STEPHEN CRANSTON: The great investment managers give sane advice: keep it simple
Benjamin Graham and Sir John Templeton eschewed complex formulas and arcane theories
Books and papers on investment management have become too complex for the layman. We are bombarded with Greek letters and algebra. It’s getting worse: to get a union ticket to work in fund management it is now almost obligatory to take the Chartered Financial Analysts (CFA) exam, where initiates are spoon-fed the gospel according to such Nobel laureates as Harry Markowitz and Bill Sharpe. I don’t believe many of these academics have actually managed a portfolio. They are rather like those professors of journalism who have never worked in a newsroom. I gather the CFA has lots of dense theory. Yet when I went to Warren Buffett’s annual meeting in Omaha, for the one and only time back in 2005, he said managing funds did not require a high IQ, managers might as well pass on the excess to someone else. Psychological strengths such as courage and determination were far more important. In my experience fund managers who are too bogged down with theory are often ineffective. You do not need...
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