How to be a Bad Portfolio Manager

Is portfolio management art or science?

This post first appeared on 19 Apr 2019 on 8percentpa.blogspot.com and we have updated it for substack.

Portfolio management is probably more art than science. But most professional fund houses approach portfolio management scientifically. We use so much data and models to justify our buys and sells. But the numbers speak for themselves. 80% of all professional portfolio managers cannot beat an index like the Straits Times Index and the famous S&P500.

Good portfolio managers are a unique breed. Especially those who had been humbled by the markets time and again. Then spent their entire careers learning about markets, trying to beat the index only knowing that they somewhat succeeded because they never let cocksureness get into their heads.

Their faces seem to show their market war stories and they never truly smile. The picture below shows Stan Drunkenmiller, #2 for George Soros and one of the best portfolio managers in our time. He never had a down year for 30 years and compounded retu…