Skills That Separate You as an Investment Manager: Curiosity
Over the last year I shared many of the skills that separate you as an investment manager that are not covered in formal contexts, such as business school, firm-level training, or even as a part of the CFA Program. In this installment I discuss the benefits of curiosity for investment management success. Tangent to this discussion are my articles on the importance of discernment and context creation.
Curiosity Helps You Expand Past Your Boundaries
To me the most important investment skill is understanding information. All other things equal, the analyst or investment manager who understands information the best wins the day. However, asymptotic to understand information is the analyst or investment manager who understands the most information. What is the fuel that drives someone to constantly search out new experiences, new perspectives, and new ways of doing things, to constantly expand past her personal boundaries to understand more information? It is curiosity.
Curiosity Is in Alignment with the News Flow
To be curious also implies eagerness to learn and to change. News flow is constantly changing and there are constantly new stories to understand. Thus, an investment manager or analyst possessed of curiosity is naturally in alignment with the informational flow, and discounting information is paramount to investment management.
Curiosity Is Efficient
Curious investment professionals do not need to be forced to understand the world around them. Instead, there is ample energy and instinctual effort in digesting the vagaries of the news whipsaw. By contrast, analysts and investment managers not possessed of curiosity must force themselves through sheer discipline to change and to learn new things.
The forces needed to overcome such intellectual inertia are considerable and require more effort on the part of the investment manager personally, through force of will, or on supervisors who must enforce a willingness to adjust and adapt to the ever-changing world. This is extra effort that could be spent doing any number of other things necessary for making investment clients more money. So the curious are also efficient effort-wise.
Curiosity Is Not Easily Satisfied
Analysts possessed of curiosity are not easily satisfied. Instead, they constantly seek out more information and new capabilities. Furthermore, they are not satisfied to take the word of others. Curiosity is hardly ever sated by the easy answers offered by another person. In part, this is because curiosity is about experiencing something firsthand . . . about experiencing something that is direct and personal, as opposed to abstract or described by others.
Investment pros without curiosity do not have the inclination to travel to see the businesses that compose their stock portfolios, or to meet and talk with the management teams that steer corporations. But the curious are so inclined. In fact, the most curious analysts I know insist on experiencing things directly and do not accept surface explanations and answers. This trait, in turn, results in deeper, more thorough, and personally accountable analysis.
How to Be More Curious
If you find yourself in the category of analysts and investment managers I described above — those executing their job tasks through sheer discipline — then some tips about cultivating curiosity are in order.
- Curiosity is about a willingness to explore what lies on the other side of your personal boundaries. Do you know what your personal boundaries are? For example, do you stop short of reading anything that contains mathematical symbols and nomenclature? If so, begin letting your ignorance dictate your research interests. That is, if you come across something that makes you feel ignorant, there is a ready-made solution to these uncomfortable sensations: get more information. In other words, it may be that standing in the way of your curiosity is a fear of feeling ignorant. In the modern digital world, illumination about nearly any topic is a search engine away. So if you are anxious about Laffer curves or what an inverted yield curve means for the economy, then investigate the topic further.
- Take a personal knowledge inventory. Begin by writing down those things or skills that you know a lot about. After that, list the things you know something about, but not necessarily a lot. Next, list things for which you have only a passing amount of knowledge. Commit to becoming more knowledgeable about one of the topics listed in your personal knowledge inventory. If you are not naturally curious, then force yourself to explore one of the issues listed in the second category of your personal knowledge inventory. If you do not quite know how to bootstrap a yield curve, then commit to learning this skill. If understanding an options strategy, such as a straddle, eludes you, then endeavor to learn about its peculiarities.
- Honor your curiosity. That is, perhaps you are curious but rarely sate your curiosity by following its drum beat. If there are topics that pique your curiosity but that you have not followed up on, then make time to indulge your curiosity. Want to better understand differential equations? Then follow up on that curiosity. Want to better understand the politics of India circa 1948 and how they shape its current politics? Then read a good book.
In short, curiosity is a secret weapon for being a better analyst or investment manager. It is about learning, understanding, assessing, efficiency, and thoroughness — all skills needed for investment management success.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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