MARKET COMMENTARY

Five Questions with Doug Cohen, Portfolio Manager

09.30.2020 - Douglas Cohen

We recently sat down with Doug Cohen, Portfolio Manager, who joined Fiduciary Trust as part of our merger with Athena Capital Advisors, LLC earlier this year.

1) As a senior member of the Investment Management Team, what do you find particularly interesting about building portfolios for clients?

As much time as we spend trying to assess where the most attractive investment opportunities are broadly, the majority of what we do is highly customized.  My clients have a very wide spectrum of priorities when it comes to risk tolerance, time frame, interest in socially responsible investing and affinity for alternative investments. Ultimately, it is the customization that comes with getting to know my clients and their priorities that I find the most interesting element of my role.

2) How did you decide to pursue the career you are in today?

I've been reading The Wall Street Journal since I was about seven, so I’ve probably had at least a little Alex Keaton (Michael J. Fox’ s character) in me for a long time for those who remember the TV show “Family Ties”. After graduating from the University of Virginia I spent two years with a consulting firm, working closely with the operating divisions of several Fortune 500 companies.  It was a wonderful introduction to the business world, but I ultimately found that there was something unfulfilling about delivering a series of recommendations in a big PowerPoint presentation while rarely getting to see the extent to which they were implemented.  I left after two years to attend Harvard Business School and had a strong sense that I wanted to focus on something more tangible.  In that sense, there's nothing quite as objective as the equity market where you get a report card every day. I took several investment management related classes at HBS and, as much respect as I developed for the notion that markets tend to be efficient, I also gained a strong appreciation for the occasional inefficiencies that can lead to very favorable risk-to-reward probabilities.

3) Is there a piece of advice you’ve received during your career that you still rely on today?

I have been extremely fortunate to have had several tremendous mentors, so I'm going to give you a two-for-one, or perhaps a three-for-one special with my answer. The first came from Byron Wien who was the chief equity strategist at Morgan Stanley for many years and is now a vice chairman at Blackstone at the age of 87 (one of Byron's favorite sayings is "never retire" so check back with me in three or four decades to see how well I follow that one). Another pearl of wisdom from Byron was to take time at the start of every year to think about ways you can do your job better, write them down, and then grade yourself at the end of the year.  I've been doing that for a long time.  Finally, another great piece of advice came from Larry Adelman, one of the finest all-around people that I've ever worked with.  Larry helped to train me as portfolio manager at Morgan Stanley and one of his key messages was "the answer is rarely in the box." In other words, with all due respect to the relatively small number of quantitative-oriented funds that have had sustained success, computer-driven screens and models (based on human assumptions) can deliver a very false sense of precision.  It can be extremely helpful to get to know a company's management, monitor the extent to which they do what they said they would do over time and think about the risks that can often alter your assumptions dramatically.

4)What is the hardest part of your current role?

In a sense this goes back to the first question in that every client is wired somewhat differently.  Almost all of them appreciate how difficult it is to time markets precisely—this past quarter being a classic example as equities soared despite the prevailing coronavirus-related gloom.  Some are very comfortable riding out both the feared and then the very real storms that inevitably occur. Others have a very difficult time not taking defensive actions when they are fearful.  And it's impossible to blame them—who wouldn't want to avoid sell-offs like we had in 2000-2001, 2008-09, and the first quarter of this year as much of that as possible? The challenge is that market timing requires being right twice. You need the fortitude to come back in, usually before the fundamental concerns appear to have improved very much. So there are often tensions between relying on diversification to help cushion risk or perhaps moving meaningfully below a predetermined strategic target—but also being respectful of the fact that equities (in particular) tend to outperform cash and lower risk, short-duration fixed income over time. That kind of figurative handholding can be very challenging when the news flow appears to be decidedly negative.    

5)What is the most rewarding?

This probably takes us back full circle to the first question. It is helping clients to know that they have a plan in place designed specifically for their needs and that can achieve the things that are most important to them.  Things like providing for the next generation or helping to identify impact-related investments, increasing tax efficiency or simply "blocking and tackling" type steps such as improving returns on cash or making an introduction that can either kick-start or improve their estate and trust planning. 

  

 

 

The information provided is intended solely to provide general information. The information and opinions stated may change without notice. The information and opinions do not represent a complete analysis of every material fact regarding any market, industry, sector or security. Statements of fact have been obtained from sources deemed reliable, but no representation is made as to their completeness or accuracy. The opinions expressed are not intended as individual investment, tax or estate planning advice or as a recommendation of any particular security, strategy, or investment product. Please consult your personal advisor to determine whether this information may be appropriate for you. This information is provided solely for insight into our general management philosophy and process. Historical performance does not guarantee future results and results may differ over future time periods.

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