Learning From The Top 1%

Reflections on a year interviewing the world’s best investors and analysts


In mid-2021 I started work on my podcast. For me this was another new medium, and one slightly trickier to master than my video attempts on YouTube. I had started my YouTube channel in January of that year. I didn’t worry too much about my production quality with the videos – as long as you could see and hear me, I felt that was good enough (and in line with my tech capabilities). But for a podcast, the production quality had to be higher, which created something of a learning curve and required expert assistance.

Behind The Balance Sheet Podcast image

Incidentally, I am not sure about this picture which is overly flattering. First, the photographer made me look better than I am in the flesh, then the cartoonist takes at least 10 years off the guests which of course they love. I have had a bit of flak about this.

To test the market, I kicked off with an initial series of five episodes. I was surprised at how much I enjoyed doing them and at the warmth of the response, so I continued. The reason I enjoy the process, and I think the reason for its popularity, is that I am learning a lot (as is the audience, I hope). I have been engaged in the investing game for decades, but this was the first time I had sat down with real experts and discussed how they approached the stock market. And my wonderful guests really opened my eyes.

Every investor approaches the market in a different way, but there are of course many commonalities. It’s incredibly helpful to listen to great investors. In my Analyst Academy Course, I have about 30 bonus lectures in which I expose students to the investing philosophy of Buffett, Graham, Klarman and many more. You cannot be a successful investor until you have developed a philosophy which suits you – everyone has their own interests, aptitudes and risk tolerances. Generally, this is a process developed over several years of making mistakes and losing money – you need to learn what makes you lose sleep, and what risks you find manageable, but also how best to approach the stockmarket puzzle. Learning from the greats is a good way of developing your own philosophy. And my podcasts can help.

Hokusai’s Feminine Wave

Hokusai’s Feminine Wave - Behind The Balance Sheet
Source: Wikipedia

A common theme from my guests is an inherent dissatisfaction with performance. Wikipedia comments that the great Japanese painter, Hokusai, on his deathbed said:

“If only Heaven will give me just another 10 years . . . Just another five more years, then I could become a real painter.”

This from a man whose paintings were an inspiration for Monet (a memorable work is on display at the French Impressionist’s former home at Giverny). Yet he was constantly seeking to improve.

What struck me from a number of my podcast conversations was how dissatisfied many of my guests were with their own performance. This isn’t a question of wanting to earn more money – they mainly have more money than they could spend in a lifetime – but an issue of wanting to improve, to be hungry, and to get better. 

The advice from John Armitage, founder and CIO of $28bn hedge fund Egerton Capital (EP 1), to young aspiring investors was to work hard; it was echoed by Quintin Price, former head of BlackRock’s active strategies (EP 4). Armitage, whose 27-year track record is staggering, said: “I like working. I never feel successful. I measure success by the recent past.”

He attributes his success to a decent dose of insecurity and being a workaholic. His ingredients for success are:

  • Finding something you like
  • Feeling you have more to learn
  • And always worrying

This is not to say that you need to be insecure to be a great investor, but it’s no coincidence that so many great investors also display humility which is in contrast to their financial success. I recently sat down offline with one of the most successful hedge fund managers in Europe and he had the same mantra – how can we improve?

For many of my initial guests, it was their first time on a podcast and for some their first ever interview. But they nevertheless had fantastic answers. A good example is Stuart Roden (EP 2). He explained his impression of the five characteristics of a good investor – he had clearly spent time analysing his own performance. He also explained that there is an important difference between analysts and portfolio managers – analysts want binary answers, while the skill of a great portfolio manager is taking on uncertainty and risk.

Roden, who has retired from Lansdowne and is mainly involved in philanthropic activities, contrasted life in fund management and afterwards – there are few other endeavours where you can make things happen so quickly and then turn on a dime to pivot.

Quintin Price explained that great investors have extraordinary clarity of thought; are not proud about reversing their decisions; and understand what process works for them.

Pete Davies, who runs the Lansdowne Partners Developed Market Strategy, recommended (EP 3) that young (and older) investors should look back at a period in history which they haven’t experienced or explored.

Lucy Macdonald (EP 5) was the global CIO Equities at fund behemoth Allianz and had some simple advice for a young analyst or portfolio manager. It may however be difficult to execute:

“Get a good boss.”

She explained that your first boss can have a profound impact on your career, so you need to make sure they are someone who can properly teach you.

When running an investment team, Lucy placed emphasis on avoiding groupthink. She used blind voting (where you cannot see how others are voting). It means a wider dispersion of opinion and often creates additional debate which is helpful in arriving at the right decision. Her three tips for avoiding groupthink:

  • Leader goes last and does not influence others
  • Diversity of inputs (gender and background) is important
  • Blind votes (ie others cannot see how you vote)

More recently, I have interviewed a few macro commentators while I try to make sense of what happens next as we exit a 40-year regime of falling rates. Jeremy Hosking and Russell Napier (EP 9) commented on the fact that many investors have come into the business in the past 10 years and it would be easy to assume that:

  • An era of falling rates and massive liquidity was normal;
  • Growth stocks would be pushed to excessive valuations, especially in private markets;
  • Companies in the real world would continue to be starved of investment; and that
  • Mean reversion was a 20th-century phenomenon.

As we are now learning, such assumptions need to be questioned.

I have learned so much more and this is just a quick snapshot of a few highlights. I hope you will learn a lot too!