This month’s Guest Blog is written by Pete Martin, creative director at The Gate Worldwide. Author of The True, The Good and The Beautiful, Pete shares Caffeine’s belief and practice for the need for speed in leadership.
The funny thing about a private jet is how fast it takes off. The plane just sort of hops into the air. I was on board with Dr. Mark Mobius, one of the greatest money managers of all time.
If he’d had a cat on his lap, the shaven-headed, multi-passport-holding global investor could easily be mistaken for a Bond villain. But, as well as being a fund of knowledge on financial markets and emerging economies, our host is the height of affability.
You might think it’s easy to be affable once you’ve made it. You’re a renowned financier, flying luxury class, playing the markets with billions at your fingertips. Yet a closer look at the management style and business decision-making of someone like Mobius suggests something a bit different, something a lot less relaxing.
The first thing that you need to know is that he takes serious risks. But he takes those risks very seriously.
His practice is to buy in bombed-out sectors, to look for ‘bargains’ in areas which other investors shun: the unloved, under-priced stocks which common sense and market sentiment are shrieking at you to ‘sell, sell, sell’.
And so, the second thing you need to know is that the bargain hunter can’t just wing it. Impulse buying is exactly what you can’t do. Like any high-wire act, Mobius’ approach demands discipline as well as cahones. You need a proven, rigorous method for decision-making. Do the long-term financial fundamentals add up – no matter what the shifting sands of market opinion may say?
That’s why, third, you’ll find Mobius adopts a ‘boots-on-the-ground’ approach. Rather than just relying on arcane maths and data modelling, he’s eyeballing his investments. He makes human judgments about companies, and the people who run them.
Consequently, having done the legwork, Mobius and his team can reach rapid conclusions. And that’s the point. To beat the competition, you must be prepared for imprecision.
It’s like a Zen puzzle.
To act early, information must be imperfect. If you wait for surety, you will be precisely informed… and perfectly incorrect. Events will overtake you. The laggard ‘facts’ will be widely known, and any upside priced into the market. You can act, safe in the knowledge that any advantage you had is long gone.
So, as Jeff Bezos remarked, you have to experiment faster than the competition.
That’s how the fuzzy logic of leadership beats the ‘analysis paralysis’ of managerialism. In a competitive situation, being mostly right, fast and flexible is better than being certainly slow and sure. The mere act of waiting for ‘facts’ and ‘the right moment’ finds you becoming precisely, definitely wrong.
In brand management, this interplay between rational information and human behaviour can be hard to plot over the long term. Outcomes are often obscured by larger social forces, long chain market complexity and short term commercial tactics.
But what’s interesting about financial markets is that they lay bare how strategic principles play out over decades. According to Bloomberg, Mobius’ long-term achievement is remarkable. To give you an indication (and not an investment recommendation), if you’d put $100,000 in his first Emerging Markets fund at launch in 1989, it’d be worth over $3.3 million today.* With too many players now spoiling the emerging markets party, recent years have been tougher, and Mobius has stepped down from day-to-day fund management.
Still, it’s worth considering the general principles by which he’s led a stellar business in one of the hardest sectors on earth.
In the late 90s, I created a small guide based on the investment wisdom of Mobius’ guru, Sir John Templeton. I wanted to call it ‘Templeton Tenets’ but no one knew what a ‘tenet’ was. So we chose ‘Templeton Maxims’ as a title and it was published in 17 languages.
There were only ten Maxims, but it strikes me now that there are really just three themes.
- First, be a contrarian. If one approach is already a big hit, you’re too late. So, avoid the popular, never follow the crowd and beware sheep-like ‘best practice’.
- Because, second, everything changes. What’s ‘happening’ now will be old hat soon enough. You have to be ready for what’s next: to be flexible and brave. The best time to act, said Templeton, is at “the point of maximum pessimism… which pays the greatest reward, and requires the greatest fortitude.”
- So, third, stay humble. In Templeton’s own words, “If you think you’ve got all the answers, you don’t even understand the questions.” Curiosity won’t kill you, or the cat. But be sceptical, and stick to your principles. According to Templeton, “This time is different” are the four most dangerous words in market history.
As Mark Mobius flies into the sunset, one of the good guys of global finance, I feel there’s plenty to be learned from his strategic practice and leadership style. You may conclude, however, that all that’s holding back your career is the lack of a Lear Jet. Well, it is important to keep dreaming.
* Information is presented for fun and general business reference only. I have no current connection with Franklin Templeton, and I’m not an investment adviser. Always seek independent professional financial advice and, remember, what goes up can also come down.