YouSaid · the spoken record

Simon Hallett

lines on the record: 54
first: 2020-07-31
most recent: 2020-07-31
sittings or episodes: 1
sources: podcast

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“The importance of to me the behaviour of finance findings, or more generally the decision-making findings, it's a very, very different world of investing today. You know, when I started, I've had a good education. I was widely read. I was kind of curious as a young guy. And I didn't know anything about stocks. Nothing. Nobody in my family had ever mentioned a stock. Nobody had ever owned one. I barely knew how a bank worked. pervasive throughout the media and throughout to some extent anyway the education system so you know the world of investing is very very different but the world of human beings is very much the same and i wish i'd known earlier on just how important it was not to be smarter and no more than everybody but to be able to control your own behavior partly i found it fascinating but also i think it's at the core”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Makes you feel better about individual decisions. It gives you more confidence, but it doesn't help the accuracy or the validity of that decision. So be careful. But the most advice I can give you that I would give anybody is just stay honest. Don't let anyone compromise your integrity. This is a fabulous industry to be in. I've been very, very lucky that it's my career in time has been one where the investment industry was tiny to where it is today, where it's huge. And I don't know that the industry is going to grow as much as it's grown over the last 40 years, but I do think it's going to be absolutely crystal just to stay honest and you at least give yourself a good chance of capitalizing on any success you may have.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, firstly, I'd say don't think that you know what career you are going to be best at or have most fun at when you're a recent college graduate. So give it a try, but be prepared to give it up. I think Ben Edstein, or David Eckstein in range talks a lot about this. It's a very good book on career planning. But if you are determined to be in investment management, I think you have to recognize that it's industry that is both blessed and cursed. So you have license to go and find out anything, anything you like. And I think that's a wonderful thing. But it's also a curse in that you don't know where to stop. And that's actually one of the lessons of that Rousseau shoemaker book. Just finding out more, just for the sake of finding out more.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It wasn't particularly topical when I read it, but I think it's topical now and I thoroughly recommend everybody read it. And if you can only bring yourself to read one, read Master of the Senate. And on the subject of institutionalized racism, I think everybody should read Dan Bauer's book called American Prison, which is, so Dan Bauer's journalist who has a political point of view, who I think he writes for Mother Jones, but he experienced incarceration in Iran for four years. Where we are today with mass incarceration in the United States, with incarceration being dominated by African Americans. And I find that appalling. And I think that Carroll goes a long way to describing why racism is so institutionalized in this country. And Dan Bauer goes to explaining how it's reflected in our prison system.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“what it weighs, but it's a superbly written book with often novelistic-like descriptions of, for example, life in the Texas Hill country in the early part of the 20th century. But it's much more a social and political history of the U.S. in the first half of the 20th century. It's brilliant on politics. It's brilliant on the political process. It's brilliant on corruption. And the corruption of power. But above all, the third volume, Master of the Senate, is brilliant on race and on the length that 12 senators from the South went to keep institutionalized racism the norm. I think everybody should read it.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, a lot of my favourite books will have been mentioned on your podcast before. I do need to mention that we owe a great debt to Michael Moverson. I often say that it's remarkable that you can get his complete works for less than 50 bucks and you can learn everything that I've learned in 40 years about decision making and investing. I give a shout out to Rousseau and Shoemaker, their book from 2002, I think, Winning Decisions, which I think is one of the best books about decision-making and doing research and doesn't get a lot of attention. It must be three or four thousand pages in length.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“About your Well, I don't mean to be dismissive, but the people that I worked with and for in the early stage of my career was during that time when investment management was about individual genius. It was about people being smarter than other people, not smart. You know, I often say that if you look at anything about one of those firms that I worked at, which were successful firms, we do it the opposite at Harding Lovener. So they were kind of negative mentors. And I don't mean that to be rude about them. So I very heavily relied on book learning and what we've learned at Harding Love and my longest standing relationship is with David Lovner, who's been a friend of mine since the mid-80s and business partner and close collaborator now for 30 years. David would deny it, but I've learned a lot from David over the years.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Funny bias against Netflix for behavioral reasons. It's an interesting thing. I used to love the idea of Netflix when you used to get posted DVDs. And I was one of these people who would order my DVDs on a Sunday and I'd order the 1960s French movies with subtitles or Japanese directors again with subtitles. But on Friday night when it came to watching a movie, I wanted to watch Love Actually or some romantic comedy. And again, I think you tend to see everything through behavioralized once you know about this. This is the classic. In the short term, we want that and sugars, that there are long-term self-wants, fruits and vegetables. So I don't watch much Netflix. The only show I've watched in the last month has been something called the Great, which is a kind of rather surreal.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“But apart from that, I listened to, you know, I listened to this podcast. I listened to Ted Sidees. I listened to Patrick O'Shaughnessy. I listened to the standard behavioral finance or oriented type financial ones. I also listened to ones about sport. I'm particularly interested in data analytics and football. So that overlap between sports and investment that I find so fascinating. I don't watch very much Netflix. I don't watch very much TV. And it's not because I don't like it. I actually love it. I haven't got the self-discipline. My attention wanders and my kids used to get driven mad. And I'd say, who's that guy? And they have to explain.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, funnily enough, the same things that keep me entertained not during lockdown. I mean, it's a terrible thing to say, but I live in the countryside in Bucks County, Pennsylvania, and I've got a large house, plenty of room for me and my wife. We miss our grandkids, but our life is mostly unchanged. Our idea of an exciting time is to sit in our armchairs with our kindles. But I do miss podcasts. And actually, in the last couple of weeks, which I used to listen to in the car on the way to work.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've always thought that it would be Vietnam. You know, I first went to Vietnam to do investment work over 20 years ago. And I followed it. It's got a large population. It's got a lot of the characteristics of underlying dynamism with a large or large-ish internal market. But governance has been an issue. Politics has been an issue. It's very unusual that you get this mixture that you get in China of top-down government where you may hate the politics, you may hate the lack of individual freedom, but where at the local level, the ability to be an entrepreneur generates profits for yourself is really quite intense. I don't think there's anywhere else in the world like it that also has the ability to put the infrastructure that enables economic growth and wealth creation at the same pace. I obviously can't think of another parallel.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Helpful in broadening exposure to non-commodities. But that was all turned over with the rise of China and the massively rapid industrialization of China. And instead of the West being the common thread to commodities that drove emerging markets, it was China. So, you know, we haven't really seen the broadening of emerging markets that we'd hope to see. I think that we are beginning to see it. I think that it is something that's still on the come and that the rise of China has to some extent masked what's happening elsewhere. But at the moment, with the pandemic coming on, I think that it's going to be a while before we see the good values that are apparent in some of the consumption stocks in emerging markets being turned into stock market returns.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dominated the non US benchmarks at one point, the Japanese market was over 65%, I think, of the non-US equity index. And of the Japanese market, about a quarter was Japanese. When I started investing in emerging markets before they were actually called emerging markets, you were looking at companies like Malaysia, the Philippines by the late 80s, Indonesia. But outside of Southeast Asia, it was South Africa and you were just beginning to invest in a couple of Latin American countries. And we all thought of emerging markets as being warrants on the West, that if U.S. GDP grew a little bit more than expected, emerging markets would soar. We hoped in the 2000s that the rise of the emerging market middle class would mean that emerging markets would be less volatile, that they'd be less financially leveraged, and that the rise of spending at the expense of consumption would be”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think for investors, it's a little bit dangerous and it's something that we are worrying about at the moment and trying to formulate policy. If you want a diversified global emerging market portfolio, you have to be careful at this stage because Chinese stocks dominate the market benchmarks. And the direction is that they're going to come to dominate it even more. So we're already at over 40% and it looks like we're headed towards 60, 65, maybe even 70% as the Chinese market that is available to foreigners invest in the benchmarks continues to broaden and deepen. So I think that for investors, you have to be very careful about how you consider a diversified emerging market exposure. We're very much at the stage that we were at in Japan in the late 80s where Japan”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Continuing or accelerating trends that were already in place, which is an interesting issue. When it comes to the rest of the world versus the US, I think one of the issues that the U.S. has had or the U.S. stock market or publicly traded stock market has had is that many of the world's great growth companies are American. And increasingly they're what's driven overall market aggregates. So it's important to note that things like American small caps have also done pretty well over the last few years. But I have to say at some point it's just a gut feel that it's been down so long it feels like up to me.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Turn around relative to the US before growth turns around relative to value. And the reason is that I do think that the value growth thing is at least something to do with the economic cycle and interest rates. And I think that the economic cycle is poor. I think that for obvious reasons, and I think that interest rates are going to stay lower for longer, which, by the way, is something that we've believed without too much conviction since the financial crisis. So once again, the pandemic is revealed as”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we're global investors and we're global growth investors. So I want growth to outperform and I want the world to do at least well relative to the US. So I'm hopelessly biased. And I must say that over my now 40 year career, my biggest flaw that I recognize quite early but didn't understand the reasons. My biggest flaw is that I'm very optimistic about the future, but I'm very pessimistic about the current. So again, I find the ability to time these things zero. My guts tell me, and I have very little confidence in my guts, so be warned, is that the rest of the world...”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“this massive revaluation of growth stocks. Though I have to say, I think that to some extent that's a post hoc narrative that's woven around what in many ways is around in this, we're extraordinarily good at producing stories to explain something that's already happened. Yet those same stories tend to have no predictive value. So I thought it was interesting as we think about the value of growth stocks and the relationship between price and value, a paper that I think AQR came out with a month or so ago looking at the influence of interest rates on the whole value growth dichotomy. And they found that value stocks did not respond to higher interest rates, as we all feared. We're thinking about the impact of the pandemic, We haven't taken any action.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the longer term, I guess for us the issue is about valuation and how we should think about interest rates that are approaching the zero bound. As I mentioned, we do care about price. We do calculate value. And interest rates that are close to zero do very strange things for value, particularly strange things for the value of growth stocks. And I think that part of the justification for what we've seen happen in markets since the pandemic really took hold into the future. But you know perfectly well your listeners will understand the basic arithmetic that when interest rates are zero, you're indifferent between a cash flow now and a cash flow in the future. The difference, of course, is in riskiness, but the actual value if you can forecast it will be the same.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the short term, when the pandemic hit and it looked like we were possibly going to be facing a depression, we did do a kind of relook at all the companies in our portfolio to make sure that they had the financial strength, just to double check that they had the financial strength to withstand a period of, let's say, two years of.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of my colleagues once why he should pay us an investment fee for 30 years to just sit on Netme. And my colleague's answer was, well, you wouldn't have done. And I think that that restraint in behavior whenever he's yelling at you to trade, trade, trade, has been a key to our success. Our holding period is over five years. And that's consistent across all our strategies. So for us, successful investing, as Charlie Munger said, is a matter of finding a bunch of good companies and sitting on you behind. The trouble is most people can't sit on their behind for so long.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And particularly over the last three or four months, but the classic company for us is, I always say Nestle. We've owned Nestle for 30 years. It never very rarely grows earnings in more than 15 or 20%. It usually grows earnings at 7 or 8 percent. It reinvests its cash flows in the 30-year annual, over 30 years, the annualized returns on Nestl ⁇ are about 12%. One of our clients asked,”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Doesn't just mean low leverage, but it means having access to capital in a way that's sustained. And we look upon bank capital as being rather volatile, let's say, there's the old story about a bank as somebody who lends you an umbrella when the sun's shining takes it away and it starts to rain. I think there's an element of truth in that. So we like companies that are relatively that have financial strength through generating their own cash flow or at least have sufficient reserves. But look, so we tend not to try to identify the massively fast growing companies. But to generate high returns and to generate the type of returns we've generated over three decades, you don't need to have portfolios that are exclusively in those kind of companies. They've been very fashionable over the last two years.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we didn't, you know, now we invest on the kind of spectrum from value to growth. And at one end of the spectrum, deep value is buying companies to kind of Ben Graham security analysis way where you're paying pennies in the pound or cents in the dollar for assets. And at the other end, high growth is where a company goes public with just a bright idea. For us, growth is the mixture of quality and growth is neither at the extreme of one end nor at the extreme of the growth end. So we do own companies such as Amazon which don't have earnings, but they have massive cash flows. But we haven't owned it for 20 years. I think we've owned it for several years, but not several decades. And we're going to say they're not going to meet our financial strength criterion where financial strength”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we think so. By relentlessly bottoms up, I mean that we don't allow beliefs and our forecasts or other people's forecasts about the macroeconomic environment to affect stock selection or portfolio construction. Though, as I said before, we do think about the macroeconomic environment and how we should. And we're not going to get scared out of selling it at the wrong time. What we didn't recognize thirty years ago when the firm started was that quality was a factor that was going to be recognized by the academics as permanent or allegedly permanent source of return. We just thought it was something that appealed to us and would help us generate the returns that we needed for our clients.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's on the same side. We've been at Home Park since 1901. Plymouth is a naval port and Plymouth and Portsmouth are the two big naval ports on the south coast of Britain. So Plymouth was completely destroyed during the war. It was very heavily bombed. And the Argyll Stadium is only a couple of miles from the city center. In fact, it's on a hill in a park. And if you look out, you can see what's called Plymouth Sound, which is where the ships live. We've just completely refurbished our very historic grandstand, which dated from the early 50s and was getting very dilapidated. And when we were doing that, one of our worries was that we would unearth exploded bombs. Luckily, we didn't.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't know about these things, but actually turning them into a process and applying them. Richard Faylor, Michael Moberson was telling me that Richard Saylor was observing at a sports analytic conference recently that everybody knew that three points is more than two points in basketball and everybody can calculate your success rate, yet it took the Golden State Warriors, I believe, to start shooting three points. If he take a more three-point shots. And again, at Argyll, as I'd like to say, one of the things that I think will help us is that we have a football management team that's Young, it's fairly inexperienced, it's very, very willing to learn. So they are fully prepared to embrace data analytics in helping them recruit players.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And there's the link straight back to Money Bore with CO Estein Billy Beans number two at the Oakland Days. So the Moneyball effect, I mean, people refer to the Moneyball effect on football. But again, what's fascinating is that it's just like, as described in Moneyball, and just as I described in the changes in our investment process at Harding Love, the use of data analytics is a way of becoming more objective in assessing players and overcoming biases in the same way that the use of objective data is a way of assessing, let's say, corporate management and overcoming imbalances. But the people, the practitioners resist it. And just as Billy Bean described with the scouts, I've experienced with my colleagues Harding Loffner and I'm now experiencing with football people at Memphis.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Out of sports betting. And he basically gathered data on soccer matches throughout the world and was able to assess the odds of Team A beating team B and bet on it accordingly. So he bought Brentford and has used data analytics essentially for recruiting the way that I was describing previously very, very effectively. At the other end of the scale, Liverpool Football Club, who at the moment are, as they like to say, champions of everything, are owned by John Henry from New England sports group, which is also the owner of the Boston Red Sox.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“To me, the money ball for soccer is money ball. The lessons in Moneyball are applicable not just to investing. It was a book that we sent to our clients, but also in football. And there's been a progression in the use of data analytics from baseball to basketball, where they said it could never happen. It's now kind of beginning to creep into hockey and American football, the NFL. in soccer. And it's very, very interesting to me that the two clubs that are most associated in England anyway with the use of data analytics are one very small low-budget club called Brentford, which actually in a couple of hours will know whether it's been promoted from the second tier to the Premier League, which is owned by a hedge fund manager who made his money.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“One who pays for a modern team. So similarly people will extrapolate. It's astonishing how often a guy will come out and score an unusual number of goals for his long-term record and then will get traded, following which he mean reverts and the price that was paid looks to be irrelevant. So when we're thinking about managing Plymouth Argyll, we're thinking very, very hard about these inefficiencies in the market and how we can best use our resources.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“But it's pretty clear that over a long, long period, skill dominates luck and the most skillful players generate the best results. Also, it's a reasonably efficient market and the most skillful players tend to cost the most. But it's not at the edge. It's a completely inefficient market. And there are all sorts of things that you'd recognize from the field of behavioral finance where people make errors in overpaying for players. People associate good players with good clubs. They assume that he's a good player. He's played for a successful team. And they assume that he's a bad player if he's played for an unsuccessful team. So a player of equal ability who plays for a top team will be more expensive.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are limitations, but they can be got around by owners willing to write checks. So we have financial fair play rules, but they're not terribly effectively enforced. And financial fragility of clubs in the lower divisions is quite a feature over the last 20 years. Many have gone bankrupt, including my own, 11 years ago almost went out of business. So it's a very interesting question about the role of money in successor. In particular, when it comes to getting players. So what's clear, and this sounds obvious, but it's not immediately obvious because football is a game like investing where short-term outcomes”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Go up to the next division and the bottom few go down. So it's terrifying. So the fight in football is not just about winning the division. It's about being in the top few so you get promoted and avoiding being in the bottom few so you get relegated and getting relegated has a massive emotional impact as well as a financial impact. As we know, losses count more than gain. But it's a terrifying system. But the impact is that it makes almost every gain meaningful.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So leagues here are closed systems and the divisions within a league are mostly closed systems. It's very unusual for a team to move from the American League East to the American League West. So obviously it has happened in the past. But so they're closed systems. Leagues in professional sports throughout the world, not just in soccer and not just in England, are much more open. So let's say let's talk about the four divisions of English football. They're actually about 100 divisions, but let's just talk about the top four divisions. So there's a progression from, let's say, the fourth tier up to the first tier, which is the English Premier League that people have probably heard of.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Community that pays my education. I've turned my education into successful business that I've reaped the rewards of. And the ratepayers of Plymouth paid to my high school education and for my university education. So it's a way of giving back. And I should say that I don't like the idea that successful entrepreneurs who make a fortune should give back. They've usually done it by selling goods and services at prices that people want to pay. It seems crazy to me that people say that Bill Gates should give back when you think of all the good that his product has done in the world. So it should be a voluntary act. But for me, I generated a return on the investment that the ratepayers, the taxpayers of Plymouth pay made. And I think some payback is appropriate. So it's been great fun.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's certainly not an investment barrier, or if it is, it's the worst one I've ever made. It's the labor above. It's not just any football club. This is the football club that I supported as a kid. I first stood on the terraces in 1966 when my family moved to Plymouth. So this is the team that I've been a fan of for most of my life for 54 years. So it's a labor of love and it's really a little bit of giving back to the community in Plymouth. The role of the football club in local communities is probably greater than sports teams in America. They're deeply embedded. They have a long history. We have a community trust which is very active doing good work. And it's important to me that Plymouth Argyll be a vehicle for me to give back to the community in which I was raised. And frankly,”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“About where you don't make judgments. And I think, you know, in some ways this is a feature of all research. We are not ashamed that a lot of the inputs we use are backward looking. But backward-looking inputs are the ones that are facts, subject, of course, to an opinion about the value of accounting rules. I think people have described them as opinions, not facts, but at least they're more objective than forecasts, which of course are subject to bias.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“We make it less squishy, but again, being structured and disciplined. So we rely very heavily not just on analyses of competitive advantage, which is really an answer to the question, what is it that this company does well that gives it an advantage in the industry and which it competes. But we also look at the Michael 4 Forces structure of an industry to make sure that the company is operating in an industry where high margins can be protected. So it's not always objective and quantitative, across the various sectors and geographies in which we invest.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so on and so on. So the arc at Harding Love really has been from qualitative judgment towards objective judgment. And that applies to the four criteria that we use as well.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the company. So corporate governance for us, again, is more than just a matter of sticking a finger in the air, making a judgment. We have a series of checklists which have identified the factors that we think are important in assessing overall levels of corporate governance. So I'm not going to pretend that all the companies in which we invest are perfect. One of the checklists, for example, asked questions about record of integrity, and they will be exclusionary. So if companies don't need a minimum standards, we won't follow them. We have got more structures. But I will say that when it comes to assessing management, we also have an element of assessing their strategic vision.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“But we can use that to look at, for example, how management allocates capital. And for us, that's a very, very important way of looking objectives at their track record. I think when you're investing for the long term in quality growth companies, obviously a lot of the value is in the future cash flows. But the past has to be some guide. You had to believe that the past is some guide to the future. So a good track record is something that we like to see. And we will use that to assess management. Are they retained in the company? Are they paid out as dividends? Are they distributed via buybacks? Most noticeably, of course, the executive.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the squishiest of these four criteria is undoubtedly the one that assesses management. And again, thinking about how the process has changed over the last 30 years, we used to think we knew quality management when we saw it. And often that simply meant that we met them and we liked them. And there's very little correlation between whether we like people and whether they're good managers of corporations on behalf of their shareholders. We actually use to halt valuation system with some adjustments for our own beliefs.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Disciplined, it's been objective and it's been reducing the autonomy of individuals. But the philosophy has been constant that we will focus exclusively on long-duration growth companies and pay attention to the price at which their stocks trade.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The philosophy has not changed, but the methods, the investment process has a lot. Our investment process today is much more structured. It's much more disciplined. We're much more objective about how we define the characteristics of the companies we follow. And the result has been a gradual shrinking of the freedom that a portfolio manager has. I think that's one of the interesting things about the lessons from behavioral finance. What we've learned is that people need to control their behavior, but they find it difficult to do so. And people don't like having their freedom restricted. So the methodology has changed, and it's been a methodology that has been”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's this relentless pursuit of originality. We all feel the pressure to be original, to be original thinkers. And I don't think it's necessary. I think there's so much good advice about how to behave, how to invest out there. And what's the key to successful investing is taking that advice and using it for the benefit of your clients.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. I mean, that view that it would be a long, hard slog was entirely based upon their work. And I have to say that this is something that I look upon as typical of my entire career. I've been very open about things. We have relied very heavily on other people's work, on other people's academic work, informing our own views. I always say that I haven't had an original thought in my entire career. But I've been very, very good at identifying useful thoughts from other people and in implementing them in investing. Book became popular. It was available for 15 bucks on Amazon. And it helped us with our expectations and our client communications for a decade. People underestimate the power of the written word, I think.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“With relying on the Reinhardt-Rogoff forecast of the macro economy. So it's quite ironic that the thing that we think we can't forecast at all was the one we actually got right.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, no, we don't bother with them at all. Having said that, we do think about them a little bit in thinking about expectations for how we should expect our portfolios to perform. So a good example would be after the financial crisis where our expectations for the economy such as they were that was based upon Reinhardt and Rogolf. We thought it would be a long, hard slog to recover fully from the financial crisis. We thought that knowing a bit about people's psychology, that they'd start the year optimistic, they'd end the year pessimistic, and that that would lead to more market volatility. But we thought it would be a good environment for our kind of investing in high-quality long-duration growth companies. And we were right about that. Interestingly, we were completely wrong with our forecast of stock market volatility. And we were actually right.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Secondly, you can't forecast GDP. So it distresses me that the financial services industry devotes so many resources to trying to make forecast it inaccurate and have no bearing upon customers' returns. So I look upon macroeconomic forecasting as damaging to good investment returns.”
2020-07-31 · Masters in Business · Simon Hallett on Investing and Soccer (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source