Interview: Douglas Isles (Investment Specialist, Platinum Asset Management)
About today’s guest
In this interview we chat with Douglas Isles, an investment specialist at Platinum Asset Management.
When he’s not advising travelling around Australia showcasing the great investment ideas that he and the Platinum team come up with (I’ve seen one of his talks, they’re great), he’s also sharing his thoughts and analysis on this corona virus pandemic with his followers on LinkedIn via a series of posts and articles (examples below).
Whilst I can’t list all of his posts (you can follow him on LinkedIn for that), I will share a link to one of his most recent articles, “It’s time to thrive” (https://www.linkedin.com/pulse/its-time-thrive-douglas-isles/).
I thought it would be good to chat with Douglas about some of the analysis he’s done and what his thoughts are on this saga so far. He’s got a great quote that aligns well with my thinking on all of this too, “spread the data, not the virus”.
The Interview
Mark: Hi Douglas, could we start off with you telling the audience about your role at Platinum?
Douglas: I have been an Investment Specialist at Platinum since 2013. My role is to communicate to clients (advisers) what we are doing in our investment portfolios. Having been an analyst in the team for 5 years (2003–2008) I am well versed in our philosophy and process.
Mark: That’s great work you’re doing for your clients, I know the advisers here at Prosperity (link) are doing this too. How does Covid-19 affect your day to day work?
Douglas: The obvious impact is via working from home. I have tended to travel a lot (too much my family would say) and this is forcing engagements to take place over email, phone and Zoom only. Internally we are also using Zoom and Slack, rather than being all in the one office in Sydney — so as a social person, I am adjusting to that, but so far, so good.
Mark: That’s a good responsible group there. So, when did you start looking at the Covid-19 data and decide to analyse it?
Douglas: It moved from what I would call a necessary interest, from the perspective of my role and broad human interest, to a deeper personal focus and attempting to spot important patterns on the weekend of 21–22 March.
Mark: That’s interesting, why did you decide to put your time and effort into this?
Douglas: On Friday 20 March, I drove to Bondi Beach to collect my daughter from a friend’s home, and was shocked by the crowds on the beach. I posted a picture on Linkedin which got a lot more response relative to my normal posts. I realised not only was this was a serious issue, but that Australia was complacent, from leaders to citizens, and wanted to try and bring this to people’s attention. So, I went looking for data. I thought it would make more sense to spread data, than to spread the virus.
LINK: https://www.linkedin.com/posts/douglasisles_socialdistancing-activity-6646660741577433088-vnVg
Mark: Great quote! Could you tell me a bit more about your style of analysis and your process for coming up with your model? For example, do you have a particular focus area?
Douglas: I knew that testing was inconsistent around the world, so the most reliable datapoint was likely to be deaths. Morbid as this sounds, I am an actuary by training, as was my grandfather before me. I understand that in the old days, actuaries would look at gravestones as datapoints to refine their understand of mortality. I then concluded that deaths acted as a good proxy, with a lag, for the rate at which new cases had been spreading perhaps 2–3 weeks previously. Initially I felt I just wanted to shout as loudly I could that we needed to lockdown. I observed that after a country reached 10 cumulative deaths, it was not long before 50 people were dying every day, except for South Korea, which had been praised for its actions. I tried to reach people via social media, and engaged directly with my local MP (Member of Parliament) via email, who was receptive.
Mark: Do you use data and analytics in your day to day work?
Douglas: The firm certainly uses a huge amount of data in our interpretation of what is going on at a company, industry and country level. In many ways though the skill of fundamental, active investors is interpretation. In recent years, as computing power has grown, the base level of data analysis has risen globally.
Mark: What kind of tools do you use to analyse the information?
Douglas: For the pandemic, I built a simple model, looking at deaths data as my input — worldometers.info publishes this early afternoon each day and I update my spreadsheet from there. I have looked at some of the regional data in Italy which I access through Wikipedia. By having a model, it gives me a sense of how this might play out — we have China as a road map for lockdowns, along with other East Asian nations, and now Italian regions.
I have seen other commentaries recently which are coming up with not vastly different conclusions on when deaths will peak for example. From a mental health perspective, by having a forecast, the deaths being reported become less of a shock as they rise, and will continue to. It allows me to calibrate and I have tried to share this message now. It has evolved from “we must lockdown”, to please “keep your distance” to something more like this will appear to get worse, but is actually on track to get better, if we stay disciplined.
Mark: I think people need to hear that. The narrative does change as we evolve in this pandemic. Speaking of change, do you see this event changing the way people look at the world and how they invest?
Douglas: I think so far it is accelerating a number of trends, such as remote working and food delivery for example. We will all be more aware of social distancing, self-isolation and hand hygiene. I expect increase regulation to protect us from the last pandemic (like we introduced greater security after 9/11). At a personal level, I think people will try to build more contingency into their lives if they can, and we will have to from an investment perspective evaluate the profile of the recovery, the credit outcomes, and the distortions of government packages and zero interest rates.
Mark: And on that note, what is Platinum doing to help its customers understand the current pandemic?
Douglas: COVID-19 took hold while we were in the middle of our annual roadshow, so we were able to physical see investors and advisers in Brisbane, Perth, Canberra and Melbourne before we decided to move to webinar. However, it meant we have been in front of a large part of our investor base in March, and we have been producing weekly updates on the situation via our website. We are fortunate to have a virologist in our team of analysts, so we have a good grasp of the situation.
Mark: What kind of opportunities do you see will come from this crisis in terms of new ways of working or ways in which the world will be different? (e.g. from looking at your ‘It’s time to thrive’ article)
Douglas: We have a great opportunity here to make change. We can kick some bad habits, while we are working from home, but we must come together and harness what we are all learning. Through time, cities have been hubs for inspiration and perhaps that takes place online, but we can generate new ideas through our experiences. Simple things like temperature checks before boarding planes, or entering public buildings would be a good start to stop the spread of viruses in future. Personally, it is giving me the confidence that we can have good quality meetings remotely, and I think I will do more of this in future, particularly where I already know and trust the person I am dealing with. I might start taking a day a week from home as I think we can cut through more in this set up.
LINK: https://www.linkedin.com/pulse/its-time-thrive-douglas-isles/
Mark: And finally Douglas, time to bring it home. What’s your outlook for Australia considering where we are now?
Douglas: I think Australia might end up with the “Lucky Country” tag again. Some combination of “tyranny of distance”, low population density, young population, warmer climate (summer), high levels of testing and other factors, has meant that the data we have so far, is pretty encouraging. Of the 32 countries I am tracking daily, we have the slowest growth rate over the range of 5 to 50 deaths (we had hit 28 by 4 April). With the increasing lockdowns on top of this, I am hopeful that we can avert a human catastrophe on a wide scale. But, to do that we need to stay disciplined and not be complacent, or come out of lockdown too early. I am also conscious that the impact of Bondi and the crazy landing of cruise ships in Sydney is not yet FULLY REFLECTED in the deaths data (as at 4 April) that I am tracking so I will watch this closely. Case data does seem encouraging though, and given the prevelance of testing here versus overseas, that is a good thing.
The most important thing though, is that we keep our discipline — keep washing our hands, keep our distance, and focus on spreading data, not the virus!
Closing remarks and contact
What a great set of insights from Douglas. To see more about what he does then check out the links in this article. To learn more about Platinum Asset Management then check out their website (https://www.platinum.com.au/) or follow him on LinkedIn (https://www.linkedin.com/in/douglasisles/).
Stay tuned for more interviews like this in future and if you would like to get in touch with me about this or other posts on this blog then feel free to reach out below:
Mark Monfort (Head of Data Analytics and Technology)
- Phone: 02 8262 8700
- Email: mmonfort@prosperity.com.au
