Researching like a pro

This summary focuses on the behavioral and psychological aspects that tend to repeat themselves in the markets.  

CFA Jason A. Voss is a senior consultant at Focus Consulting Group, a firm advising active investment managers on how to improve their cultures and performance. He gave his insights on how creativity and presence of mind could help you make much better decisions. Also, he discussed about how to overcome some of the common mistakes that are caused due to emotions and biases. 

The prominent topics that were covered in the webinar were in regards to taking research-based decisions by taking creativity into account, which would lead to high quality insights.  


Starting off with how creativity could lead you to make better decisions and preserving the quality of your work, it is the most underappreciated subject within investment management. We tend to overemphasize the left-brain analysis, which is why most of our job titles end up being research analysts and not research creativists. According to some creativity researchers, creativity is defined as the ability to produce work that is original, unexpected, high in quality and appropriate. The simplified definition of creativity is doing what nobody else is doing. The job of an investment manager, if they are in pursuit of alpha rather than index like returns, is to do what nobody else is doing.

There are 5 necessary creativity conditions –  

  • IQ and expertise – The value of IQ is, if you have familiarity with a body of knowledge, then you are better able to identify what’s original, because you are familiar with what’s already available. In addition to that, you have a language with which you could describe your insights. It is also a source of bias we tend to invoke mental models which are very common to us. 
  • Discovery and curiosity – We need to have familiarity with ourselves, our capabilities and acknowledgement of what our personal limitations are. 
  • EQ – It is the wisdom aspect of creativity. It is helpful to evaluate oneself by going back to the discovery bed and check if one has any anxieties about something, being curious to not let the shortcomings stand in one’s way.  
  • Attention – Attention is wonderfully important if we want to be creative. If we are in a creative state and get interrupted, it takes 10-15 minutes to reengage and get our mind reoriented to the same flow state as we had before interruption.  
  • Support – Personal level of support that is responding to emails only during certain hours, so that one could have uninterrupted time to be creative. 

Qualitative analysis

The ABCDE (Actions, Behaviors, Choices, Decisions, Ethics) in the accounting statements provide a qualitative way to analyze the business. Also, there could be a possible occurrence of some mistakes in regards to the financial statements. The first one is that, possibly the financial statements might be using a generalized format or a template, that could lead to loss of some of the behavioral content of the business.

The second mistake is about not understanding the reflexivity of the statements, as in how they interrelate to one another. Another mistake to note in regards to the balance sheet and the income statement is about using different time dimensions. If one wants to get an insight, the statements need to be put in the same temporal dimension.  

Interviewing to assess a business and its truthfulness is an essential task that needs to be carried out. During the interview, structuring the questions (starting with easy questions to difficult ones or vice-versa) could help in assessing the business in a much simpler way based on their responses. To access the top management, one needs to come up with complex questions that would cross the channel built to the CEO or CFO and a level of intimacy, that hadn’t been there before.

The second aspect is about performing the truth analysis. To detect a lie, one could use some software for text-based analysis to detect the lies in the annual reports. Coming up with questions that indirectly refer to the crucial information of the business would lead to the appropriate results. Also, if one has some evidence of a lie but no proof, then the interview could start with questions that have broader context and end with the narrowed context questions.  

Overcoming behavioural biases

Overcoming biases and controlling emotions is often overlooked by the market participants. While researching, one must consider creating a pause between stimulus and response. How do you get the pause? Simply, by getting a second opinion. Also, there are various software packages out there that take the trading data and look for biases that recur within your trades.  

To conclude with, he spoke about how meditation could help one achieve control over their mind. Creativity needs practice and unlearning of certain things that are coming in the way of making fruitful decisions and putting the decisions into actions. Also, by taking complete control over our minds, creativity would be at its peak when there are less interruptions and more attention.  

This summary was prepared by Monika Jambhale based on the webinar by Jason A. Voss at the CFA Institute.  

Practitioners’ Insights: Researching & Investing like a Pro 



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