Abdulaziz A. Alnaim, Managing Partner of Mayar Capital Advisors, offers a very unique perspective on the relationship between understanding risk and generating ROI. In an exclusive conversation with The Manual of Ideas, he discusses overall market efficiency, despite challenges with institutional ownership or pressures to beat the market on a short-term basis.
In the interview highlight below, Abdulaziz explores how the market is rational in providing higher returns to value investors who are willing to take on career risks with long-term portfolio goals. These words of wisdom particularly stand out:
The portfolio manager thinking about next quarter’s results is being perfectly rational given his or her incentives and the risks that he or she is facing. The average portfolio manager has a risk that they are not willing to accept of getting fired if they don’t have a good quarter or a good couple of years…If you are generally not bothered by short-term volatility, you’re willing to take the risk that the average portfolio manager is not willing to take and the market is compensating you for taking that risk.
About The Author: Latticework Staff
Serving the global value investing community: Since 2008, The Manual of Ideas has expanded to become much more than simply “the very best investing newsletter on the planet” (Mohnish Pabrai). We are now a thriving global community of intelligent investors, connected through great ideas, thought-provoking interviews, online conferences, live member events, and much more. Latticework reflects this growth. It also opens a new chapter in our efforts to bring together intelligent investors around a shared mission of lifelong learning. Prior to launching Latticework in late 2015, we reached out to Mohnish Pabrai and Guy Spier regarding the use of the name, as they are founding members of Latticework Club. Mohnish and Guy were extremely generous and encouraged us to go ahead. This generosity is reflective of the value investing community in general, which we have repeatedly found to be warm and welcoming — a great place to learn and build lifelong friendships. Thank you for being a member of our community. We hope you’ll find value in the content, events, and connections we hope to bring you via Latticework.
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