It’s difficult to argue investment strategies with someone like Warren Buffet. The Oracle of Omaha has proven that it is absolutely possible to conquer market investing using a “bottom-up” strategy. He proclaims that a long-term, patient, and performance-driven attitude is necessary to creating a nest egg. Timothy Armour, the CEO of Capital Group however, believes that the flaw in Buffet’s strategy is that it ignores changes in certain economic sectors, and the pliable dynamic of demographics.
Buffet’s main philosophical contribution to society is that it is always a good idea to save for the future. Investors need to be constantly aware of what parts of the market are solid and grounded in performance, and those that are promoted because of investment manager branding. He believes active investment vehicles with great risk are far inferior to passive investments that have the strength to withstand market downturns. Also, high management fees are not a good exchange for unpredictable returns, even if they are potentially more profitable. It is better to concentrate on building a portfolio that is filled with non-flashy labels, lower management fees or commissions, and a traceable positive performance history.
Timothy Armour agrees with the pillars of this philosophy, but he believes Mr. Buffet has failed to recognize one important factor in modern investment strategies. Unlike every generation since the US industrial revolution, the majority of people now are responsible for creating their own nest eggs. Radical shifts in the economy, along with a retiring Baby Boomer generation, has gutted the ability of corporate America to provide retirement vehicles for career employees. In short, the majority of younger working people must consider working with high-fee investment management firms to take advantage of a severely unpredictable global market. Instead of long-term being defined by a person’s entire career, it now means surviving a few market cycles, while contributing profit to a personal portfolio.
With more than 34 years as an equity portfolio manager, and having earned a Bachelor’s Degree in Economics from Middlebury College, Timothy Armour has amassed incredible knowledge of modern finance and investment strategies. Having an active role in managing portfolios, even as a corporate executive, has allowed Timothy Armour to keep an accurate view of modern changes in the market. This vision contributed to his election as Capital Group’s CEO in 2015.
Armour is extremely insistent that it is not only the strength of an investment vehicle that contributes to positive portfolio growth, but the contributions of a dynamic management team as well. As chairman of a firm with more than 7,600 associates, Timothy Armour has the important responsibility of helping younger generations of investors understand the importance of working with a committed management team.