by Jack Flynn ‘22
The evening of Tuesday, February 2, saw the first meeting of the calendar year for the St. Sebastian’s Finance Academy. Our featured speaker was Steven Flynn P‘22, Senior Director of Russell Investments. Mr. Flynn is a client portfolio manager, which entails creating and managing investment portfolios for institutions such as corporations, hospitals, municipalities, schools and charitable foundations--a role also known as an outsourced chief investment officer (OCIO). Currently serving as OCIO for fifteen organizations across the eastern United States, he provided a glimpse into his thought processes as he develops customized investment portfolios and investment plans for these clients.
In his opening comments, Mr. Flynn challenged the students “to think like portfolio managers tonight, because I’m going to talk to you like portfolio managers.” Proceeding to do just that, he asked the students to consider a portfolio comprised of the five strong-performing “FAANG” stocks (Facebook, Amazon, Apple, Netflix, and Google) and to assess this portfolio as a professional portfolio manager would. He asked them to consider the likelihood that all five FAANGs would provide double-digit returns for a second straight year in 2021 (“two words: good luck”), while introducing the investing concepts of diversification (or lack thereof) and correlation (how stocks behave relative to each other), both of which are important aspects in building investment portfolios. With those considerations in mind, he then compared that FAANG portfolio to a broader five-stock portfolio, diversified across various industries (“sectors”) and global regions. He drew an interesting analogy, saying that the FAANG portfolio was like a hockey team made up of five Brad Marchands (“lots of performance, firepower and goals … dynamic but risky”), whereas the more diversified portfolio was more like a team of Patrice Bergerons (“nicely balanced … likely to provide benefit in a variety of different situations and investing environments”). Extending the metaphor, he likened the role of portfolio manager to that of team coach and noted that one’s team (i.e., portfolio) should be aligned with one’s investment objectives, and as a result, there’s no such thing as a “one-size-fits-all” investment portfolio for all investors. He encouraged the students to think for themselves, but he reminded them that being an informed investor means understanding the risks undertaken (which, Mr. Flynn explained, can be applied to life, as well).
Reflecting on a portfolio manager’s need to communicate his ideas in an articulate and persuasive fashion, Mr. Flynn then encouraged the students to continually hone their presentation skills, in both the written and spoken word--and praised Mr. Nerbonne and Mr. Burke for emphasizing these skills throughout the St. Sebastian’s curriculum.
Mr. Flynn concluded by taking some questions and wrapped up with a very clear overview of the current and rather convoluted Robinhood and GameStop quagmire.