Andy note: SirTrades' decided to get deeper into the story so we're making it a trilogy. Enjoy part two below, part 3 is coming up next Wednesday, and make sure to check out part one here (which includes his bio) if you haven't already.
Importance of Gaining Relevant Experience vs. Brand
One of the biggest fears that people have is looking stupid. This causes all sorts of strange behavior.
The first relates to the old adage, "nobody got fired for buying IBM" which was used by purchasing managers many years ago to justify their sub-optimal purchases of computer equipment, but helped the buyer protect their position in the firm. The same mindset is prevalent in the investment business.
Some portfolio managers will buy the same security as most other portfolio managers because they know it will be harder to criticize them if the security depreciates ("hey, everybody else owned it") and easier to criticize them for not owning a winner. These managers are closet indexers and it is the dominant strategy in mutual funds. Unfortunately, doing what everyone else is doing is rarely a winning strategy.