Introduction

Salomon Partners provides coaching and consulting services to active discretionary managers across asset classes. We have a business model that focuses on a small but very high quality list of global clients. We are not life coaches, academics or business psychologists, but focus on improving the mechanics of investment philosophy and process across teams of investors. It may be helpful for you to understand our beliefs.

Our Philosophy for Capitalizing Skill

We believe skill should not be inferred from near-term outcomes and that;

  • Every performance activity has a combination of skill and luck
  • Active discretionary management involves on average a large amount of luck
  • Skill development is a fiduciary responsibility for asset managers
  • Most asset managers don’t have a clear definition of skill for their organisation
  • Humans are predictably irrational
  • If skill can be defined, skill can be developed
  • Skill is controllable, luck is not
  • Skill development is an active choice
  • Randomness is understood better in failure than in success
  • The downside should be protected first
  • Great investment ideas are scarce
  • Most PMs don’t know what they are trying to improve as regards their investment process
  • More relative skill in any activity is good
  • Relative skill matters, but only counts in the long-term and is much less relevant in the short-term
  • IQ and investment skill are non-correlated beyond an average IQ level
  • Self awareness is at the core of all highly skilled PMs
  • Probability theory should or needs to be applied, as opposed to being “proved” right
  • Professional investing is primarily about making money and not being proved ‘right’ or ‘wrong’
  • PMs are performance engines and need support from both within and outside the firm
  • Long-term marginal improvements are germane to process
  • That PMs are not innately talented
  • Discretionary management must be partnered with rigorous discipline
  • Man and machine should be the mantra, not man versus machine
  • Humans are engines of judgement compared with computers
  • By understanding and minimizing PM’s weaknesses, they can focus on maximizing their strengths
  • Systematic learning is crucial, especially around errors

Salomon Partners Believe

  • In asking and guiding and NOT telling
  • In socratic questioning and challenging the responses
  • Asset owners deserve more value