Tag Archives: Carlson School of Management

2020 Annual Dinner Recap

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Written by: Tharaniitharan Panchalingam, Junior studying Finance and MIS at the Carlson School of Management and Fixed Income Analyst at the Carlson Funds Enterprise

The 2020 CFA Society Minnesota Annual Dinner featured Rick Rieder at BlackRock, with questions moderated by Society volunteer Susanna Gibbons, CFA, Carlson School of Management. Rick Rieder is BlackRock’s Chief Investment Officer of Global Fixed Income, Head of the Global Allocation Investment Team in the Multi-Asset Strategies Group, a member of BlackRock’s Global Operating Committee and Chairman of the firm-wide BlackRock Investment Council. In addition to this, he is a member of the Borrowing Committee for the U.S. Treasury and is currently a member of the Federal Reserve Bank of New York’s Investment Advisory Committee on Financial Markets.

The presentation got off to a humorous start with Rick sharing how his multiple flight delays in New York had him running around the Downtown Minneapolis looking for our venue! After he gathered his breath, he went into what his day was like. In the morning, he presented to the New York Fed on his outlook of the global economy and the policies that ought to be implemented. After this Rick mentioned how he was on a call with Elon Musk to give his thoughts on Tesla’s expected share sale to raise capital. Rick concluded by saying that Elon Musk is probably the smartest person of our generation.

We then went into conversations about Fixed Income; Rick believes that debt is far too cheap and that we are in an environment where spreads are unbelievably tight but, there is still a massive demand for US based fixed income assets, which further puts pressure on the US and global economy. He also stressed that due to the nature of the market, Fixed Income managers must not “stretch in 2020” and that hitting five percent would be an accomplishment.

He also touched on technology and how companies that have significant investments in R&D are creating this “incredible growth paradigm,” while those that don’t invest aren’t experiencing much growth, if any.

This led to one question that caught my attention. Susanna asked Rick, “what do you think of Negative Interest Rates and what are commercial banks’ alternative?” Rick immediately responded with “I think that negative interest rates are the dumbest invention of all time.” He went into why and stressed that it breaks down the traditional investment paradigm and that in Europe, because of the way businesses operate, growth will be extremely hard to come by. Rick said that Europe needs to create “exogenous growth” by investing in innovation. Europe’s innovation is stifling and as a result, don’t benefit from the dramatic growth that it has the potential for. He also said that Japan is in the same predicament and that there may be a time in the future where Japan will default on significant portions of its debt.

We ended the night talking about equities being very cheap relative to credit and that we will see a turn or two in equity multiples over the next few quarters.

All in all, this was a tremendous night. Rick has such a wealth of knowledge and his ability to weave a coherent picture with the data he analyses is incredible. We had great food, great company and a very insightful hour-long conversation! We hope to have Rick back soon!

Managing Me Event Recap

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By Matt Chruscielski, Society intern, recent University of St. Thomas MBA graduate and CFA level III candidate

It’s a new year which means it’s time for resolutions to become better versions of ourselves. One thing I’m sure we all struggle with is managing our time. Much like losing ten pounds, it’s something many of us want, but few achieve. Balancing time between family, career and ourselves can seem like we are on a treadmill repeating the same steps over and over without getting closer to our long-term goals. In the Managing Me session put on by CFA Society Minnesota last week, University of Minnesota, Carlson School of Management Professor, Arthur Hill, talked about how it is possible to identify the trivial things that eat up our time. Time that could be spent doing the important tasks on our to-do list.

In the hour session, Professor Hill led an engaged audience through an interactive presentation on the six steps to better manage ourselves: aim, sort, select, do, review and break, all summarized below. Professor Hill’s process encourages one to write on sticky notes to help visualize the steps and ideas, because what’s in our heads does not seem as daunting once it is written down.

Aim: Define roles and responsibilities. Set daily, weekly monthly and longer-term goals that are regularly assessed. Schedule more difficult tasks early in the day and save easier or favorite tasks for later making up energy with passion.

Sort: Process inputs through filters to assess when to respond. Professor Hill described six filters related to how valuable, actionable, incremental, outsourceable, timely and capable the input is along with a filter for new projects.

Select: Use goals to pick the best task from the list. Only consider tasks that we have the time, energy and tools to do in the present. Prioritize tasks based on importance and urgency. Avoid multitasking when we are trying to complete a task that has a high cognitive demand.

Do: Complete selected tasks with focus and discipline. Focus on just a few goals. Take breaks but avoid distractions and interruptions as it can take up to ten minutes to get fully focused once disturbed. Avoid reading emails first thing in the morning. Emails can quickly derail a day as some of the audience attested to having over a thousand emails unread emails that day.

Review: Reflect, evaluate, celebrate and improve. This is to help with Aim. Did we take a step closer to goals this day, week, month? What did we learn? How can we improve? This is where we can keep track of our habits and create new ideas the next time we Sort. Don’t forget to celebrate reinforcing the good habits we want.

Break: Take breaks to recharge both at and away from work. We need to take regular breaks to replenish our attention and refresh our energy throughout the day. Pursue activities that boost energy. When away from work, really unplug. Don’t sneak a peek at the work email. Live in the moment and enjoy the time with family and friends. Work on a hobby or new skill to keep the mind fresh.

Overall, the session provided helpful tips and tools, and will hopefully allow for better time management in 2019. As Professor Hill said, “we are all guilty of letting ourselves get overwhelmed by the amount of noise in our lives which is why it is so important to have someone teach us how to filter out the small things so that we can focus on what really matters.” Judging by the large crowd in attendance it seems we all can use a friendly reminder now and then.

Changing Perceptions Interview with Diana Schutter, CFA – Retired

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Tell me a little about yourself.

After graduating from high school, I enrolled in a State college with a plan of studying music and theater. The following year, my education took a different course when I accepted an entry level position in the investment department at a public pension fund. I needed full time employment and this position offered tuition reimbursement for college courses in business and accounting. At the time, I didn’t know anything about investments and was uncertain if this was the right decision, but my boss was very encouraging and told me a business education could be very rewarding. Over the next eight years I attended the evening program at the Carlson School of Management, earning undergraduate and graduate degrees from Carlson School of Management. During that period I was promoted to assistant investment manager and that set the stage for what turned out to be a successful, forty-year career in investment management and investment consulting.

What sparked your interest in the investment industry and CFA Program?

I earned the CFA Charter in 1994. At that time I was the in-house investment manager for a legal publishing company, where I also held positions as Chair of the Investment Advisory Committee and Trustee for the company’s defined benefit plan. I was responsible for how the employee benefit funds and corporate assets were invested. Later, the company was bought out and my job was eliminated. A woman that I knew had just been recruited to develop and lead the investment advisory practice in an accounting firm. She asked if I would join her practice because some of the executives at my former company were interested in having an independent advisor. That’s how my career changed from investment management to investment consulting.

What was your experience with the CFA Charter?

I was previously a member of the of the Twin Cities Society of Financial Analysts and there were no requirements as long as you worked in the industry. Later, new members were required to pass the CFA Level 1 Exam. When I went into consulting and had to build a business, the CFA was very beneficial. At the time our consulting firm was started in the late 90’s, most institutional investors did not know what the CFA Charter was. However, following the tech bust when there was a big fallout in the capital markets, the CFA gained more recognition among institutional investors and became more respected and then again after the 2009 financial crisis. Therefore, in the field of investment consulting, the CFA credential was very beneficial to my career success.

Did you have a mentor or champion who was instrumental in your career?

The person who hired me for my first job. He was very encouraging and showed me that you can’t have a closed mind when thinking about potential career changes. He opened my eyes to numerous opportunities.  In my experience, his encouragement and willingness to hire and promote a female in the mid-1970’s was unusual.

What professional opportunities and challenges have you experienced?

My biggest challenge was that the ethics in this business is on average not good. With 23 years of experience where my role was to invest funds of the employer, I wasn’t trying to sell my services to clients and everything I did, I thought was the very best for my employer. When you are in the advisory business, there are so many things that constrain what you can offer a client for advice. Whether it is technology and resources you have, or that you decided to affiliate with another party, it influences your advice and you may not always be giving the best solution. That was the hardest thing for me. For my new business, I had three partners and we wanted to go into consulting in our own firm so that we wouldn’t be confined to that culture where it wasn’t always in the client’s best interests. Our dedication to that cause hurt us in terms of how much we could grow, but we did well enough.

What is your experience with starting your own business?

Our consulting firm was founded as part of a “spin out” of twelve clients from the accounting firm where my business partner and I worked to develop an investment advisory practice for two years. In 1998 our firm was started with two principals (including myself) and one associate. We invested $60,000 of our own money for working capital. Over the next 14 years our firm grew to 9 employees and 55 clients with aggregate assets of 3 billion.

What is the biggest risk you’ve taken in your career?

The biggest risk was starting my own firm and each year thereafter the potential risks increased as new clients were added, new employees hired and assets under advisement grew larger. As a registered investment advisory firm we were cast in a fiduciary position with respect to investment advice, which increases the costs for insurance protection.

What got you here; how have you been successful in investment management?

As explained earlier, I believe the combination of my work experience with internal funds management and education were contributing factors. The reason my second employer (where I worked for 12 years) hired me was my experience in internal-funds management. Today, most investment consultants who advise institutional investors don’t have that hands-on experience of performing securities analysis or initiating trades. Those work opportunities I think made me a better consultant.

18% of CFA Institute’s members are female, and 14% of CFA Society Minnesota members are female. Do you have any thoughts on why more women aren’t pursuing a career in investment management?

The numbers have changed, it’s surprising that the number entering the field is not proportional to the number rising through the positions and responsibilities. A career in the investment industry is taxing especially if you are a woman with a family and have other obligations. Some companies are trying to change their culture to allow for the flexibility needed for us to be able to succeed. There is also a huge amount of sexism, but CFA Institute and companies are working to improve that.

Do you have any advice for young professionals interested in a career similar to yours?

If you’re looking at positions within the investment management field, some of the larger foundations that have a staff managing their investments is a good place to start because then you are truly investing for the specific objectives of that client and not influenced like you would be if you are investing and representing a management firm. You can start in larger foundations to get a good understanding and background then branch out.

 

Student Interviewer

Lise Arakaza is an international student from Rwanda in her final year at Gustavus Adolphus College. She’s a Financial Economics major and Gender Women Studies minor with hopes of working in banking or an investment advisory firm.

2018 Annual Dinner Recap

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By Elliot Smallidge, a student at the University of Minnesota Carlson School of Management, Class of 2019

I was ecstatic when I heard about the opportunity to see Professor Jeremy Siegel speak. As the highly acclaimed author of Stocks for the Long Run, I knew that Dr. Siegel’s lecture would complement everything I had learned in school. His take on investing would corroborate the conclusions of class after countless class: buy and hold stocks because you can’t beat the market. I arrived at the Minnesota CFA Society Annual Dinner eagerly awaiting his remarks.

Dr. Siegel contracted the flu and was forced to withdraw on short notice. Replacing him would be Doug Ramsey, CIO at Leuthold Weeden Capital. This change of speaker didn’t just shake up my night, but rather my entire perspective on investing.

Every undergraduate portfolio management class teaches that markets are efficient. No amount of fundamental analysis, and especially not technical analysis, could give an investor a sustainable edge. Enter Doug Ramsey, CFA, CMT, and master of market technicals.

His remarks upended everything I had learned in class about investing. Never had I seen anyone seriously attempt to understand markets by examining patterns in the relationships between various economic data in the way that Mr. Ramsey did. His opening comments centered on what he called the eight “Bellweather” indices. Displaying a chart of the S&P 500, Dow Jones Industrial Average, and several sub-sectors, Mr. Ramsey pointed out that every sector (except utilities) had trended upward in unison through January 26; the market was rising broadly across all industries. In a further analysis, we broke the S&P into deciles based on market capitalization and found a similar result: strong stock performance across the board. This pattern, Ramsey explained, has historically indicated not the peak of a bull market, but rather an average of 59 more prosperous weeks.

All my life I learned that there was no science to historical trends, yet here it was so clear before me. I will admit, some of Mr. Ramsey’s further analysis went a bit over my head, but his message has stuck with me. I now know that, however unpredictable the markets are, I cannot discount the value of patterns in historical data.

I was fortunate enough to meet Mr. Ramsey the next week at his office. In a phrase, the theme of our conversation was trust yourself. News outlets and publications are important, but at the end of the day, he cautioned me, your own analysis and critical thinking are the most valuable assets.

Although I did not have the chance to hear Dr. Siegel speak, my experience at the Annual Dinner altered my perspective on investing and opened my eyes to a brand new skill set in a way that I never could have imagined.

Thank you, Doug Ramsey and CFA Society Minnesota, for this wonderful opportunity.