Women in investments: Career advice from seasoned pros

Making a career in investment management can challenge both women and men.

Photo by whiskymac

Here are some tips I’ve heard recently.

On bosses, mentors, and sponsors

  • “Having a boss who throws you into the deep end of the pool is a good thing.”
  • Look for sponsors who’ll throw their weight behind you. They’re different from mentors who only give you advice.

Work–life balance

  • Outsource everything.
  • “I don’t cook. I don’t clean. I don’t iron.”
  • Find a good nanny. Don’t be upset if your children love them. Pay them well.
  • Give up stuff. You may need to narrow your life to only work and time with your family.
  • “Don’t be a guilty mom.” Guilty moms overindulge their kids.
  • Take a child – just one, if you have more than one – on a business trip. You’ll create a wonderful memory that’ll last for years.

Do you have career advice or an interesting story to share?

Let’s get possessive: A financial writing tip

Sometimes it pays for financial writers to get possessive.

No, I’m not suggesting that you jealously hoard your office supplies or isolate your clients from other professionals. This is a writing tip.

Instead, I’m suggesting that you use the possessive case to shorten phrases.

For example, turn “The tone of the market improved by Friday” into “The market’s tone improved by Friday.”

The next time you find a sentence including “the X of Y,” see if it sounds better rephrased as “Y’s X.”

Plain English means writing sentences that flow better. It’s not only about choosing more basic words.

Advertising makes you stupid–even if you’re smart or rich

Highly educated and wealthy investors make dumb mistakes.

This is my oversimplified take on one section of “Mutual Funds: Advertising, Behavioral Models, and Investor Choice,” an article by John Haslem, which appeared in the Spring 2011 issue of The Journal of Index Investing.

“There is a strong positive relation between advertising and investor dollar allocations,” says Haslem’s article, which appears to be a review of other authors’ literature on his topic.

Smart and rich, yet dumb

Advertising emphasizes past performance and rarely discusses fees outside the fine print, so this provides a backdrop to Haslem’s assertion that

  • Highly educated and wealthy investors underweight fund fees and give more attention to past performance.
  • Financially savvy investors underweight fund fees
    and give more attention to short-term performance.

Surprising, isn’t it? You’d think that wealthy investors would take the time to educate themselves and that highly educated investors would understand the importance of expenses to fund returns.

To dig below the surface of this finding, read the source cited by Haslem: Ronald T. Wilcox’s “Bargain Hunting or Star Gazing? Investors’ Preferences for Stock Mutual Funds,” The Journal of Business (October 2003).

Financial writer’s tips

  1. If you’re a financial blogger or newsletter writer, the provocative assertions in Haslem’s article would make a great takeoff point for an article.  For example, you could share how your experience compares.
  2. The Finance Professionals’ Post, published by New York Society of Security Analysts (NYSSA), is a good place to find tidbits to inspire your writing. I found Haslem’s article in the blog’s “Recent Research: Highlights from March 2011.”
  3. If you’re an NYSSA member, you can pick up more writing tips when I speak on “How to Write Investment Commentary People Will Read” on April 28. It’s FREE for NYSSA members.

Reader question: How can I become a freelance financial writer?

Aspiring freelance financial writers seeking advice contact me occasionally. If you’re one of them, here’s some advice.

“Freelance financial writer” is made up of three words, each of which contains clues to the freelance financial writer’s success. I discuss them below in order of importance.

“Writer”: Polish your wordsmithing

Do whatever you can to improve your writing, including

“Financial”: Learn about the business

I took many great classes through the Boston Security Analysts Society on my way to earning my CFA (chartered financial analyst) credential. Your local society of the CFA Institute, other professional societies, or colleges may offer relevant classes in person or online.

Industry experience helps, too. I took my first job in financial services back in the 1980s.

“Freelance”: Learn how to survive

You may be a great writer with a strong command of finance. But if you can’t run a business, you’re lost.

Here are some online resources for learning more about freelancing:

“Freelance financial writing”

Here are some relevant posts from my blog. While they’re aimed at CFA charterholders, they’re relevant to others who understand investments.

If you have more suggestions for aspiring writers, please leave a comment.

If you’re in New York City, you can pick up more writing tips from me at my New York Society of Security Analysts presentation on “How to Write Investment Commentary People Will Read” or the  annual writers conference of the American Society of Journalists and Authors.

April 2013 presentations by Susan Weiner, CFA

New York Society of Security Analysts on April 28

I’m leading a workshop on “How to Write Investment Commentary People Will Read” for the New York Society of Security Analysts (NYSSA) on Thursday, April 28, 2013. The meeting runs from 12 noon to 1:30 p.m. The program is for NYSSA members only. Pre-registration required.

Professional Association of Investment Communications Resources on April 28
How to Write What People Will Read About Investments” is the focus of my presentation for the Professional Association of Investment Communications Resources, more commonly called PAICR. It will run from 3:30 p.m.-5:00 p.m. It is open to non-members. Pre-registration required. Spots are filling quickly, so register now!

Also in APRIL: American Society of Journalists and Authors 2011 Conference

I will moderate–and speak on–panels about corporate writing and white papers at “The Write Road to Success,” the annual conference of the American Society of Journalists and Authors.

My panel on “Writing White Papers” takes place on April 30, during the part of the conference with registration open to the public. This event is also in New York City.

Diversification: Andre Perold’s take on its value

“Diversification shouldn’t be viewed as protecting you from losses in wealth but rather from being concentrated in the worst-performing asset classes.”

In other words, diversification puts a floor under how badly you can do when all asset classes fall.

This struck me as a valuable insight from “Harvard Business School Professor Andre Perold Looks At The Forces Reshaping the Business of Asset Management,” on the blog for the CFA Institute’s Second Annual Middle East Investment Conference.

Other points I took from the CFa Institute’s summary of Perold’s talk include the following:

  • The value of classic endowment-style management has run its course because “the low-hanging fruit has been picked.”
  • New instruments that separate alpha and beta are useful; Now asset managers don’t have to “leave significant money on the table.”
  • Stable-weight portfolios should be replaced by portfolios with stable risk budgets. (I’ve written about Perold’s views in “Stable Risk Portfolios: A Timely Alternative to Static Asset Allocations?“)

Investment writing challenge for my readers

Change one word in the following line to make it a more effective sentence.

The Standard and Poor’s 500 Index rose and the Barclays Capital Aggregate Bond Index fell.

Post your rewrite in the comments.

I’ve got a writing lesson in mind as I pose this puzzler. I’ll circle back later to explain it, although I wouldn’t be surprised if one of my savvy readers beats me to it.

Best European investment opportunities are cyclical, say strategists

European cyclical stocks and banks in the continent’s peripheral countries offer the best investment opportunities, according to Ian Harnett, managing director for European strategy at Absolute Strategy Research (ASR), a London-based macroeconomic research firm. He made his comments during “Europe: ‘This could be Heaven or this could be Hell,’ ” a March 17 presentation to the Boston Security Analysts Society.

Reasons to favor cyclical stocks from Europe’s core countries

Why cyclicals?

“Globally, excess liquidity will continue to make ‘risk assets’ more attractive,” said Harnett. Cyclical stocks in core Europe will benefit most from loose monetary policy and weak exchange rates.

More reasons to favor cyclicals include the following:

  • The VIX measure of volatility will fall closer to 10 by year-end 2011, in Harnett’s opinion
  • European Union stocks remain cheap, using 10-year trailing earnings per share–They are still below lows hit in 2003 and earlier
  • European cyclicals tend to do better when the yield curve flattens
  • Dynamic earnings growth will support these stocks

ASR’s perspective on Europe’s crisis

The main points I took from ASR’s description of Europe’s situation were

  1. The important of cyclicality
  2. A shift in relative cost of capital between core and peripheral Europe
  3. The survival of the euro

Europe’s woes have both structural and cyclical elements, said Harnett. However, he said, fiscal deficits such as we’ve seen recently are nearly always cyclical rather than structural. Harnett made his point with a graph showing the correlation between “Budget Balance as a % of GDP” and “Industrials Hiring Intentions.” “This has been a jolly good indication of deficits until now,” he added. “Europe’s woes are more ‘cyclical’ than ‘structural,’ ” he concluded.

Investors are moving into “safe havens,” such as Germany, at the expense of Europe’s peripheral countries, Harnett said. As a result, the core countries of Europe are paying an inappropriately low cost of capital. German consumer confidence is at record highs, so they are spending.

“The German locomotive can carry a very heavy load,” said Harnett. German excess demand is being funneled to Europe’s peripheral countries. Germans are vacationing abroad and buying peripheral countries’ exports. Trade imbalances within the euro zone are shrinking. Eventually, banks will benefit, especially in the peripheral countries, assuming they survive the current turmoil. ASR is currently very long on European peripheral banks and neutral on the banks of core Europe. Harnett added that he expects ASR’s next move will be to overweight core banks.

The euro is a political creation, so politicians will ensure its survival, according to Harnett. So your investment strategy shouldn’t bet against the euro, if you agree with ASR’s opinions.

For more on ASR’s views, go to “Japanese crisis good for European economies” and “U.S. companies may move supply chain home.”

U.S. companies may move supply chain home, says Absolute Strategy Research

U.S. companies may move more of their production back home, said David Bowers, managing director of global strategy for Absolute Strategy Research (ASR), a London-based macroeconomic research firm. He spoke during the Q&A session following “Europe: ‘This could be Heaven or this could be Hell,’ ” a March 17 presentation to the Boston Security Analysts Society.

The lessons of the past few years suggest that companies should bring their supply chain home to avoid “the risks of exchange rates or tectonic plates,” suggested Bowers. The disruptions caused by the Japanese tsunami have been in the news.

Ian Harnett, ASR’s managing director for European strategy, agreed, elaborating on Bowers’ exchange rate comment. Offshoring is based on low foreign exchange volatility, he said. But foreign exchange volatility is rising. Food price inflation will encourage foreign countries to allow their currencies appreciate. As a result,  labor costs could rise by as much as 10 times, depressing the wage advantage overseas. This argues for in-sourcing, Harnett concluded.

Japanese crisis good for European economies, strategists say

Will the Japanese crisis help or hurt European economies?

The answer hinges on how it affects nominal growth in European countries’ gross domestic product, said David Bowers, managing director of global strategy for Absolute Strategy Research (ASR), a London-based macroeconomic research firm. He spoke during the Q&A session following “Europe: ‘This could be Heaven or this could be Hell,’ ” a March 17 presentation to the Boston Security Analysts Society.

Higher capital expenditures

In Europe, as in the U.S., companies have been hoarding cash. It’s likely these firms will open their capital expenditure spigots wider, according to Bowers. Why? Because the crisis presents an opportunity to gain market share at Japanese companies’ expense, Bowers said.

Ian Harnett, ASR’s managing director for European strategy, said this opening should appeal to Germany, which competes directly with Japan in areas such as heavy machinery.

Another plus for European economies is that Japan’s plight makes central banks less likely to raise interest rates for fear of sparking a return to recession.