(Bloomberg Opinion) -- What if your investing process was to start with the premise of finding attractive companies with the greatest growth potential — regardless of style, size, or location — and then buying those stocks? Figuring out the best home for them would seem almost secondary. Surprisingly, this is the opposite philosophy of how mutual funds typically operate. Most have preordained and well-defined parameters that limit what they can buy. Dennis Lynch, head of the Counterpoint Global group at Morgan Stanley Investment Management, has embraced the less common process.
Counterpoint Global is a “firm within a firm” at Morgan Stanley, managing about $130 billion. Several of the funds Lynch and his team manage — Inception, Discovery, Growth, Insight, Advantage & Permanence — have doubled in value this year and their long-term track record has been similarly outstanding. Lynch describes the group’s process as somewhat unusual: Their 19 products are concentrated in just 200 companies. And they even use personality tests to shed insight into their stock-picking and decision-making.
Lynch says the relative momentum of technology stocks during the big market drop in February and March was strong, and quickly translated into absolute strength as the market began to rally. He does not expect the torrid pace of growth to continue indefinitely, though he remains a long-term bull on technology and growth names. And while it’s assumed that the economy will be substantially larger in 2022 than it has been during the pandemic and lockdowns, those expectations are reflected in current asset prices.
A list of his favorite books is here; a transcript of our conversation is available here.
You can stream and download our full conversation, including the podcast extras, on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Greg Fleming, founding CEO of Rockefeller Capital Management (based on the prior Rockefeller Family Office), which has about $43 billion in assets under management. Previously, Fleming was president of Morgan Stanley Wealth Management and served as chief operating officer of Merrill Lynch & Co., where he ran Merrill’s global investment banking business.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”
For more articles like this, please visit us at bloomberg.com/opinion
Subscribe now to stay ahead with the most trusted business news source.
©2020 Bloomberg L.P.