Investors must always be thinking because nothing worthwhile will come from the commoditised sources of information. Paradice knows this. “They’ve got to be good at numbers and know what value is, and not believe in the blue sky. You want people to do their own numbers. Some managers only know the numbers of their brokers.” “You can’t do this job part-time,” Paradice says. “The people I like, when they find out about an idea, they don’t wait for me – they’re off.” But good ideas must also be executed well. Adams says good managers develop a “gut” instinct over time that can become advantageous. “The gut feeling is everything they’ve learned in the past about investing that has now become automatic,” he says. It emerges in their behaviour. “It’s about knowing when to act and when to be patient.

A lot of value is destroyed by funds managers acting too early or holding a stock too long out of love. It’s looking for liquidity, or the next idea coming along.” Adams applies his studies of psychology and economics into his work at Advance. He says the behavioural characteristics of funds managers, often dubbed ‘the softer stuff ’, can be sidelined in preference for rigorous analyses aiming to dissect an investor’s abilities. “Sometimes, by putting things under the microscope too much, we forget that fund managers are human beings and they do rely on their intuition to make decisions.” The ability to think independently, combined with the confidence to apply that thinking, is a given trait among excellent investors as they must be able to make sensible decisions in uncertain situations. “You need courage,” Sevior says, “because when things look great and a boom’s on, good investors can’t get sucked into that game.”

The best buying opportunities in his generation so far, he says, were on offer during the financial crisis, and exploiting them required true grit. “You need courage so that, despite all the noise, the numbers and opportunities are so compelling that they more than account for any number of dire scenarios.” “At certain points in the cycle – the tech boom, the leverage boom – principles are going to be tested. I’ve been through three cycles now, and at the peak of each boom people have said our process is outdated. Then when it blows up it proves it isn’t outdated.” This self-drive is also powered, in part, by a fear of mediocrity. Good investors must be empowered and have ownership of the outcomes of their work. “A funds manager wants to feel as though they can make a difference,” Paradice says.

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