Many funding practitioners are already effectively acquainted with Karen Firestone, who labored as a number one analyst and portfolio supervisor at Fidelity Investments for greater than 20 years. After leaving Fidelity, she cofounded Aureus Asset Management, shifting her duties to firm management at an organization offering asset administration for households and people.
What might shock those that know Firestone solely as a consummate funding skilled is that her writing is a complete delight. Her strategy to threat administration in enterprise, investing, and life, as informed in Even the Odds, is clever, disciplined, and rooted in conscience. Her charming and conversational prose type imprints readers with unforgettable real-life examples of threat taking.
Firestone defines 4 tenets of smart threat taking:
Right-size your threat.
Right-time your threat.
Rely on data, talent, and expertise.
Maintain a healthy skepticism.
She delivers memorable tales to underscore every tenet, with some illustrations pertaining to all 4. One, coping with the tech bubble of the late 1990s, will resonate with all readers who lived by that debacle and can encourage those that joined the business throughout the previous 15 years.
Firestone articulately applies her 4 tenets to the errors dedicated in that interval, which she describes in residing colour:
Right-sizing: The e book particulars the penalties for skilled buyers who forged apart valuation metrics and chased the tech bubble in 1999 and 2000, believing that inventory costs’ geometric progress, with out corresponding progress in such basic elements as gross sales and earnings, may proceed.
Right-timing, counting on expertise and talent, and sustaining a healthy skepticism: Disregarding widespread sense by investing in corporations for which basic worth was 50% or extra under their inventory costs resulted in horrendous funding losses that proved practically unimaginable to recoup.
Firestone offers examples of buyers who caught to those tenets, risking ridicule and underperformance by huge divergence from their benchmarks, to vindicate the long-term impact of her really helpful strategy.
The writer tells her story with real humility, although she is an funding grasp. She writes of nice funding success that arrived solely after quarter upon quarter of research and remark mixed with smart threat taking.
Firestone additionally recounts some threat evaluation errors, which appear to emerge from incomplete evaluation greater than another issue. Her experiences with Green Mountain Coffee Roasters, Kythera Biopharmaceuticals, Allied Irish Banks, and Twitter had me studying and re-reading sections of the e book. She tells readers why she purchased shares (or didn’t), how she decided value targets, what modified the value targets, and her precise funding outcomes. Rarely does an funding supervisor focus on such issues in depth with anybody apart from her colleagues.
In the chapter “Masters of the Trade,” readers will get pleasure from spending time with the all-stars of threat evaluation: Peter Lynch, George Vanderheiden, and Gordon Crawford. For many people in center age, these people have been our funding heroes. Firestone realized effectively from these exemplars of smart threat evaluation. In this chapter, a phrase related to Lynch — “Great, great, great . . . ” — is talked about in an surprising context.
In “Running,” Firestone relates how a seemingly innocent connection turned out to have a sinister dimension. Her on-target evaluation of the info protected her, each bodily and from a reputational standpoint. This chapter close to the finish of the e book leaves a very lasting impression on the reader.
My sole criticism of Even the Odds is that the print version lacks an index. Although it incorporates detailed notes for every chapter, some help is required to maintain monitor of the big variety of corporations and people referenced in the course of the narrative. An index would additionally assist readers find the case research for explicit shares way more shortly.
Aspiring and current funding professionals ought to think about Even the Odds important studying. Firestone offers plentiful real-life funding dilemmas, together with their resolutions for higher or worse, and in doing so additionally produces a compelling memoir. She is a real “master of the trade,” practising and honing her distinctive decision-making and threat evaluation expertise in investing, in main Aureus, and in residing. Let us hope she writes once more, and shortly! The e book’s writer, Bibliomotion, believes there’s a profitable system in distinctive content material, seen authors, group constructing, goodwill, excessive contact (shut collaboration between writer and writer), and enjoyable. Even the Odds fulfills all of those standards.
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All posts are the opinion of the writer. As such, they shouldn’t be construed as funding recommendation, nor do the opinions expressed essentially replicate the views of CFA Institute or the writer’s employer.