Drawing Parallels: Stock Investing and Leadership
Illustrations: Kamelia Hristova, Kira Chung and Yova Bogdanova
Editor: Lakshmi
I am a design professional, but stock investing is one of my biggest passions. Over time, I have drawn parallels between the worlds of management and stock investing, and I am able to leverage my learning in one area to help me in the other.
Here are some of the fundamentals that apply to both fields.
Ask the Big Questions
What do you want to achieve with your stock portfolio? Do you have a long-term vision for it? Are you investing because you believe in a certain cause? (e.g., sustainability-based initiatives, green companies.) Is it a growth play or a value play? (A growth play is an investment that yields results based on the company’s growth in the long term, whereas a value play investment will usually bring in results immediately. In case of value investing, the stock is trading lower than its intrinsic value, so you can buy it cheap and make immediate gains.)
You need to have similar goals laid out for your team as well. What is the team’s jurisdiction for the coming quarter and/or year? Where do you need to add more resources, and how can you help them get set up for success? You need to also invest in a value system that the team believes in. This will help you take important decisions for the team.
Honor the Differences
Every stock/individual has different strengths, and they contribute to the macro goal differently. In a stock portfolio you will include risky, high-value stocks along with stable, limited-growth ones. Similarly, you cannot expect to have cookie-cutter designers on your team — you will need to invest in folks with a variety of specialties. I have had tremendous success hiring specialist designers who can also contribute to other areas. I regard every designer I hire as the letter T. Meaning; they have depth in certain design areas, and their breadth of knowledge is less than the depth. Over the course of their career, they may develop expertise in other areas as well, but their mainstay mostly remains the same. This may evolve sometimes, and you will need to adapt accordingly.
Stay Focused
Stay laser focused on the larger goal and refrain from making whimsical decisions. Often, a minor market fluctuation causes us to sell/buy stocks. A similar phenomenon occurs in team settings as well. We tend to make decisions on the fly without analyzing how they may affect the team goals. Once a clear assessment is made about where the team wants to be in the next quarter (or year), all decisions need to be taken with that milestone in mind. Even when pushed to take quick decisions, it’s important to not lose focus of that goal. Such decisions must be taken in an objective manner.
What is the Right Size?
Too many stocks (or people) are difficult to manage. You need to know how large a team you can manage in a particular setting. There is more to managing a team than basic goal setting, tracking, and planning. You need to invest in the right team culture, bake in growth opportunities, and more. There are experts who will advise you to maintain 30 stocks in your portfolio. My advice to them is that you’d rather invest in the market without worrying about it. When it comes to your portfolio, you want to know every asset in detail, read the earnings reports, have a clear sense of where the specific company is headed. Personally, I have never been able to do this kind of exhaustive study for more than a handful of stocks. Similarly, I have learned that I cannot effectively manage a team of thirty split across multiple continents. Some people might call me lazy but hear me out. Having a direct report is a lot more than merely utilizing their skills to get the job done. It’s also about caring about their overall wellbeing, work-life balance, career goals, etc. Therefore, it’s best to have a succession plan and learn to delegate. I have found that the magic number is 6–10. Creating smaller teams and empowering them to achieve the goals of the organization has worked well for me.
Keep Your Finger on the Pulse
As an investor you need to keep up with all the latest news and updates about your stocks. Similarly, you need to know what’s going on at work with the folks who report to you. I am not talking of micromanagement but more so about what they are working on, if they are satisfied with their work if they need to take a break, and so on. Having insight into all of this will help you take key decisions for the individuals on your team as well as for your organization.
Honestly, I may have missed a ton of learnings that could have been part of this list. One key understanding I would like to share is that becoming a better manager can help you improve in other aspects of life and vice versa. In closing, I’d like to say: keep learning from things around you, spend time reflecting on those learnings, and share with others to continually improve your management and leadership style.
