Investment pros share lessons learned in 30 years of work

Four investment managers, brought together by Ariel Investments LLC because they have managed their flagship mutual funds for 30 years, celebrated their longevity in investment management and offered reasons for their endurance in a highly competitive field.

John W. Rogers Jr., Chicago-based Ariel chairman and CEO, drew analogies to their special place with other fields.

“In music you always have the one-hit wonders,” Mr. Rogers said at the panel discussion hosted by Ariel Nov. 9 in Chicago. “There are very few folks that are still having new music coming out 30 years later that is relevant and important. …. Coaching is like that; there are coaches that win a championship and never win another one. … It is hard to have that hit or top performer ... and replicate it again.”

John W. Carey, executive vice president of Pioneer Investment Management USA Inc., the Boston-based unit of UniCredit SpA Milan, Italy, said: “One way I've been able to survive is by keeping myself out of (portfolio management) to an extent. If you identify with stocks and get giddy and euphoric every time (stocks) go up, and despondent … every time they go down, you could be a basket case in no time … But I've always made time for other interests, always tried to leave (portfolio management) behind on occasion.”

On the other hand, Mario J. Gabelli, chairman, CEO and chief investment officer, GAMCO Investors Inc., Rye, N.Y., said: “The answer for me is obsession. That is a total passion for stock companies.”

Robert S. Bacarella, chairman and president at Monetta Financial Services Inc., Wheaton, Ill,, said: “I have my own money in my own funds. I don't manage my own money outside of my own funds. So I'm committed because … I'm motivated to make the return my shareholders make.“

The discussion by the four panelists drew an audience of some 250, including asset owners, investment consultants, and other investment managers.

On lessons in running an investment management firm, Mr. Rogers said he looks for “people who read everything.”

“All that information will help you make better investment choices,” Mr. Rogers said. “You want to find people who just love information, love to read, love to study the markets, love to read history and love to read just about everything, because all of that has relevance to the industries we invest in.”

In addition, Mr. Rogers attributes success in investment management to being “someone who doesn't follow the crowd, who's comfortable standing alone and really doesn't care what anyone else thinks. They truly are independent thinkers. We saw the groupthink in this more recent election. Everyone convinced themselves of the same thing. It takes a lot of courage and a unique person who can stand alone and say the crowd is wrong.”

“You have to be greedy when others are fearful; that was sort of a core (conviction),” Mr. Rogers said.

In addition, Mr. Rogers said: “Early in my career I was often shy about asking people to join our firm. It was kind of like dating. You didn't want to ask someone and get turned down. So as an entrepreneur I was a little bit shy in reaching for terrific talent. It took me awhile to understand how important it was to really reach for the top talent.”

Mr. Gabelli attributed his endurance to “patience. In terms of when you are making an investment, it's very fundamentally important to have the ability to look past the short-term market dynamics.”

Mr. Carey said: “It comes down to the three P's: patience, perspective and purpose,” calling them “really core to a successful investment program. “Being able to see things in context, being able to see things over a longer period of time. Then purpose: What is your goal, what is your investment mandate?”

Mr. Bacarella said, “The best investment occasion is when we've had significant market corrections. … It's an opportunity. It's not a time to be backing away. I never look at the past, I always look at the future … because if there is one thing I do know, the market will always rebound and come back. … There is an upward bias to it.”

“What has kept us surviving all these years is a sell discipline,” Mr. Bacarella added. “When things go against you, you must cut losses. If you don't cut losses, you are going to go into a deep hole (and) you are never going to recover … you've got to stick with your sell discipline, cut losses early and let the profits rise.”