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As we settle into another holiday season, we take some time to reflect. We have a lot to think about this year. The changes that crept into our lives. The people we hold a little closer to our hearts. The journey is long, so it's important to catch your breath, look back, and marvel at how far you've come.
Let's turn it over to Michael Craig, CFA, Managing Director and Head of Asset Allocation and Derivatives, TDAM, for his personal and professional take on the past, present and future.
What inspired you to become a portfolio manager?
That's a good question. I'll start by saying I wasn't much good at anything else. Joking aside, I've always been intrigued by financial markets. It happened naturally. I actually have a long answer for this, but I'll simplify it.
My parents are retail investors. And they made poor decisions along the way. They're stable now, but those poor decisions meant they had to work much longer. My first experience with investing was on the behavioural end. I wanted to understand how investment decisions were influenced by emotions. That curiosity pulled me in. Before I knew it, I was running risk management and making fairly dispassionate decisions, which I still do today.
This is a neat profession. It's the intersection of economics, finance, sociology, psychology, and history. It's a special mix of traditional sciences and social sciences. I like that cross-disciplinary aspect. There aren't many other professions, in my mind, that draw from that.
How does one become a portfolio manager?
Today's investment industry is far different than the industry I entered twenty years ago. And I think it'll be quite different ten years from now. Right now, the industry is consolidating. Certain requirements aren't as critical as they used to be. While the CFA will always be a part of the conversation, soft skills are becoming increasingly important. Building a network of people. Communicating and writing in a strong, clear way. Multidisciplinary experience is also key.
These days, you don't necessarily need to complete a commerce degree to become a portfolio manager. You can pursue a science degree or a degree in English literature. Anything really. As the thought process behind investment teams evolves, it's going to demand more diversity and varying backgrounds.
It's important to think about where the industry is going. Environmental and social governance are big growth areas, so having expertise in those areas could be an asset. Expertise in private assets is another potential asset. It's quite valuable, and it will continue to be valuable.
You have to think about what part of this large system attracts you, and then move accordingly. This is a tough question to answer perfectly. If I gave a simple answer, everyone might go and do it. Some would be happy with the outcome. Others would be underwhelmed. What I know for certain is it takes time. The typical role of a portfolio manager is different than it was ten years ago. And it will continue to change.
Has your investment process changed at all because of the COVID-19 pandemic?
That is something that evolves, not changes. Those are different things. When it comes to the investment process, we're never going to do a 180-degree turn in our thinking. But our thinking is going to evolve. For one, our current strategy takes the COVID-19 pandemic into account. We analyze how this pandemic is progressing. Whether it's accelerating or declining. Everyone looks at the case count, but I think hospitalizations are more important. That data is more likely to influence public decisions regarding lockdowns. This evolution in our approach will taper off once the pandemic is under control.
Now that U.S. election results have settled, how will the markets react?
I don't think U.S. election results will have as huge an impact on markets as it will on policy and sectors. We're mindful of its impact on accounts that are more sensitive to volatility, so we position for that. In the next four years, there may be a few different policies put forward and a fair share of winners and losers, but that's something we'll assess on an ongoing basis.
What is the best investment advice you have ever received?
The best investment advice I've ever received was to pursue my graduate studies. It's also the best decision I've ever made in my career. Fortunately, my wife was extra encouraging while I considered it. I'm very happy I went down that path. The things I learned, even fourteen years later, are the foundation of my understanding in this industry. We're always faced with decisions about where to invest. If you want the highest certainty of investment, the best course of action is to invest in yourself. I would give that advice to anyone.
How are you and your family handling another Canadian winter?
While we don't relish the idea of being outside in minus 20-degree weather, we do enjoy all kinds of outdoor activities. I actually look forward to winter. I like it. I'll probably be sick of it by March, but I'm ready for that. More than anything, I like a good snowfall.
Any final thoughts for investors as we approach the holidays?
It's been a strange year. I could leave it at that, but I'll add this: The biggest risk in investing is not having enough savings when you need them. That's a manageable risk if you act early.
As for the rest, I understand the discomfort. That's just the path. Your goals define your success. Stay focused on your goals and not the present. Divert your energy to things that make you happy, whether it's family, friends, or work. We're here to support your investment needs. Let us worry about that. Focus on your goals and, hopefully, take some time to do the things you enjoy. We have your back when it comes to your finances. We'll see you through.
Happy Holidays from TDAM!
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