If you attended the CFA Society Vancouver 50th Anniversary Dinner in November 2015, you had the privilege of hearing from keynote speaker, financial journalist and New York Times best-selling author, Michael Lewis. Your second abiding memory from the evening may have come during the Panel of Past Presidents, when Michael Ryan, the founder of CFA Society Vancouver and its second president, stole the stage with engaging stories from a by-gone era in Vancouver’s investment community.
Following up on these revelations, CFA Society Vancouver recently hosted, “An Evening with Michael Ryan.” Naturally, this time Mr. Ryan was the focus of the event, with Bill Wheeler asking the questions about an investment career that began in the 1950’s.
“It’s unbelievable how unsophisticated things were”. In those days The Financial Post was weekly and The Vancouver Sun and The Globe & Mail had no financial coverage whatsoever. Everything was “so primitive”. Analysts relied on company surveys and stock cards published by The Financial Post. Stock quotes came in over ticker tape via a quote machine and were written up onto chalk boards. “No one even knew the GDP back then”.
Mr. Ryan grew up with Art Phillips, a central figure in the Vancouver investment community and political scene. He says they spent a lot of time trying to figure out “how to make money without lifting anything heavy.” They split the cost of a batch of finance books to give themselves a head start – Ryan reserved special praise for The Battle for Investment Survival by Gerald Loeb. After humble beginnings, the two men separately founded their own highly respected investment shops in Vancouver (Ryan Investments and Phillips, Hager & North).
Mr. Ryan told a number of entertaining stories involving local stock promoters and their fraudulent schemes. Not surprisingly, in the early days most local investors never admitted to having their money managed by Vancouver-based firms. Montreal was the country’s investment capital and Vancouver was regarded as “the scam capital of the world”. Over time, Art Phillips entered politics and Michael Ryan became a Director and later President of the Vancouver Stock Exchange with the goal of cleaning it up.
He’s still actively investing and managing his own portfolios. “There are lots of good stocks out there. I love owning them.” He looks for quality stocks with a future and tries to keep his portfolio small, “enough to remember what I own.” It’s currently around 15-18 stocks, though he’s been as low as three.
Ryan says “stuff in the media is just hopeless” and believes “the average portfolio manager or financial analyst wastes 80% of their time looking at metrics and things that are really not important.” His advice to the current generation of portfolio managers and analysts? “People get married to good ideas”, it’s a “human quality” but it’s a barrier to succeeding. When he sees a stock that has stalled or is dropping he has no hesitation in selling. “There is no love whatsoever”.
Year over year, change tends to be relatively gradual making it difficult to notice. But looking back over longer periods the impact from technology especially has been immense. Michael Ryan’s anecdotes from the past are a reminder of how far the investment industry has come in the last 60 years. And the world continues to evolve at an ever-faster pace. No doubt future generations will view today’s contemporary investment scene as quaint. Nevertheless, some things have not, and will never change. Despite all the advancements to improve market efficiency, the very human emotions of fear and greed (along with other hardwired psychological biases) among market participants continue to play a measurably out-sized role in today’s “sophisticated” markets.