Confidence or Contemplation

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After being in the finance industry for many years, beginning my practice at a major Wall Street brokerage, starting my own firm, investing millions and millions of dollars through the worst markets in decades, teaching portfolio management at the university and graduate levels to hundreds of students, traveling throughout the world, conversing with countless contemporaries, attending many on many conferences, having a wide range of investment professionals work with and for me, and dedicating myself to studying my craft, I have realized only one essential truth: It is better to have contemplation than “confidence.”

Finance is an immense field with millions of individuals working within and around it. There are investment advisors and investment bankers, financial advisors and financial consultants, analysts, journalists, teachers, reporters, accountants, account managers, and even brokers and dealers, to name just a few. We are a group of professionals with tremendous monetary weight, and a cultural arrogance to accompany. Perhaps more extreme than any other industry, we are one that overlooks intellectual thought and severely rewards confidence — more accurately the facade of its existence.

This industry loves the fancy black luxury car more than any other. The expensive pen with the flashy logo cap is a sign of strength. Posh offices with wonderful conference views are signals of aptitude. Expensive clothing brings an easier sale. Bold assurance is a trait largely sought-after.  And importantly — and most disappointingly — answers are rewarded over questions.

Finance is a broken field. It is an industry with terrible priorities. It is a place of little contemplation and far too much action. A high price is paid to the seemingly all knowing — where one can reach such stardom as to even obtain the nickname “The Oracle of Omaha” (aka Warren Buffet).  Analysts with ever-changing opinions are paid large sums though they truly know nothing while saying too much. An industry where the barrier to entry is so low, we can have a Madoff practicing illegally for decades simply due to the aura of success. It is a ghastly existence for those who handle the monetary security of billions around the globe.

The field of finance, in reality, is a scary graveyard where the largest tombstones do nothing more than mark the ground of just another idiot hoping to out-flash his neighbor. So much time and money is put into status and looking good — neglecting the time, energy, and humility it takes to become actually exceptional at what we do; the average financial advisor or analyst is more worried about looking smart than getting smarter.

There is a vast difference between confident and cocksure. True confidence rests not with the boastful office or costly suit. Rather, true confidence — the type needed for long-term successful performance in such touchy, volatile markets — is found in he who is secure enough to question himself. The professional that will ultimately succeed is one willing to self-reflect, to admit his innate human imperfections and markets’ true randomness. We are in desperate need of individuals willing to forego “the show” and invest humble reflection and mindful questions into their investment process and its potential outcomes.

Professionals have become fat — even during dismal economic times — thanks to the comforting illusion of the “curtain.” But, there truly is no wizard, and no accompanying magic or mystifying powers. Though the facade makes us all feel safe, we are at far greater risk trusting those who constantly give answers. Faith should be given to the one who questions, constantly, the world and its potential outcomes; one who questions himself — and is willing to tell the world, “No one knows what will happen in Europe, China, with inflation, gold, or similar — including me. And, anyone who tells you what will happen is either: untruthful, insecure, or simply blind in their underlying assertions toward markets and how they fundamentally work.”

As a fiduciary for many, and a member of the finance community, it is my duty to disclose: There is nothing behind that curtain — definitely not what you are hoping for. If you study markets, economics, the brain, and psychology, you will ultimately understand that sometimes in finance, the only answer is questions.

Jonathan Citrin is founder and CEO of CitrinGroup, an investment advisory firm located in Birmingham, MI. He is an adjunct faculty of finance in the School of Business at Wayne State University.

Founded in 2003, CitrinGroup specializes in portfolio management and advises clients on investment planning.

Contact: 248-569-1100 or www.citringroup.com.

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