Mike Philbrick – Just Because You’re Winning Doesn’t Mean You’re Smart

BIO: Mike Philbrick is the CEO of ReSolve Asset Management. He has over 30 years of experience in investment management, serving in senior investment industry positions with several major financial services firms, and is responsible for investment decisions, coaching, and strategic leadership.

STORY: Mike learned of a mining stock at the urinal. He invested, and the stock performed well because the mining industry was on fire. And so encouraged by early success and massive ignorance, Mike wiped all of those gains in no time.

LEARNING: Don’t over-leverage. Understand what kind of investor you are. Ensure you have some protection before you go all-in in an investment.

 

“Just because you’re winning doesn’t mean you’re smart or you’re good at these things.”

Mike Philbrick

 

Guest profile

Mike Philbrick is the Chief Executive Officer of ReSolve Asset Management. He has over 30 years of experience in investment management, serving in senior investment industry positions with several major financial services firms, and is responsible for investment decisions, coaching, and strategic leadership. He has co-authored the book Adaptive Asset Allocation: Dynamic Global Portfolios to Profit in Good Times – and Bad (Wiley), as well as several whitepapers and research focused on adding new insights to the quantitative global asset allocation space.

Adaptive Asset Allocation and Return Stacked Portfolio Solutions have been popularized by him and his team at ReSolve.

Preceding his investment career, Mike played professional football in the CFL, winning the Grey Cup Championship in 1999 and being inducted into the Hamilton Tiger-Cat Walk of Fame in 2015.

Worst investment ever

Back in the early 90s, there was a lot of mining going on in Canada, and so mining stocks were becoming popular. Mike had started noticing the stocks but had yet to invest. One day, he’s at a urinal, and a guy tells him about a particular mining stock. Mike figured it was a good idea to invest in the stock. He didn’t do any research; he just took the man’s word for it.

The stock wins, and Mike gets a couple more wins from the stock, not because he was a genius but because the mining industry was on fire. And so emboldened with early success and massive ignorance, Mike wiped all of those gains in no time.

Lessons learned

• Understand what kind of investor you are. Can you withstand a 90% decline?
• Can you buy something and then ignore it long-term?
• Don’t over-leverage.

Andrew’s takeaways

• Ensure you have some protection before you go all-in in an investment, particularly when you don’t know much about it.

Actionable advice

Always remember that you don’t know as much as you think, so take different approaches such as diversifying, being less confident, managing risk with stop losses, or managing risk at the portfolio level on an ongoing basis. You don’t need to own more of what’s going well. Just do less of what’s dragging your portfolio from a momentum factor that enhances returns.

Mike’s recommendations

Mike recommends his book Adaptive Asset Allocation: Dynamic Global Portfolios to Profit in Good Times – and Bad, which goes through steps that you would take to maximize...