The thing about the finance industry is we tend to take ourselves way too seriously. We love jargon, we love pedigree, and some of us even still love the cufflinks & dress shoe uniform.
So when someone comes around looking like he’s trying to catch last call at the neighborhood bar, using plain language, cracking jokes, calling bullshit on everyone and everything that needs to be called out, well you gotta take notice.
What I’m saying is that sometimes there's a man, sometimes, there's a man. Aw. I lost my train of thought here. But... aw, hell, I've done introduced him enough. I’m talking about Quoth the Raven.
I got to spend a couple hours chatting with QTR this weekend as a guest on his amazing podcast. True to form, there was no prep call, no talking points, no editing. We just got on the phone and let it go for what I referred to as a thoughtcrime spree, and it was a ton of fun.
I want to expand on one of the ideas that came up on the pod: Cathie Wood saved active management and should be celebrated by the same value managers that vilify her.
I get it, she is an avatar for a period in time when fundamentals disconnected from stock prices, this or that about their Tesla valuation model, the performance was not sustainable, and on and on. I hear you and I get it.
But also, in an age where conventional wisdom mocks the whole point of active management, in an age where you need to run an attribution analysis to spot the difference between most “active” funds and their benchmarks, and in an age where active managers just don’t have a whole lot of interesting things to say, the entire active management industry needed a refreshing new voice more than they could see.
Personally, my investing approach is more aligned with the Boomer Wisdom of Lou Mannheim. The funds I’ve brought to market employ simple and systematic strategies, companies with good customer satisfaction, or invest in real assets that offer inflation protection. I look for fundamentals, intrinsic value, wide moats, repeatable processes, and an overarching macro view that passes the smell test.
Bud Fox: Lou, I got a sure thing.
Lou Mannheim: Quick buck artists come and go with every bull market, but the steady players make it through the bear market... The money you make for people creates science and research jobs. Don't sell that out.
Cathie’s strategy is none of those things. She is focused on innovation and paradigm shifts and long term time horizons and moonshots. She has long term conviction, sticks to her guns and has unwavering optimism in the future.
And at a time where fund managers blend into the blandness of their corporate banners, while slowly melting under relentless fee pressure and inability to provide consistent alpha - or even articulate why they remain a good bet to do so going forward, and at a time when the industry has started to look like a black and white sea of sad fund managers quibbling about why they own 4.2% Apple instead of the 4.8% that the other guy owns, the whole thing was just dying a slow and sad death.
And then comes Cathie, a true lightning rod, with a differentiated story about innovation. It is refreshing, and I wish those same sad fund managers could see it, because if we had more Cathie Woods in the industry the entire investing landscape would be a more vibrant place.
As always good work! Is selling an unrealistic dream of unlimited money and growth to an audience of retail buyers really that differentiated or was she just the first person to package that kind of lie into an ETF? Seems to me that isn’t much different than what they promise in multi-level marketing and other such ploys for retail money.