Wealthtech Insider (7/13/21)

Rusty Vanneman’s Summer Reading

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Rusty Vanneman

By Rusty Vannenman

The primary value of what we do as financial professionals is always shifting. I have found that a bottomless appetite for news and podcasts goes a long way toward understanding how our clients behave and what they need from us. Here are some resources that have piqued my interest this summer.

A recent article reminded me of the wisdom of an investing great, Peter Lynch. Years ago, I worked at Fidelity Investments in Boston in their investment unit, FMR Co. It was a few years after Lynch retired from running the largest fund in the industry, the Magellan Fund, though he could still be found in the Fido hallways. Years later, I co-managed a hedge fund that invested in former Fidelity portfolio managers.

Over the years, I became very familiar with the lessons and stories of Lynch. His wisdom was vital to understanding the culture and mindset of money managers. The article posted a transcript of a 1990 interview with Peter Lynch discussing common investor mistakes. It’s a great read: while the world has changed a great deal since the ‘90s, human beings are just as emotional and fallible as we have ever been.

To me, the key lessons are:

  • To build wealth, we need to invest (and be patient)
  • Don’t forecast or “play” the market
  • The investor who “turns over the most rocks” will do better over time; and if we can’t do that, we should hire investment managers who have the resources to dynamically and actively manage portfolios.

Speaking of good articles, it’s hard to beat Jason Zweig’s weekly words of wisdom for all investors. In a recent article, he wrote how our decision-making is far less consistent than we think it is. To cite one example, the article finds that doctors are 15% more likely to order breast cancer screening for a patient if they see them first thing in the morning, instead of right after lunch.

No matter how intelligent you are or how capable you are as a professional, it’s unlikely any of us realize how much our decisions vary unless they are measured. The same thing holds true for matters of finance. Investors need to recognize that and work to counter it.

If your clients are looking for guidance on personal investing, they could do worse than follow the example of the late, great David Swensen, CIO of the Yale endowment before he passed away earlier this year. If I were carving a Mount Rushmore of legendary investors, David Swensen would definitely be on the list. His book “Unconventional Success: A Fundamental Approach to Personal Investment” provides several important lessons for investors. Here are my top five:

1.  To build wealth, one needs to invest in growth assets.

2.  Diversify!

3.  Costs matter. And it’s important to note that time is also a cost.

4.  Think long-term.

5.  Swensen also believed in active management in less-efficient asset classes.

Finally, for fans of thematic investing, a recent episode of Orion’s Weighing Machine features Jay Jacobs and Tom Driscoll from Global X, a leading ETF provider and thematic investing strategist.


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Rusty Vanneman, CFA, CMT, is chief investment strategist at Orion.