The most exciting aspect of investment markets is the ability to engage with talented people who are at the top of their game. I interact with smart people who have created a lot of value through the companies they run. How they think about life and business is very interesting. It’s also key to figure out which people are on the right track. Most managers are A-type personalities and considering the psychological profiles of what makes a good manager is fascinating. I really enjoy dealing with people who know how to make money and run successful businesses.
I tend to remember the periods when market conditions were very tough. I’ll never forget my first year of running the Investec Opportunity Fund. February 2003 was the tail end of the bear market. I was a new manager and market conditions were difficult, so meeting with some of the Fund’s large investors for the first time was very challenging. I told one particularly sceptical client: “Give me six months.” In hindsight, that was a rather bold statement as markets sometimes take much longer to correct. Fortunately, markets turned around a month later and at the next client report-back, I got a much friendlier reception. Of course, 2009 was a watershed year. The big financial crisis meant that many investors felt the world was ‘ending’ and they wouldn’t touch shares. At the time, many people thought I was nuts to invest money in the stock market. It was only when markets turned, that my decision to invest in cheap stocks seemed to be a prudent move.
You need a strong stomach to do this job. You can’t take things personally and you need to have the ability to ride out a tough spot. It’s important to stick to your investment principles and wait till markets return to some degree of normality. Patience is something that people typically don’t have in this industry. When things go well, you equally have to question if what you’re doing is correct – are you getting sucked into fads, momentum or themes? It’s important for an investment manager to stay focused and continually evaluate information and to maintain an even temperament through the ups and the downs.
There are multiple ways of making money with investing. The most important thing is to have an investment philosophy that matches your psychological make-up and you have to stick to that philosophy through thick and thin. Being disciplined is key and you have to work hard at finding investment ideas. There is no short cut for hard work.
You’re never going to know everything and you’re not going to get everything right either. You have to accept this but have the emotional resilience to be confident about your decisions. Besides hard technical skills, emotional intelligence is crucial. Individual achievements are one thing, but in this environment you have to interact with others. You have to be able to rely on others and bring out the best in them, so good people skills are important.
Stress comes with the job. I spend time in nature as it provides a physical and mental break. While I’m not a marathon runner or a Cape Epic man, I love climbing mountains and pursuing most forms of exercise. I play cricket and golf and also enjoy running, cycling and swimming. It’s very important to have positive distractions.
My family also helps me to maintain perspective. Spending time with my family and building relationships with my children [16, 14 and 9] is very important to me. Investing can be all-absorbing. Financial markets are constantly changing and you can never say “the job is done”. That’s why it doesn’t suit a lot of people. You have to be flexible. The upside is that if you need to attend a school function, for example, you can do that. You can usually make up that time later in the evening. Markets have pre-determined opening and closing times, but news and judgement is an ongoing process. Making sure that you prioritise other things is important because investing can be an all-consuming job.
My favourite subject at school was geography, and I regret giving up geography and history after grade 10. I did economics and accounting for matric as these subjects are more suited to a commercial career. Geography fascinates me because I have always been passionate about climatology. I am one of those nerds who has a rain gauge at home and I like measuring a bunch of stuff related to weather and climate. History is another passion of mine. I love learning about civilisations and how people have developed. History teaches you about context and how regimes are established. You can’t distil that into mathematical formulas and package it. You can analyse the facts, but you have to understand the context. That’s why history is so compelling.
I have read a number of Warren Buffet's books and those definitely shaped my thoughts and how to invest early on in my career. But more recently, I have really enjoyed Michael Mauboussin’s books. He focuses a lot on the behavioural aspects of investing – the psychology of markets and how that drives the decision-making process. We know that share prices, markets and currencies often operate away from fundamental norms. Understanding what drives those extremes is very valuable. So I would definitely recommend his books, as I find them fascinating.
Clyde is Co-Head of Quality at Investec Asset Management. He is a portfolio manager with a focus on multi-asset absolute return and low volatility real return equity investing. His portfolio manager duties include the Investec Opportunity, Cautious Managed and Global Franchise Funds.
Clyde joined the firm in 1999, initially as an asset allocation and sector allocation strategist. Prior to Investec Asset Management, Clyde worked at Sanlam for eight years, including five years in asset management. His experience in investments there included fixed income analysis and portfolio management.
Clyde graduated from the University of Cape Town with a Bachelor of Science degree in Statistics and Actuarial Science. He was awarded the Certificates in Actuarial Techniques in 1995, and Finance and Investments in 1997 by the Institute of Actuaries in London. Clyde is a CFA Charterholder.
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