Confessions of a Closet Quant

“Where you stand depends on where you sit.”

Global Market Update - Confessions of a Closet Quant - Douglas Tengdin

Photo Credit: Hans Neleman

This observation can be applied to management, politics, or investments. I got into this business from the bond-side; I was a bond analyst and Treasury Note trader for a mid-sized bank before I became a portfolio manager. Bonds are math-y things: the maturity date, call date, coupon rate, yield to maturity, and settlement details all affect the price in different ways.

So I tend to look at investments quantitatively. This is true in my personal life as well: my kids like math. When I evaluate a portfolio, I look at its mathematical features first—return, volatility, number of holdings, diversification, and so on. And these statistical measures do capture much of what makes a portfolio work.

But not everything that counts can be counted. There are qualitative issues that resist quantification, such as the character of management, its strategic direction or quality of leadership, or a business’s “moats.” So I need to have pursuits that aren’t so numerical, like literature or art. If all you see are numbers, you’re only getting part of the story.

To be effective managers, we need to understand our biases and how they might mislead us. Because taking the right road often means avoiding the wrong turns.

Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
Leave a comment if you have any questions—I read them all!

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By |2017-07-17T12:34:14-04:00September 25th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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