Skills That Separate You as an Investment Manager: Creativity
Having hired research analyst interns, research analysts, a portfolio manager, and even my own successor when I retired from investment management in 2005, I have gained a fair amount of knowledge about which skills separate you as an investment manager. As such I’ve been writing a series on the skills — aside from the obvious (e.g., a love of economics, drive, confidence, etc.) — that help you stand out from the pack. Last month I wrote about introspection. Now try adding this one to your arsenal: creativity.
One of the questions I used to ask aspiring investor candidates was, “What do you do that is creative?” In all of my years of asking this question I only ever got two coherent answers. One was so superior that I insisted on hiring the candidate on the spot.
Why is the answer to this question so important? There are two reasons. First, it measures whether or not you know how your mind works, and two, it reveals whether or not you are conscious about using your entire mind to think, and consequently, solve problems.
In reality, every time we cross the street we are taking in lots of data about the situation and inventing an on-the-spot solution to the various factors at play: icy road, fast-moving traffic, number of lanes to cross, your health, and so forth. The solution is a creative solution. So in reality, people are using their creativity all the time to solve problems, but most have zero awareness of how they think.
Many people who are conscious of creativity as a part of their mental framework still blow it because they have made an archetype of creativity. What do I mean by that? Creative things are drawing, painting, sculpting, or playing music. But a true creative practice is just being aware that you are creative and doing things to cultivate that part of your mental apparatus.
Gaining creativity has two major accelerants. First, constantly be aware of your and your firm’s boundaries. Creativity is about pushing past boundaries into new territory; doing what no one else is doing. If you do what you have always done then you will get what you have always gotten. Second, creativity is about awareness. So the remedy here is: you guessed it, meditation and to challenge orthodoxy by taking mental leaps of faith.
Creativity is such a generalized skill that it can be deployed in almost any situation. However, the most obvious application is in generating new investment ideas. After all, by definition, to outperform your investment management competition you must be doing something that they are not doing. Again, by definition, creativity is the skill that helps you to identify what no one else is doing.
In my investment management career, I developed an important thesis early on: a sneaky way to inexpensively own the technology boom. Via my creativity practice, I recognized technology was both a breadth and depth story. That is, more and more people globally would be buying technological gadgets, and also that more and more gadgets were beneficiaries of new technology (think: refrigerators, toothbrushes, and so forth).
Unfortunately, it was almost impossible to buy the technology leaders at discounted prices. But what I recognized through my creativity was that all of these devices required electricity, and that electricity was also therefore a depth and breadth story. This led me to look for a global power company so I could capture the upside benefits of technological growth but experience the growth through a very stable, established business. My creativity led me to purchase shares in AES Corporation (AES) — a decision that was among the best I made as an investment manager.
Next month I’ll discuss another key, but often-overlooked skill in the investment industry: intuition.
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
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