February 23, 2009
Thomas Michael Alleman for Barron's
It has been suggested that while you have done a great job getting the macro picture right, you've had a harder time executing in terms of running a stock portfolio.
There is a bigger issue here, which is what style performed in 2008? Last year will go down as the year diversification didn't work, whether it was international, domestic, large-cap, small-cap, mid-cap, growth or value.For several years I've been arguing that there was far more covariance between the various investment styles and investment products.
What will the shake-out be for asset managers?
The investment industry has some real issues and questions to answer, just like it did post-1974. Since that era, we went through all the slicing and dicing and we had all these little style boxes -- but that's been blown away. For years, I kept saying that in equities I believe in the land of tall trees.
Could you elaborate?
We own only a couple of industries, and we ignore everything else. That was considered too risky, but I said, 'Well, your diversification that you think you have is not really diversifying the risk.' I have been waiting for several years for what I would call a flushing out to finally demonstrate what I have been talking about. Thus, the investment industry over the next five to 10 years is going to look
materially different from the investment industry pre-2008.
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