September 16, 2016
A Matter Of Time
Time is a never-ending resource. But for those who know what to do with it, time is an asset.
Of all the arrows in an investor's quiver, among the most powerful is time. Yet many asset managers and owners don't fully grasp how powerful an impact time can have on investment decision-making and outcomes.
As a society, we're moving at an ever faster pace – in business and in life – taking less time to do things that perhaps should take more. The need for immediacy can be all consuming. And technology certainly feeds that appetite, with its invaluable contribution to speed and efficiency. But technology can distort an investor's sense of the time needed to allow skill and discipline to play out or manage risk when they have to take more of it. Many believe they are being efficient with their time by measuring numerous data points and reacting to them more quickly. But are they really? With so much information at their fingertips, investors and asset owners need to start distinguishing between check points and decision points.
As an industry, we need to think carefully about why time matters to investors. We believe time allows skill, expertise and discipline to have the greatest impact on investment outcomes. It offers a meticulously researched investment thesis a chance to bear fruit. It favors thoughtful decision-making over reactive trading or chasing the latest fleeting trend. If investors are not taking the time to do good research – to identify value, good governance and a sustainable business, they are not investing responsibly.
Perhaps most importantly, time may allow investors to take risks more intentionally and manage them more effectively. In an environment such as we see today — in which investors must take three times the risk they did 20 years ago to earn the same returns — patience is essential. That's true despite the angst investors might feel when taking on more risk. They need to curb the urge to micro-measure performance and make changes, which offers only a false sense of control at best.
It's time to step back and help investors understand why, when used properly, time can be a valuable asset in getting to their desired outcome. Toward that end, this three-part blog series looks at the following:
Ultimately, the conversation isn't about managing time. It's about using time to manage wisely.
The views expressed are those of Carol Geremia and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation or solicitation or as investment advice from the Advisor.
This content is directed at investment professionals only.