Barry Ritholtz Podcast on Bloomberg Radio - Interview With Dennis Lynch, Jr. (Marshall)
Masters in Business With Barry Ritholtz Podcast on Bloomberg Radio Recap - Interview With Dennis Lynch
The "Masters in Business with Barry Ritholtz" podcast interviewed Dennis Lynch, who grew up in Monmouth County, Rumson, New Jersey, to discuss a variety of topics, including portfolio-building, selling stocks from the bottom up, and more. Dennis Lynch, who also goes by Marshall Lynch, started by commenting on his experience with Morgan Stanley. He discussed how it's been a great environment for diversity, small decision-making, and beating the market over the past 20 years of his time with them. He noted that the model has included building small entrepreneurial teams within the investment management sector, touting it as a healthy concept for their company.
Early Beginnings With Morgan Stanley
Morgan Stanley, according to Dennis Lynch, has 19 products and over 130 billion in assets, also owning about 200 companies across the globe. He mentions that they’re picky about what they choose to invest in and that they spend a lot of time concentrating on each product individually. The Rumson, New Jersey, native went on to talk about the challenge of starting as an analyst and becoming a portfolio manager, noting that the challenges present themselves differently for everyone depending on their personalities. He said his company utilizes personality assessments frequently to gain a better understanding of his team members to create a sense of self-awareness that can bring about stronger decision-making.
Growth Investment and the Pandemic
Ritholtz went on to ask him about growth investment, noting the rise in remote work over the past couple of years due to the COVID-19 pandemic. Marshall Lynch’s company was able to expand its portfolio to work with companies like Shopify and Zoom. Ritholtz asked his opinion on how the tech industry wasn't able to do as well during the market action period after the Pfizer vaccine news came out. Lynch agreed in that he thinks the trade-off is going to be changing permanently, despite the clear uncertainty of these times. After that discussion, Ritholtz brought up how the S&P fell pretty drastically in just a matter of weeks. He asked Lynch how he managed a drawdown like that, considering his work with high beta names in the industry.
Dennis Lynch, Jr. (Marshall)said that it was interesting because it showed the limitations when it comes to quantifying risks in any way, noting that sometimes business owners can tend to oversimplify the process of quantification in a way that leads to overconfidence.
Qualitative vs. Quantitative -- Which Is More Important?
An interesting distinction that Ritholtz made later on in the episode posed the question: "How much of the success for these various portfolios for Morgan Stanley has been driven by quantitative research versus qualitative research?" Lynch responded that qualitative insights have been where they’ve spent most of their focus. It doesn’t make their business anti-quant but rather focused on maintaining a good investment culture in which they consistently think about alternatives, according to the Rumson, New Jersey, native. After some more back and forth, Ritholtz asked him what his process is for identifying when to sell a stock. Lynch responded with a focus on diversification; sometimes a company can get too big, and they need to shift its focus to be more specific or lower risk. At one point, Ritholtz asked Lynch what sort of growth attracted him to big company names like Amazon, Zoom, and Slack. Lynch attributed these decisions to his team, noting that he's fortunate for their low turnover rates and high talent. He said the benefit of having team members for a long time is that they get to develop stable relationships with these companies and networks.
Advice for Future Investors
The podcast episode concluded with one question: "What do you wish you knew 30 years ago about the investing world?" Dennis Lynch, Jr. (Marshall) responded that taking compound annual growth to heart coupled with long-term success is what he tries to highlight with his fellow Rumson, NJ, professionals and those just starting in the industry.