I just found out that Yngve, Slyngstad The CEO of Norway’s sovereign wealth fund (“SWF”), the largest SWF in the world with over $1 trillion of assets, has FIVE different degrees – politics, economics, law, business and philosophy.
Just when I thought, I had collected enough degree/certifications. Degree in Actuarial Science, Masters in Risk and Stochastics, MBA, CFA. And mine are all somewhat related – finance, statistics, business. If I ever decide to study again, I’ll make sure it’s in a different field. Have always wanted to learn about psychology though. But anything related to machine learning is still on my list.
Anyway, I thought the Bloomberg Interview with Yngve was quite interesting. You can read the whole interview here.
What I like about him is how he views investing differently.
Eventhough most of the investments in Norwar’s SWF are considered passive management, i.e. 30% fixed income, 70% equities with majority is still public markets, he still thinks that whatever they are doing are equally active. From our point of view there is no way to do investment that is not active. You can be more active in tailoring your reference index, or you can be more active in selecting specific securities in the portfolio, but you’re equally active whatever you’re doing. As soon as you start to say, “I want to have X in a specific asset class,” you already have active management.”
And because of that mindset, he believes that the CEO (and I would like to think the analysts and fund managers too) should still go and visit the companies on the ground, especially the small ones where not much information can be gathered publicly (something that my former MD truly believes in). His view of finance (and hence investing) is that it’s not about paper gain/loss (and I believe he’s referring to financial models), “it’s about investing in actual real economic activity”. He believes that “A small company in a small country may give you more insight into how the world economy is developing”. Hence, when he visits China, he likes to go to a small town in China to understand how China is really changing the world. I guess the way he thinks is a reflection of where he comes from. I mean just look at Norway, how can a small country with only 5m population owns almost 2.0% of global stock market and has the largest AUM. That definitely tells you something.
He also thinks that investors should be focusing more on how the FAANG stocks/companies have the power of changing the global economy, more so than geopolitical issues that sometimes we emphasize on it too much. This is what he said in the interview:
“The first thing to note is the size of these companies relative to the market in general. When you see the market cap of Facebook surpassing the combined market cap of Russia—and Amazon actually crossed the combined market cap of Brazil—it just tells you that it’s well worth spending more time thinking about how these companies affect how the economy is working and about their long-term profitability, rather than spending too much time on geopolitical risk or the risk of a country having some difficulties for the moment. It’s the development of how the economy is put together rather than the simple political issues of the day that we try to focus on”.
Another point I thought is also interesting, especially for the millennials is that, in today’s world of investing, “It is still about information processing, but the amount of information that is available is of course increasing every year, and the frequency of that information is just getting faster and faster. You have to cut through that and find what is essential. With this kind of a skill set it is very difficult to see who has got it and who hasn’t got that ability, but I think it’s one way of distinguishing”