Gordon Gecko Syndrome
by Jamie Hyndman, Mawer Investment Management
A few weeks ago, I went to dinner with Martin Ferguson, the co-manager of Mawerās Canadian Small Cap strategy. Martin is a 16-year veteran of our firm, has won numerous awards over the years (including the prestigious Morningstar Domestic Equity Fund Manager of the Year), and has been in the investment industry for a total of 30 years. And on this night, he had just learned that the fund he co-manages won the Morningstar Canadian Small/Mid Cap Equity Fund of the Year award.
You would think the man would have had more swagger about him. But no ā Martin was gracious for the acknowledgement and stoically raised his glass only once for me. And that was it.
Now, Martin is a humble, unassuming gentleman. His reaction was typical of Martin and typical of any of the other portfolio managers at Mawer. So why do I bring this up? Because far too often I am shocked by the personality type that people believe is best suited to managing money well.
One might be excused for thinking that it is the loud, arrogant, alpha-male persona that excels in investing ā think Gordon Gecko from the 1987 movie, Wall Street. Because it is true that investing is a highly competitive, zero sum game that takes a great deal of conviction. But while it may be seemingly comfortable to have your money managed by a supremely confident individual, that may in fact be an ominous warning sign because really good managers understand that what they know is greatly outstripped by what they donāt know. As such, over-confidence is an extremely dangerous character trait. As an example, someone like Gecko might be reluctant to admit he was wrong about a particular investment and hold onto it too long, whereas a humble manager would swallow his or her pride, admit to a mistake, and sell it and move on to a better idea.
Rather, we think that competent investment managers have intellectual humility. They are well aware of the limits of their abilities, and the uncertainty that pervades the investment world. They approach investing with caution, preferring to focus on those investments that have a relatively high probability of success. Further, they are always open-minded and eagerly listen to other team membersā opinions to gather as much perspective as possible. In fact, they are always in learning mode because they know the world is constantly changing around them.
In effect, we believe that there is no place for ego in investing and we have built our culture around that principle ā more Martin Fergusons, less Gordon Geckos.
Jamie Hyndman
Copyright Ā© Mawer Investment Management
