lot of stocks with high asset turnover in that portfolio. So we tend to look at a very broad range of factors, not just sort of value growth, quality, small cap, but really kind of try to capture the cost section of factors that fundamental investors look at.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a factor that has really, really been rewarded in the marketplace. Investors are really focusing on that. Right now, trading earnings is not useful because any earnings number contains a pandemic. So using forward looking numbers like forward PE price to sales are really, really important.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's a fairly vanilla fund, if you think about everything that we do, because it's long U.S. stock, the idea is to have volatility of about 70% of the equity market and a similar return. The fund itself is new, but we've run that strategy now since the early 2000s. So it's, you know, I'm going to show my age here because I've been involved with that type of for 16 years. and be building a portfolio that has a low beta. So the average beta for all the stocks in the portfolio is around 0.6, 0.7. But at the same time, we're tilting towards the characteristics that are in favor. So if you look at the portfolio right now, you'll see that it has a very big loading on price to sales as a characteristic.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So now, for example, as we are sitting here in the May, longer dated calls actually more mispriced than shorter dated calls. So you really need to be thinking about increasing the tenor of your call if you're in a call writing strategy.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. You're getting paid for the risk. But having a call writing strategy where you're always selling the same call That is usually not going to be as successful as something that is actually constantly looking at one month, two month, three-month horizon and different strikes and trying to figure out where is the most amount of mispricing coming in the marketplace.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the underlying wouldn't get pulled away because you're selling the calls on the SP 500 index, for example. So you would have to be on the hook for the payment. But the key with call riding that most people don't think about is you have to have a way to value the call. So if volatility is overpriced as it was at the start of this year, for example, that's a great time to be selling coal.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so that, I mean, that portfolio is team managed, so it actually uses some of the other skills within Wells Fraga as well. So we are not the only manager. So we just manage the option portfolio. The way we avoid the stop getting called away is by using index calls. Because if you use the index calls, all you're susceptible to is a market run up, not the individual stocks themselves going up, right?”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's a little bit unusual, but it's a typical quant approach in that you're not just using one way to generate income, you're using dividends as well as covered calls as a way to generate income for the portfolio.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, that's been kind of a corporate trend, right? Because of the tendency to have buybacks as a methodology for returning money to shareholders. So, I mean, it's a challenge from a dividend focus strategy. In that particular portfolio, the other thing we do is use covered calls. So analytic got its start as a firm in doing covered call strategies. So we actually use a volatility forecasting model to identify overvalued call options and then use that to generate additional income for the portfolio.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are you transferring all your information into the portfolio, the transfer coefficient? And that's a formula that is very useful when you think about how much outperformance you can get from a portfolio. And it's a formula that my colleagues, Steve Soley and Roger Clark and I developed in the 90s and then published a paper in the 2000 time frame.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that is actually a formula. And the idea behind the formula is that you can relate your investing success to really three things. So, if we think about investing in US large cap stocks, the first thing that's going to matter for you in terms of your relative success of investing is how big your universe is. So what we call breadth. The second is your ability to forecast, which is as a quant measured by the correlation between your predictions and what actually happens. So quants call that your information coefficient, how much information you have. And then the third thing is how effectively you transfer your information into your portfolio. So you overweight the stocks you like and are you underweight the stocks you don't like? And that's what Quantz referred to as the transfer coefficient. So the three decisions or the three inputs to determining your success is one is how big is the universe? What's the breadth of your investment decisions? The second is how well are you forecasting? And the third is how effectively”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's what's driving, that's what something you need to take into account when you factor investing. Because I think the idea that yes, value work, small cap works, quality works. So you take these five or six factor tilts and you're going to beat the market regardless of what happens, well, that's going to work if you have a very long horizon. But if those factors are favor for the last three years, you're in for a little bit of pain for the next two or three years.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Japanese stocks that you see this same factor momentum and then subsequently we tested it in emerging markets and in Europe and you see the same currency. So I think what you're seeing is really, and you can, depending on which camp you fall into, I date the economic cycle or it's just human behavior, right? If you think about the way our decision-making process tends to work is we tend to like things or we tend to focus on things that have worked recently. So that recency bias, I think is there in the way we buy stocks and the way we think of fads coming in and out of favor.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not only recently, but also think about the mean reversion factor, right? So if you think about value factors right now, right now it's kind of a nice time for value, right? Because the last six months have been very strong. So the FATCA has momentum, not great momentum because it's only been strong for three to four months, maybe six months. But the mean reversion aspect of it is actually quite strong. So what's really fascinating about this is when I first started running money using this factor momentum approach, I was doing it for a US client using US stocks. And it was a client who was based out of Japan, and they came to me and said, hey, would this work in Japan? And, you know, being the typical Kan, I said, yeah, well, let me check. So I collected all this data on Japan. And I found that the same effect exists.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's remarkably consistent. I mean, in all the work I've done, the work, the time and effort I put into modeling each factor individually has not been fruitful. What I see very consistently is that factors tend to the factors that have worked in the last year tend to continue to work. The ones that have worked in the last two to three years, they tend to work well but a little less. So the persistence is very strong over one year, less strong over two to three years. And then after three years, you actually start to see some mean reversion. When you look at manager cycles, you'll really, really start seeing that. What I mean by manager cycles is a tendency for certain types of managers to outperform. And so I think when you're thinking about factor investing, it's really important to actually weigh the factors that have been working well.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And as long as it's in favor, they're going to do really, really well. And then suddenly the factor starts underperforming and the manager says, well, my style is out of favor, but it's going to come back. So cynically, if you're an investor, you know this, right? Because if you're doing well, you're a genius, but if you're doing poorly, your style's out of favor. That's the euphemism. It's an asymmetrical bet.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. And I think that is probably one of the most least appreciated things in investing, and it's something to be really, really aware of. And I noticed this when I first got into investing because I look at these investment firms and, you know, they were growing like gangbasters because their performance was great. The head of the firm was viewed as a genius. And I look at it really closely as an ex-engineer and go, it's not about genius, but they're loading up on this one. And this factor with its earnings acceleration or underleveraged companies, whatever the fact is, that's been in favor for the last five years.”
2021-06-04 · Masters in Business · Harin de Silva on Portfolio Management (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source