Value Library
The following is an excerpt from the ABC Perspective -
January 2011 - Pg. 16
Portfolio Managers: Aging Like Fine Wine
There has never been a boy painter nor can there be.
The art requires a long apprenticeship, being
mechanical as well as intellectual |
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John Constable
19th Century
English landscape painter |
I wrote a piece on this topic a number of years ago and, quite frankly, I still feel even more strongly on this subject today. The point is that professional hockey, baseball, basketball and tennis players tend to peak early with maximum athletic performance in their late twenties to early thirties. On the other hand, North American football, due to the severe physical contact of the sport, leads to an even shorter athletic career and a fairly early peak in top performance.
Very rarely in any of these five major sports do players continue well on into their early forties. While their minds may be willing, unfortunately, their battle-scarred knees, dislocated shoulders, broken ribs and serious concussions impede their athletic longevity. Today, a perfect example is 41 year-old Brett Favre, star quarterback with the NFL Minnesota Vikings, who just retired for the third time in his long and illustrious 20-year pro football career.
Interestingly, the careers of investment professionals along with landscape painters take a completely different course. Accomplished painters and successful investors are neither born nor are they overnight successes. Through extensive trial and error, painters and portfolio managers mature and improve gradually over time; they age like fine wine.
While a hockey player may be scoring hat-tricks and a point guard may be shooting three pointers and slam-dunking in their late twenties to early thirties, comparatively-aged portfolio managers are considered to be mere rookies.
It is my opinion that it takes at least several business cycles, countless missed and frustrating opportunities, occasional misfortunate stock selections and numerous successes to forge the character of a well-rounded portfolio manager. But this process takes time just as no one expects a 25-year-old to paint a Mona Lisa or a Last Supper. The point is, successful portfolio managers do not mature until their mid-forties or early fifties/sixties (see Warren Buffet at age 80). At that time a manager has had at least 20-25 years of battle-hardened work experience and has, ultimately, honed a multitude of invaluable investment skills and tools.
In summation, the fact is that unlike numerous other lines of work, the older and more experienced an investment manager becomes, the more priceless his work.
Irwin A. Michael, CFA
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