Episode summary
Learning to thrive in unpredictable markets
Capital Ideas Podcast
· · Hosts: Mike Gitlin · Guests: Lisa Thompson
Summary
Lisa Thompson says her edge as a portfolio manager comes from being comfortable with uncertainty, cyclicality and volatility, a skill she traces to decades of experience in emerging markets and to her math background. She describes how her early work in Latin American research led to Capital Group, and how an early thesis on Telmex after Mexico’s peso crisis showed the value of buying when the market’s fears look overdone.
She argues that value investing requires optimism, patience and a willingness to look for optionality in unpopular names. Thompson says she likes to own some cyclical businesses and some “boring” companies with low valuations but potential upside, and she emphasizes starting small and waiting when a thesis takes time to work. The Capital System, she says, lets her focus on that long-term style while colleagues cover other parts of the market.
Thompson is constructive on emerging markets over the next 5 to 10 years, citing a weaker dollar, somewhat higher inflation and improving corporate governance, especially in Japan, Korea and parts of China. She also says management matters a great deal, but that trust and intuition should not be ignored. Her lessons learned include not chasing hot stocks and not ignoring a bad feeling about management.
Key takeaways
- Thompson says her investment edge is being “very comfortable with uncertainty, with cyclicality and volatility,” built from years in emerging markets.
- She sees emerging markets as set up well after a 15-year relative bear market and thinks a weaker dollar and more inflation could help.
- Thompson says Japan and parts of Asia now offer a more secular shift toward shareholder returns and corporate governance.
- Her biggest lesson learned was not to ignore discomfort with management, even when the numbers look good.
- She says value investors need patience because good ideas can take years to work, and Capital Group’s structure helps support that discipline.
Notable quotes
“My edge is, I'm very comfortable with uncertainty, with cyclicality and volatility”
“I think value investors are optimistic people”
“One of the nice things about being a value investor is often where you're looking is not terribly popular”
“I listen to the pit now”
“I love investing, and if you love investing, there is no better place to be”
How the episode opens
- Welcome to another episode of our Capital Ideas podcast, where we get to know the people behind the portfolios. We spend time with our portfolio managers and analysts, hear some of their ideas, lessons learned, investment edge, something about Capital Group as well. Today we have Lisa Thompson with us.
Lisa's an equity portfolio manager based in New York City. She's been at Capital Group for 31 years, welcome. - Thank you very much.
- Glad you're here. So I'm going to paint you a picture of this three-circle Venn diagram. And in the three circles are mathematics, architecture and cooking.
- Yes. - So no one would assume the shaded area would equal sign investing. - Yes.
- Tell us a bit about how you got here. - Well, you know, I studied math in college. I loved that.
But at the end, you know, when I was a senior I was like, you know, I don't want to be a mathematician. I don't, that's not something that I'm interested in. But I didn't know what I wanted to do.
I did feel strongly that I wanted to have passion about what I was doing and I wanted to be reasonably good at it, right? And so I did think about architecture and later on I did actually consider being a chef. And in both cases I went and worked in a small architecture firm.
And while I was on Wall Street, I actually, I went to cooking school at night, which was pretty crazy, that was a crazy, - It was a long day, - A very long day. A very long nine months, let's put it that way. And I realized in both cases they, for different reasons, weren't the right field for me, but never regretted the experience.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- unpredictable markets
- value investing
- emerging markets
- investment patience
- long-term investing
Companies and tickers mentioned
- Capital Group
Watch the episode
Watch “Learning to thrive in unpredictable markets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Capital Ideas Podcast, this episode and its artwork belong to Capital Group. Octagon is not affiliated with the show; this page is an independent summary.
