Plato to Portfolios: Why Liberal Arts Majors Should Pursue the Investing Industry
The number of liberal arts majors in the investment industry has diminished in recent decades. The industry and universities need to do more to promote the career path.
Audio version:
Seven years ago, I attended a presentation given by the CFA Institute president. During the presentation, he noted that among Charterholders over the age of 50, about half had liberal arts undergraduate degrees; however, only a tiny fraction of Charterholders under 50 did.
This data point isn't surprising, but it reveals the challenge liberal arts majors face when pursuing a career in investing.
That’s unfortunate because investing is a natural fit for liberal arts majors. Investing rewards multi-disciplinary thinking and research and communication skills. As such, the industry and universities should do more to encourage investing as a career path for liberal arts students.
What I've found is that my liberal arts background has become more valuable as my career has progressed. Once the job became less about technical skills and more about broad conceptual thinking, the disciplines I learned like research, writing, and logic while taking history, philosophy, theology, and other core courses at Saint Joseph's University became more important.
The hardest part for a liberal arts major is getting your foot in the door. Here are some strategies to consider.
One is to minor in finance or accounting. If it's too late to add a minor, audit introduction to finance and accounting courses. Pursuing an MBA is another option, though MBA programs are more valuable if you have a few years of professional experience. Plus, your future employer may cover some or all the cost of an MBA.
Alternatively, you can investigate the CFA or CFP programs. Starting toward industry certifications shows employers that you are serious about the profession. I didn't pursue the CFA until I was in the industry for a few years, but earning the right to use the designation in 2014 has unlocked many doors for me, including the ability to teach finance at the university level.
Yet another option is to seek larger companies with in-house training programs. Large firms regularly hire college graduates and fully expect to lose a percentage of new hires to other jobs. The programs price in those risks, so they’re more willing to consider liberal arts majors.
Importantly, when the firm has professional trainers, they don't need to pull specialists off their jobs to train you. My first job out of school was with Vanguard, where I entered a multi-month licensing and job training program led by full-time instructors.
Once you're in the industry – ideally before you are in the industry - you need to put your liberal arts skills to work to show how they can benefit your employer. Do some independent research on an industry or a company, develop a novel thesis, and write a report that's forward looking (What do you think is going to happen?) and debatable (Why do you think this will happen?).
If you’re unsure how to formulate and present an investment idea, I recommend getting a copy of James Valentine’s Best Practices for Equity Research Analysts. It’s a comprehensive guide to the role of an investment analyst and how to add value to an investment team. Â
All this is to say that liberal arts majors shouldn’t diminish the value of their multi-disciplinary education when speaking with potential employers in the investment industry. Instead, reframe those skills to illustrate how they could benefit the company.
The late Charlie Munger repeatedly espoused the values of multi-disciplinary thinking – what he called a developing a "latticework" of mental models. Liberal arts majors are already on their way to building such a latticework through their varietal coursework. It will only become more robust once they connect it to and incorporate the business and finance disciplines.
There isn’t a static blueprint for success in investing. The markets are complex adaptive systems that require us to use critical thinking to course-correct around a handful of core principles, such as buying assets for less than they’re worth.
Indeed, there is precedent for long-term success in the investing industry for those with liberal arts degrees. Here are just a few examples I’ve noted over the years:
Nick Train of Lindsell Train - History. Train's co-founder, Mike Lindsell, majored in zoology, and their analyst team consists of two English majors, two more history majors, and another zoology major.
David Einhorn of Greenlight Capital – Government.
Stanley Druckenmiller – English and economics.
Terry Smith of Fundsmith – History.
Nick Sleep of Nomad Investment Partners – Geography.
Someone with an insatiable curiosity and a way of digesting complex topics and then communicating them in an accessible way should always have a home in the investment industry.
Students with liberal arts backgrounds have much to offer the investment industry - and vice versa. The more the industry and universities can promote a stronger connection between liberal arts and investing, the better off we'll all be.
Stay patient, stay focused.
Todd
At the time of publication, Todd and/or his family did not own shares of any company mentioned.
Disclaimer:
This material is published by W8 Group, LLC and is for informational, entertainment, and educational purposes only and is not financial advice or a solicitation to deal in any of the securities mentioned. All investments carry risks, including the risk of losing all your investment. Investors should carefully consider the risks involved before making any investment decision. Be sure to do your own due diligence before making an investment of any kind.
At time of publication, the author or his family may have an interest in the securities mentioned or discussed. Any ownership of this kind will be disclosed at the time of publication, but may not be updated if ownership of a particular security changes after publication.
This newsletter does not provide buy or sell recommendations and articles should not be interpreted this way.
Information presented may be sourced from third parties and public filings. Unless otherwise specified, any links to these sources are included for convenience only and are not endorsements, sponsorships, or recommendations of any opinions expressed or services offered by those third parties.
Flyover Stocks has partnered with Koyfin to provide a discount to Koyfin’s services for Flyover Stocks readers. The W8 Group, LLC, which publishes Flyover Stocks, may receive a commission from a reader’s purchase of products linked from this page as part of an affiliate program.
I should have added in the post that NYU professor Aswath Damodaran's corporate finance and valuation courses, which he's generously shared for almost two decades now, were an invaluable resource to me early in my career. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/onlineclass.htm
It often feels like fundamental analysis is being eclipsed by indexing and algo trading these days. How many more job listings do you see for quant analysts (Citadel hiring meteorologists!) vs those with a rich analytical background well suited toward fundamental analysis?