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Published Nov 25, 2019

Drew Dickson – Blending Behavior and Fundamentals at Albert Bridge Capital (First Meeting, EP.13)

Drew Dickson, founder of Albert Bridge Capital, delves into the fusion of behavioral finance and fundamental research that drives their investment strategy, sharing personal career insights, the impact of biases on decision-making, and the importance of fostering a culture that learns from mistakes.
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Episode Highlights

  • Biases

    Drew Dickson, founder of Albert Bridge Capital, highlights the pervasive nature of biases in financial decision-making. He emphasizes the role of confirmation bias, where investors seek information that supports their existing beliefs, often leading to skewed interpretations of data. Dickson shares an example of how two investors might interpret the same data point differently based on their positions, illustrating the challenge of maintaining objectivity 1. He also discusses the influence of behavioral finance pioneers like Daniel Kahneman and Dick Thaler on his investment approach, acknowledging that even experts fall prey to these biases 2.

    People are now talking about behavioral finance so much and a lot of them relatively new to it, they almost want to start looking as if there's definitely going to be a bias here. You're biased to find a bias.

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    Dickson stresses the importance of creating a culture where acknowledging mistakes is acceptable, allowing for more objective decision-making 3.

       

    Debiasing

    Albert Bridge Capital employs debiasing strategies to mitigate the impact of biases in their investment processes. Drew Dickson explains the practice of writing deep dive short cases on potential investments, which helps identify where things could go wrong and encourages a culture of recognizing mistakes 4. This approach aims to counteract confirmation bias by fostering an environment where questioning and re-evaluating decisions is encouraged.

    If you can flip that on its head, it also means you're trying to get one out of three wrong. And if you have a culture where we can look at the portfolio and say, okay, which of these things are going to be wrong?

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    Additionally, Dickson discusses the complexities of factor investing, questioning the validity of certain factors and their theoretical underpinnings, which further underscores the need for a critical approach to investment strategies 5.

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