Reflections on Portfolio Management After 25 Years

Abstract

Until 1974, the author was the president of a century-old, family-owned engineering and manufacturing company whose assets were sold for cash. The author's reflections on portfolio management over the next 25 years reflect his previous engineering background. He suggests that portfolio owners spend too much time worrying about the asset side of the portfolio management equation and too little on the liability side, i.e., what it is that they 're trying to accomplish. He concludes that “portfolio management is an activity that may have gotten unnecessarily complicated [with] too many bright people using too much computer power to count the angels on the head of the portfolio management pin. Mathematics is good, but it's no substitute for common sense.”