I’m continually amazed by the mixed messages that investors are hit with daily—mostly from the media, but the media is not the only culprit. At Klein Financial Advisors, American Century Investments is the manager for many of our fixed income funds (also known as bond funds). Of course, I pay close attention to their market commentary. In their most recent note, The Bull vs. Bear Battle in 2019, Rick Weiss, a skilled investment manager, writes that he’s “not predicting a recession this year,” but that he’s “taking note of some signals.” Yet, in the same section of their website, investment manager Cleo Chang presents a different view. “Let’s take the emotion out of [the volatility],” she writes, “because we often get too caught-up in the real-time emotion of market selloffs.” She then goes on to give facts and figures to support her perspective.
Here’s my take: Weiss is ‘mansplaining’ investments, while Chang is refocusing the attention on investors’ reactions. If that’s not a muddled message, I don’t know what is! This is a pervasive problem I see in the investment world. When I sit back and listen to the chatter around the table at investment committee meetings, the language and attitude about the markets, the economy, the Fed, and all the rest begins to sound more like a conversation about the Superbowl than about something as significant as investing for growth and security. It’s a problem that inevitably impacts the thinking of individual investors as well.
This past summer, I met with Ed. He and his wife Ann had been clients of mine for years. After Ann’s death in June, Ed was forced to take an active role in the financial planning process—something Ann had managed mostly on her own. In Ed and my first meeting one on one, it became clear that our work together would have a vastly different tone than my work with Ann.
As a key executive at a large corporation, Ed has participated in many investment committee meetings, and he has often sat through the inevitable ‘dog and pony shows.’ If you’ve never witnessed one yourself, investment committee meetings have a pretty standard agenda. The portfolio manager presents how the market performed in the past quarter, what their analysts predict will happen in the future, the status of your portfolio, and, last but not least, the “brilliant moves” they are planning to make your portfolio better than ever. Once they’ve offered their brilliant solutions, they welcome the audience’s brilliant questions—which usually sound something like this: Who do you think is going to come out on top? What is the Fed’s next move? How will the trade war with China/Canada/Mexico affect tariffs? (I always find myself wondering: if we were talking about a sports team, would the questions be any different? Everyone wants to know who will win the next game, what ‘management’ will do to improve their team’s odds, and what outside factors might impact their success. Same game, different playing field.)
At the end of my meeting with Ed, I asked what he would like to have more of in future meetings. Ed’s reply: he wants more ‘Weiss’ and less ‘Chang.’ In other words, he wants to talk sports. He wants the full dog and pony show, including charts, graphs, and prognostications so I can prove I am a ‘brilliant’ investment manager.
But why? Why play that game when I could be spending my time doing the right things to help him protect his financial security? Do I have market perspective, a high conviction portfolio, a deep understanding of economics and investment theory, a reliable investing process, a research capability, and the skill to employ these things to deliver a successful investment experience? Yes, I do. So why do I need to suit up, put on my game face, and sit in the press box to opine on the markets?
As an advisor, I get it. For certain investors, I have to to pull out my script and get to ‘work.’ Harumph. The last thing I want to do is talk about investing (to Ed, to you, or to anyone!) in an overconfident and condescending manner. If I need to demonstrate my investing chops, I prefer to do it in honest language. I’d rather show the projection of the long-term plan and walk through how that plan is structured to protect and grow assets over time. I’d rather focus on what matters most.
Another interesting thing about investment committees is that, in my experience, they are mostly (almost solely) attended by men, and so the language spoken there is inherently male oriented. Why? Do men really know more about investments, or are these meetings simply designed for a male audience—another symptom of the ‘good ‘ol boys network’ that has dominated the business world for years?
The March 2019 cover of Rolling Stone magazine features a photo of U.S. Congresswomen Jahana Hayes, Alexandria Ocasio-Cortez, and Ilhan Omar, along with House Speaker Nancy Pelosi. The title: “Women Shaping the Future.” The focus is all about the new and boldly female voices that are helping to lead the country. Perhaps it’s about time we start accepting new voices in the investment world as well and, indeed, inject a little plain speak about investing using language that's more than just talk.
I remember a time when news reporters were only men. Back then, the audience (me included) had a cognitive dissonance when listening to a woman’s voice reading news. Times have changed on TV news. Times are changing in Congress. Maybe one day soon, it will change in investment review meetings, too. I plan to be here to help make it happen.