Finance conference season in Chicago kicked off with a bang Sunday night at the 65th annual CFA Institute National Conference. 1800 professionals who believe in the future of finance are in town for what promises to be a great week of research, education, and analysis.
The night kicked off with speaker James Montier. To say his resume is impressive might be an understatement. He is a member of the asset allocation team at GMO UK Ltd. Previously, he was co-head of global strategy at Société Générale S.A. and a global equity strategist at Dresdner Kleinwort. Mr. Montier is the author of several books, including Behavioural Investing, Value Investing, and Behavioural Finance. He is a visiting fellow at Durham University and a fellow of the Royal Society of Arts. Mr. Montier holds a BA in economics from the University of Portsmouth and an MSc in economics from the University of Warwick.
Mr. Montier reminded us that there are still flaws in finance, despite the perception by some that the equity markets are back to normal and all is rosy. When speaking about the global financial crisis, he quickly pointed out (graphically) that guns don’t kill people, people kill people… But if you give a monkey a gun, monkeys kill people. This parlayed into his contention that, “If you give a monkey a computer, you get a GFC [Global Financial Crisis].”
Perhaps most importantly, he reminded us all that finance is not physics and that we (investors, regulators, and most importantly the people creating financial products) should not be fooled by models and should use a lot more common sense and a little less mathematics! While we aren’t exactly ready to throw statistical analysis out the window, we can definitely agree with his argument that those constructing investment portfolios must take in to consideration robustness, and ask themselves how the portfolio will perform in various investing environments. To that end… where’s the managed futures love?
More from CFA later today – there are some excellent speakers lined up.
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