What Separates Good PMs From the Great PMs?
What traits differentiate the great PMs above all? Off the bat I'm thinking: smart, objective, and disciplined. What other characteristics define a great PM?
What traits differentiate the great PMs above all? Off the bat I'm thinking: smart, objective, and disciplined. What other characteristics define a great PM?
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A few commonalities I've noticed from observing great PMs:
1) Meta-cognition / self-awareness: knows own strengths and weaknesses (intellectual, behavioral), learns from mistakes and compounds investment skill over time; recognizes and controls own fear & greed and takes advantage
2) Intuitive understanding of asymmetry: does this investment really offer a far greater reward than the downside risk scenario playing out?
3) Nuanced thinkers: investment thesis expressed with sophisticated rationale - a crude thesis might read "Company X has low P/E and P/B , their manufacturing division is growing so buy the stock"; a more sophisticated thesis might read "Company X might appear superficially cheap on a multiple basis, but high debt levels and unforgiving covenants jeopardize the transfer of free cash flow to the stockholder, furthermore in a low barrier to entry industry (due to cheap entry licenses/irrelevance of brand value) future earning streams could be vastly overstated"
4) Long term orientation: Buffet, Klarman, Michael Burry etc. all can tolerate short term pain for long term gain (hard to do when angry clients are on the phone). Long term investing cuts out the noise and day to day random fluctuations of the market. How many GREAT investors are successful trading on a day by day or even quarter by quarter basis?
5) Intellect: Important, but by no means decisive on its own; see spectacular downfalls of ultra high IQ Victor Niederhoffer and "look at all muh Nobel prizes " Long Term Capital Management
Great PMs focus on things they can actually control: branding, marketing, and building AUM.