Episode 104: Simon Evan-Cook, Downing Fox – The Role of Luck and Skill in Successful Fund Management and Business Building
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What if luck plays a bigger role in fund success than anyone wants to admit?
Simon Evan-Cook isn’t just throwing that idea out there. He’s lived it.
He spent years on the allocator side, vetting fund managers and learning what really sticks (hint: it’s not just your track record).
Now that he’s a fund manager himself, he’s pulling back the curtain on the truth no one wants to say out loud…
Yes, being good at what you do matters, but so does luck, timing, and learning how to stack the odds in your favor.
In this Episode, Simon and Stacy dig into:
Why some of the most skilled fund managers don’t always win
13 ways emerging managers can make their own luck
What allocators actually remember after your pitch
And why being honest, even when it’s uncomfortable—is the real differentiator
Resources Mentioned in this Episode:
About Simon Evan-Cook
Simon Evan-Cook is an award-winning multi-asset fund manager. In 2022 he joined Downing to set up and manage the Downing Fox range of funds. Before that he built his reputation at Premier Asset Management from 2006, where he was a senior member of their highly successful multi-asset team. He began his career with Fidelity in the late 90s, before joining Rothschild Asset Management and then Gartmore.
Simon also writes on investment (and beyond), including a monthly column for Citywire Magazine and his investment blog on Medium.com. Outside of work, he enjoys spending time with his family and dog, devouring movies and books, and superficially damaging European golf courses.
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TRANSCRIPT
Below is an AI-generated transcript and therefore it may contain errors.
[00:00:00] Stacy Havener: How can we evaluate whether a fund manager is talented and skillful versus lucky? That is an age old question and one that my next guest has been thinking a lot about. What is the role of luck and skill in investing in biz? In life meet Simon Evan Cook, formerly a $5 billion premier mitten. Now leading the charge at Downing Fox Funds a multi-manager fund complex, which requires Simon to evaluate this very thing.
[00:00:31] Stacy Havener: He is one of my favorite thinkers and writers in our industry. He's also a friend. I'm thrilled to be back in the podcast studio with him in this reunion episode. Join us as we deep dive on the topic of success and fund management and how we can put ourselves in the position to not only identify skill, but also to be more opportunistic when luck turns in our favor.
[00:00:57] Stacy Havener: Let's reunite with my friend [00:01:00] Simon. Hey, my name is Stacey Er. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the Toughest Boys Club, wall Street. I've raised over 8 billion that has led to 30 billion in follow-on assets for investment boutiques, you could say, against the odds.
[00:01:22] Stacy Havener: Yeah, understatement. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here. Money, authenticity, growth, setbacks, sales and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in college, mixed with happy hour.
[00:01:47] Stacy Havener: Pull up a seat. Grab your notebook and get ready to be inspired and challenged while you learn. This is the Billion Dollar Backstory podcast,[00:02:00]
[00:02:01] Stacy Havener: Simon. Welcome back to the Billion dollar Backstory podcast Studio with a twist.
[00:02:07] Yes,
[00:02:07] Stacy Havener: because we are sitting here in person. Not on Riverside, our recording platform. And we're in London and this is the third time we're trying to make this reunion tour happen. And we're doing it,
[00:02:20] Simon Evan-Cook: yeah, the third time because the first two were technological horror shows.
[00:02:24] Simon Evan-Cook: But I'm, this is the first and thing. This the first. I'm pleased with that.
[00:02:28] Stacy Havener: Thank you. It's the first in person in this location, but not your first time on the show.
[00:02:34] Simon Evan-Cook (2): No.
[00:02:35] Stacy Havener: And so in the spirit of the reunion. We're gonna need a chapter update on your story because it's been a minute since you've been here.
[00:02:44] Stacy Havener: It has. So tell us how it's going. What's new? What's this latest chapter like for you?
[00:02:48] Simon Evan-Cook: So when we last spoke, when you left off? Mm-hmm. I was, I think pre even the Fox Funds launching the Downing Fox funds, I should say. So you can find them now that I'm plugging them. Yes. They were [00:03:00] pre-launch, but we had some money and we were up and running, but we were bright eyed and bushy tailed waiting to see how we do.
[00:03:05] Simon Evan-Cook: Fast forward to now we're up to 300 million under management, just over that, which is great. That's a decent number. It gives us what we need to keep going for a lot longer, which if you're a new business or a new part of a business is obviously what you need. You need the runtime to keep going. So yeah, it's been a success.
[00:03:24] Simon Evan-Cook: I would always like it to be more of a success.
[00:03:26] Stacy Havener: Yes,
[00:03:26] Simon Evan-Cook: that's the nature of me, but it's been good so far. Yeah.
[00:03:31] Stacy Havener: Congratulations and let's pause on this because I want people to really hear this and feel it. We all want the success to happen, you know, go farther faster.
[00:03:44] Yes.
[00:03:44] Stacy Havener: This is one of the most challenging things for founders to really embrace that it's not gonna happen on your timeline.
[00:03:51] Stacy Havener: It's gonna take twice as long and probably cost twice as much. And so what happens when we're in that mindset is we forget to pause and [00:04:00] celebrate how far we've come. Yes. Because we're always sort of moving the goalpost on ourselves.
[00:04:04] Simon Evan-Cook: You're completely right. And what it reminds me of is having kids, right before you have kids, everyone says, oh my God, that's gonna be hard.
[00:04:13] Simon Evan-Cook: You're in for a really hard time. And it's not that you're arguing with them, you're kind of agreeing with them, but you think. Yeah, you found it hard, but I'm not gonna find it hard. Yeah. Because I'm gonna be an amazing parent and I've read all the books and I'm just a natural, and then you become a parent and you're like.
[00:04:27] Simon Evan-Cook: Oh my God, they were right. Yes. This is really hard and it's harder than I imagined it would be. Launching the funds has been exactly that because yeah, like you said, everybody said, oh God, it's gonna be hard. And I thought, yeah, it was hard for you. It's not gonna be hard for me. I've got all this stuff in my favor.
[00:04:44] Simon Evan-Cook: It's gonna be an absolute breeze. And yeah, it's been hard. You're right also that we've reached a very good level. I'm definitely looking forward and looking where we want to get next, but yeah, you are right. Absolutely. We have to pause and go. Yeah. We could quite [00:05:00] easily have been at zero at this point.
[00:05:01] Simon Evan-Cook: Yeah. And I would've been looking for something else to do, so I'm very pleased we've got where we've got, but I just wanna go further.
[00:05:08] Stacy Havener: Yes. And you will, and actually this is an interesting segue to our topic today. 'cause one of the fun things about the reunion tour is we're coming back with guests and we're sort of deep diving on a topic that's near and dear to their heart.
[00:05:23] Stacy Havener: But what's interesting in this conversation, one of the things that we look for when we're working with clients is, has the fund manager done it before?
[00:05:34] Simon Evan-Cook (2): Yes.
[00:05:35] Stacy Havener: Okay. And by done it, I mean, have they launched something and built it from sort of the get doesn't have to be from zero, but have they really built something from an idea all the way up over a billion dollars.
[00:05:51] Stacy Havener: And the reason that's so important to us, it's not so much the investing part of it, but it's that. Building a business is a skill in and [00:06:00] of itself.
[00:06:01] Yes. And
[00:06:01] Stacy Havener: if they've done it before, then they understand how it's done and they've sort of proven that they're willing to play that game, for lack of a better phrase, a skill.
[00:06:11] Stacy Havener: And I'm interested, that's a skill.
[00:06:12] Simon Evan-Cook: Are there many of those around? Because I would think if you've built. A business up to a billion, then you're done, aren't you? I mean, that would be my, maybe it's a British kind of, you do it once and you're done, but maybe not
[00:06:22] Stacy Havener: well. But I would say that you did it right.
[00:06:25] Stacy Havener: You did it. It wasn't quote yours as part of a bigger,
[00:06:27] Simon Evan-Cook: yeah, yeah.
[00:06:28] Stacy Havener: But you've done it. So like if we were vetting you, that would be something we would say that gets points, because the fund was. Smaller when you started. Yeah. And you grew it so you understand how to do it.
[00:06:42] Simon Evan-Cook: It felt like that was doing it with stabilizers on, now it's with the stabilizers off, but it, I guess it's all a, a spectrum, right?
[00:06:48] Simon Evan-Cook: It's Yes. Degrees of difficulty.
[00:06:50] Stacy Havener: Yes. And so that's a skill, which I think is a good segue and maybe we'll come back to the building bit, but one of the things that you are really thinking a lot about [00:07:00] is this idea of luck versus skill. Absolutely. So I'm gonna tee it up and I'm gonna let you kind of unpack.
[00:07:06] Stacy Havener: What are you thinking about specifically as it relates to that?
[00:07:09] Simon Evan-Cook: Yeah, so it's a really interesting one. I'm thinking a lot about luck and I have been for years because basically I'm in the luck. Business. And I think actually you are in the luck business as well. Yeah. We'll get onto this in a bit, but I think probably most businesses are luck businesses.
[00:07:23] Simon Evan-Cook: Yeah. But particularly fund management and particularly sales, marketing, distribution. They are both luck businesses. Now, from my perspective, why. It's interesting to me, and it has been interesting to me for as long as I've been running money. So that's going back almost 20 years now, is that my particular job is that I analyze fund managers.
[00:07:43] Simon Evan-Cook: So I've gotta work out the ones who are genuinely skillful and can keep producing the alpha versus the ones who've just got lucky. And when you're looking at that, you look at all the different ways in which you can be lucky, which you can be unlucky, and you start to think about that. [00:08:00] In quite some depth and from a hundred different angles.
[00:08:03] Simon Evan-Cook: But I'm also as a portfolio manager myself. 'cause we run, we're multi-manager, we run funds of funds. I am subject to the same luck myself, so I've gotta be aware of that in how can I myself be. As it were, and you know, this is where luck and skill gets blurred. What can you do to become luckier if you're doing something to become luckier?
[00:08:25] Simon Evan-Cook: Is that then skill? Arguably it is,
[00:08:27] Simon Evan-Cook (2): yeah.
[00:08:28] Simon Evan-Cook: But part three and where it comes into your world is that now that I'm in the building a business. I'm a kind of founder of that business, and I'm therefore responsible to a large part for selling it and encouraging other people to sell it. I'm realizing just how much luck is involved in the marketing, the distribution of those funds themselves.
[00:08:49] Simon Evan-Cook: So all the way through everything we do there is luck, and clearly the thing to do is to tip the scales of luck in your favor. Yes. I think that's where it gets [00:09:00] really interesting.
[00:09:01] Stacy Havener: All the Hunger Games s nods on that one. Um, may the odds be ever in our favor. Okay. So let's do some definitional work, because I love this topic and it's got a lot of layers.
[00:09:13] Stacy Havener: So when you say that you are trying to assess skill, what are you trying to assess? You mentioned alpha. So is it really that you wanna find the persistent alpha? Like how are you thinking about the result that you're trying to. Reverse engineer basically.
[00:09:30] Simon Evan-Cook: Yeah. That's ultimately what we want from the fund managers.
[00:09:32] Simon Evan-Cook: We are only interested in downing fox at backing what we call the future goats. So the greatest of all times. We are only interested in trying to find the next Peter Lynch, the next Anthony Bolt, and the next Warren Buffet. Anything else? Anyone who isn't trying to be that to some degree? Or another is boring to us and is not gonna be in the portfolio.
[00:09:52] Simon Evan-Cook: So, but obviously we're not gonna be successful. We are not gonna end up with 40 goats. Yeah. In the fund. We're gonna end up with a [00:10:00] handful of those. Hopefully we'll have more exposure to them. We'll end up with some who are very good, but maybe they don't make it to the very top grade. Still really great fund managers who outperform the market by a long way, wind up with some who are quite good, will end up with some who.
[00:10:14] Simon Evan-Cook: Turned out to be average and maybe we'll end up with one or two who turn out over the long term to be subpar. And obviously we're trying to maximize the best and minimize the worst. So we are looking for that persistent outperformance, people who have outperformed in the past.
[00:10:30] Simon Evan-Cook (2): Mm-hmm. But
[00:10:31] Simon Evan-Cook: we are trying to work out whether they can keep doing that.
[00:10:34] Simon Evan-Cook: How did they do it? What are they doing? Is that repeatable? Is it something that they just got lucky and the luck's about to run out? And actually they're not just gonna end up being average. They're going to end up being, oh, considerably worse than average. 'cause they just plumbed into something that worked for five years and when it reverses, yeah, you're gonna end up not just with market returns, but with considerably less than market returns.
[00:10:57] Simon Evan-Cook: So we are, yeah, looking at the [00:11:00] myriad of different ways in which you can be lucky or unlucky.
[00:11:04] Stacy Havener: Okay. So I would imagine if you're listening to this podcast, you're in the investment industry. All kinds of stats are swirling through everyone's head. Mine included, and I'm not even a stat geek, but it's like you wanna go to, okay, well you could look at persistence, you could look at batting average.
[00:11:20] Stacy Havener: You could look, you instantly go to all the quantitative ways that you could break down a portfolio manager's return.
[00:11:28] Simon Evan-Cook: Yeah.
[00:11:29] Stacy Havener: Yep. Okay. And I know there are floss to that. So I want you to kind of take this in the direction that sort of your thought process on this. Did you start quantitatively or did you start from a different place because you knew that the stats could be misleading and send you down a path that you didn't wanna go on?
[00:11:48] Simon Evan-Cook: That's a really good question. I think probably way back when I started statistically. Mm-hmm. Or with numbers. But I've very quickly realized that there are lots of gaps in numbers. There are lots of gaps on a [00:12:00] spreadsheet. There are things that you cannot put in a column. On a spreadsheet, there are things you cannot measure.
[00:12:05] Simon Evan-Cook: So I think if I look at the first few years of my actual fund management career, when I was actually running money, that was probably my belief that actually you could, you could sit down at a desk, you could look at some statistics about how funds are performed, and yeah, maybe it would help to speak to the fund manager a little bit.
[00:12:23] Simon Evan-Cook: Basically you don't really need that. I went 180 degrees backwards on that. If I could only have one of the two things, stats or face-to-face meetings with fund managers, I'll take the face-to-face meetings with the fund managers every time. Now, don't get me wrong, we'll still look at track record. We'll still 'cause all of that is super, super useful.
[00:12:42] Simon Evan-Cook: But I guess my turning point was meeting genuine great fund managers and I. Things I've written in podcasts I've been on before, but there was a manager called Angus Tak, used to run emerging market Asian money out of Edinburgh. A genuine goat, you know, retired with a goat [00:13:00] worthy track record as well.
[00:13:01] Simon Evan-Cook: Wasn't one of those fund managers where it all fell apart at the end.
[00:13:04] Simon Evan-Cook (2): Mm-hmm.
[00:13:05] Simon Evan-Cook: Um, and that's when I really got thinking about how he does it. And was there just one thing he was doing? Like could you just look at his track record and go, oh, he is doing that? Mm-hmm. He said, basically you could have said, oh, he is a quality investor.
[00:13:17] Simon Evan-Cook (2): Yeah.
[00:13:18] Simon Evan-Cook: But when you met him, you realized he was doing a hundred little things that maybe he didn't even realize he was doing. That added up to what turned out to be an exceptional track record. Now, some of those were investment things for sure. You know how he analyzed a company, what he'd realized about.
[00:13:35] Simon Evan-Cook: Different types of companies in Asia and the different risks you face investing as it was back then in the eighties and nineties and, and naughties in in emerging market companies. But some of the other things as well about how he treated his teammates, who he hired trust. I'd say if there was a word that you could apply to his process that doesn't ever figure on a spreadsheet, it's trust.
[00:13:58] Simon Evan-Cook: And basically if he [00:14:00] really wanted to get down to what he was doing is that he was spending a lot of time analyzing companies. And then he was working out within this very high risk world of emerging markets, which owners of businesses can I trust? Wow. With my money, there was more to it. Yeah. There was timing, there was valuation, all this type of thing.
[00:14:18] Simon Evan-Cook: But ultimately that was at the heart of what he was doing, and that's what he was looking for in companies. But actually that's how he hired his team as well, and that's his team. He got genuine. Teamwork happening within what he was doing because he trusted his junior members of his team and his junior member of, of his team trusted him, which meant it was, I guess, in modern parlance a safe space.
[00:14:40] Simon Evan-Cook (2): Yeah.
[00:14:41] Simon Evan-Cook: For them to disagree with him, for them to come up with ideas. He may not accept the ideas, but he would never have ridiculed you for suggesting.
[00:14:51] Simon Evan-Cook: What might look to a scientist as luck? How on earth did this guy do it? I don't understand it. Let's get rid of him. He's an anomaly, but it's the anomalies [00:15:00] that I'm after.
[00:15:02] Stacy Havener: I love that comment. So then I'm gonna play devil's advocate for a second. I agree with you, especially on the qualitative bit, and actually studies show that allocators in general value qualitative due diligence.
[00:15:17] Stacy Havener: At the same level, if not more, than they value quantitative due diligence.
[00:15:23] Yes.
[00:15:24] Stacy Havener: I think the issue is that fund managers don't believe that to be true.
[00:15:28] Simon Evan-Cook: Yep. I can see that. I can see that.
[00:15:31] Stacy Havener: So they don't actually let allocators into the qualitative. As much because they don't think that that's important to the allocator.
[00:15:40] Stacy Havener: So that's a really interesting nuance that I think is creating a disconnect.
[00:15:44] Simon Evan-Cook: Yeah, I'm with you on that. Yeah.
[00:15:45] Stacy Havener: Yeah. So, but if I devil's advocate this for a second, so let's say you identify that that manager and the trust bit and all of the qualitative description of the picture you painted, but [00:16:00] how is that repeatable?
[00:16:01] Stacy Havener: Well, let me ask it differently. Is it repeatable?
[00:16:04] Simon Evan-Cook: Yes. Well that's again where the, the luck comes in. Yeah. So there are, I mean there are certain basic things you can look at, like the type of thing they're doing. One of my guess more controversial beliefs, controversial within the world of investing anyway.
[00:16:18] Simon Evan-Cook: Yeah. Is, uh, that you can do bottom up stock selection and you can do that well.
[00:16:25] Simon Evan-Cook (2): And
[00:16:25] Simon Evan-Cook: you look at all the greats, you know I've mentioned the names before, but basically they were some form of bottom up stock picker. I personally have the belief that the opposite of that, the top down allocator, I don't think you can do that consistently Well.
[00:16:41] Simon Evan-Cook: I think people have done it well for a little while, maybe 'cause they've picked up a certain trend or a thing. They happen to be early onto something that. Rules the roost for 10 years, but I don't think you can do it on a repeatable basis. So I think that's a really good example of what we do. And we do look at fund managers and if that fund manager [00:17:00] says they're a bottom up stock picker, but they talk too much about the macro and about how they're swinging the fund around this year, we're gonna be heavily into oil because we think there's gonna be, you know, a glut or a a change, or there's gonna be a war in the gulf, whatever it might be.
[00:17:13] Simon Evan-Cook: Politics, economics come into it. We're so much into that. Ah, we like. Fund managers, they look at companies, try to work out everything around that company. It's quality, it's management, ultimately it's valuation, and then just structure their portfolio around picking, I don't know, 30, 40, 50 different versions of that that are different in important ways.
[00:17:35] Simon Evan-Cook: But same in a similar way, if that makes sense.
[00:17:38] Stacy Havener: That does make sense. So I want you, like if you thinking about this conversation around the skill bit, like what else? Did you look at or are you looking at, because this is a, I mean this could be like a, a career long journey that we're on here, on the look and skill bit.
[00:17:57] Stacy Havener: Yeah. Okay. So we've identified qualitative [00:18:00] as if you had to have one qualitative over quantitative. What else is kind of a big element to this assessment of skill?
[00:18:09] Simon Evan-Cook: So what we make sure of, repeatability are factors. So I remember one US fund manager that I bought way back early in my career, so we're looking at maybe 2008, nine, 10, and he had an amazing track record.
[00:18:29] Simon Evan-Cook: And so if you were just looking at the fund, it looked great. But then with hindsight, I know this now with hindsight, when you looked at the portfolio, you could tell that basically that portfolio was a thematic bet on China.
[00:18:43] Ah,
[00:18:43] Simon Evan-Cook: he never said so much when he was marketing it. Maybe it had come out a little bit in the conversation and maybe at that stage I wasn't sufficiently experienced to pick up on it.
[00:18:52] Simon Evan-Cook: But what that fund, despite looking diversified and despite being a US Equity fund, was, was a thematic play [00:19:00] on China. And obviously when that China trade then turned mm-hmm. That whole fund then turned with it. I'm not even sure if the fund manager himself necessarily knew. No. Was that I
[00:19:11] Stacy Havener: had that exact thought.
[00:19:12] Simon Evan-Cook: Yeah. I don't think that he particularly, yeah. Did. And so he couldn't work out what was going wrong when it changed.
[00:19:20] Simon Evan-Cook (2): Yeah.
[00:19:20] Simon Evan-Cook: Either. So these are the little factors that are in there as well. Yeah. I, I guess you look at other things. That's one thing we're particularly interested in is, has somebody been doing something for 10 years that it's worked, but actually is gonna go spectacularly wrong in year 11 and another US investor.
[00:19:37] Simon Evan-Cook: She was part my formative years. Bill Miller, the famous one, who he famously beat the s and p 16 years running, but then not equally famously blew up in such a gigantically spectacular way in the financial crisis, was exactly that type of investor. So it's looking at what are they doing? Is this something that is repeatable or is there [00:20:00] a one in 20 year event that can come along and Absolutely, yeah, sideswipe this.
[00:20:04] Simon Evan-Cook: But then also you're looking for changes in how the fund manager behaves the size of the fund. So once you found the fund manager, I was talking to a potential buyer of the fund yesterday, and they're like, we're looking at your portfolio. It just sounds like you could just go and sit on the beach. And we're like, I suppose we could, but actually what most of what we do now is maintenance.
[00:20:26] Simon Evan-Cook: And what I mean by maintenance is just making sure that those fund managers are capable of delivering on what we thought they could deliver and. We're relatively early on in a lot of the journeys with these fund managers. So I think we've got a lot of runtime, but there does come a point when they begin to degrade
[00:20:42] Simon Evan-Cook (2): Yeah.
[00:20:43] Simon Evan-Cook: And fall apart the edges. Like I guess we all do as we get older. Yeah. In some way or another. Uh, I'm saying this, you can tell I'm just staring down the barrel of my 50th birthday. So, um, yeah. I'm starting to, you're starting to think about how things fall apart. But yeah, as you get older, maybe you've scratched the [00:21:00] itch of whatever it was when you were, yeah.
[00:21:02] Simon Evan-Cook: 32, and you got your first shot at being a portfolio manager. You really wanted to prove yourself. Maybe once you've proved yourself, then you haven't got that hunger anymore. Maybe it was a money thing and maybe now you've got enough money. Yeah. Or distractions. You're at a life stage where it doesn't work for you possibly.
[00:21:20] Simon Evan-Cook: I mean, we'll get a little bit more conservative as we get older. So possibly there's an element there of, there was a point in your life when you were taking just the right amount of risk, like a Formula One driver, right? You, you knew exactly how far to push a corner without spinning off or without other people catching you up.
[00:21:38] Simon Evan-Cook: But as you maybe spin off of one or two corners, which is in management. Take the pedal off a little bit. All of these things are the things you have to be aware of as you sort of hold a fund through its lifespan.
[00:21:54] Stacy Havener: So true. The 50th birthday thing, I'm gonna try to push that out of my mind [00:22:00] too, 'cause that really, it's not, I show you a long way off.
[00:22:01] Simon Evan-Cook (2): It's, no,
[00:22:02] Stacy Havener: it's not. But it's, but it is interesting because I think what it, what it says to me is. Not that we lose our skill, but maybe we lose some edge. So I wanna go back to something you said, which is, well, you mentioned Bill Miller and I wanna talk about two things there. One is, is it easier to be skillful in a niche than it is to be skillful as a generalist or vice versa?
[00:22:32] Stacy Havener: And then how does scale play into that?
[00:22:36] Simon Evan-Cook: Yes. Good questions. Um, in a niche, we're in Europe now I have to give the European pro pronunciation. Oh, I'm sorry. No, that's alright. Yeah. I say tomato, I say tomato. So in, in a niche, I don't know the honest answer to that. Okay. So one of the best funds ever held was a, I mean, it's the most boring sounding fund ever, but it's been amazing.
[00:22:53] Simon Evan-Cook: It's really widely held by allocators. Over here is the Polar Global Insurance Fund, and it's [00:23:00] within their little, their niche. They are looking at companies. Within that world of non-life insurance, super boring. But they know that world extremely well. Yeah. They know when a company's taking too much risk and they get away from it.
[00:23:13] Simon Evan-Cook: Right. Or when it's not. And they've been amazing operators within that world. So arguably, yeah. If you are just within that small world, you get to know it a little bit better.
[00:23:22] Simon Evan-Cook (2): Yeah.
[00:23:22] Simon Evan-Cook: But I suppose at that point you then take the risk of your fund buyers see you as as niche as well. So they will then say, well, I don't need a insurance fund, or I don't need a tech fund, or I don't need a commodities fund anymore.
[00:23:35] Simon Evan-Cook: And you can end up on the wrong end of that. So that, I guess that's a disadvantage to it, but possibly that would be a lucky,
[00:23:40] Stacy Havener: perhaps.
[00:23:41] Simon Evan-Cook: Yeah. Again, if you've, yeah, if you've launched your fund just at the point, your commodities fund, just at the point, yeah,
[00:23:46] Stacy Havener: I had a client that did that, so yeah, I've lived that.
[00:23:48] Simon Evan-Cook: Yeah. And again, is that luck or is that, could you have seen that coming? Because if everybody's launching a commodity fund at the same time, then maybe actually that is the point when you've [00:24:00] had a, a part of the capital cycle, which is telling you that the best years of this are behind you. That's a whole other conversation.
[00:24:06] Simon Evan-Cook: That
[00:24:06] Stacy Havener: is a whole nother conversation because I think that tees up an idea, which is business skill. Versus investing skill, which we've kind of talked about at the beginning. Yes. Because you can be skillful. Let's use commodities. It's a great example 'cause it's so asymmetric from a macro and trend perspective.
[00:24:24] Stacy Havener: But you could be skillful at commodities and a couple things could go against you. Yes. Market could go against you. Yeah. And capital could go against you because everybody thinks they can time it. So if you launched the fund at a time when it would make the most sense to allocate capital. That is not when allocators actually will give you the money.
[00:24:45] Stacy Havener: This
[00:24:45] Simon Evan-Cook (2): is the big problem. Right? It's one of the big problems. Yeah. Yeah. So,
[00:24:47] Stacy Havener: so, but that doesn't make you any less skillful of an investor. Just you could say maybe it makes you less skillful from a business perspective, or it's unlucky that people aren't aligned with your skill. [00:25:00]But going back to your comment about the niche, I don't know.
[00:25:04] Stacy Havener: My point of view would be if you can go. Deep into something, insert whatever it's. Could be an advantage. Yeah, to elevate your skill because you're not trying to be everything. You're trying to be one specific thing, which I believe ties into how you're building a portfolio in general.
[00:25:27] Simon Evan-Cook: It does, yeah. It's, I guess it's how nichey it gets.
[00:25:30] Simon Evan-Cook: If you are, for example, and let's say your niche is Japanese, small cap value. Yeah. That for us is not too niche.
[00:25:37] Okay. 'cause
[00:25:38] Simon Evan-Cook: it's in, it's got enough companies there. You can move around within different sectors and industries. I guess where we struggle a little bit would be to have a. Very specific sector, like sector.
[00:25:47] Simon Evan-Cook: Sector, because I don't, I don't wanna be calling that sector. I kind of want you to be doing it. Yeah. But that's, that's just me. Other, other holders will like the fact that they can move in and out of different sectors using a specialist and it's, it's a really [00:26:00] interesting conversation for another time.
[00:26:02] Simon Evan-Cook: But I think the bit that you're getting onto about luck
[00:26:04] Stacy Havener: Yeah.
[00:26:05] Simon Evan-Cook: Is exactly that. Where. I've often wondered over the years, I mean the massive role that luck plays in the sense that you could be the most naturally talented, let's say US small cap value in investor. Yeah. Right. You've got all of the makings to be one of the goats.
[00:26:23] Simon Evan-Cook (2): Yeah.
[00:26:23] Simon Evan-Cook: But if you just were unlucky enough to come of a certain age when you would've had your, your chance, or you get your chance in, I don't know, let's say 2018, so the beginning of the rise of the fangs. Then within three years you are in McDonald's, frankly, flipping burgers because it just, the market will not give you a chance no, to prove that you are great at this thing.
[00:26:47] Simon Evan-Cook: So you cannot get away from luck as much as you would like to. As much as we would all love to say, let's just get luck out of the system as much as we possibly can. It is impossible to have a [00:27:00] luck free thing. I think a luck free business, a luck free fund, there has to be some, at the very least, absence of bad luck for you to succeed.
[00:27:11] Stacy Havener: Oh, absence of bad luck.
[00:27:14] Simon Evan-Cook: Yes.
[00:27:14] Stacy Havener: So then. Does that mean? Is that something you can control? Is this like a risk mitigation component to the skill versus luck?
[00:27:23] Simon Evan-Cook: Well, it's interesting, so in my head, yeah, because I'm thinking possibly I might write a book about luck.
[00:27:29] Simon Evan-Cook (2): Mm.
[00:27:29] Simon Evan-Cook: I might not. I'm always thinking about writing books and I've never, I've never managed to, to write one yet, which tells you something about my personality may be, but I'm thinking about all these different ways in which you.
[00:27:38] Simon Evan-Cook: Can be luck. Yeah. And it's just so as luck would have it, I've come up with 13 of them and I've just now gotta write down what they mean. But yeah, I think if you wanna hack
[00:27:48] Simon Evan-Cook (2): Yeah.
[00:27:48] Simon Evan-Cook: About luck to be more lucky. I would say the one thing to understand about luck is that there is not one thing to understand about luck.
[00:27:56] Simon Evan-Cook: Like if you are trying to become luckier and you are in [00:28:00] the same business. So people effectively are coming to you when you are trying to. In the business of selling their funds and saying, tell me how to do it. And I bet more often than not, they just want one thing. Oh yeah. They want someone to say, just tell me one thing I can do to sell the funds better.
[00:28:13] Simon Evan-Cook: And you're like, there's not one thing you can do. You have to do 10 different things. And I think. Same with fund management. Mm-hmm. If you try and work out what fund manager's doing, you say they're just doing this one thing, they're not,
[00:28:24] Simon Evan-Cook (2): no,
[00:28:25] Simon Evan-Cook: they're doing 5, 10, 20, 50 different things. Maybe they don't even know what they are.
[00:28:30] Simon Evan-Cook: And it's the same with being lucky in general. I think you need to do. Loads and loads and loads and loads of different things. And if you do all of these things, you bring your chances of success up from, let's say it's launching a new fund boutique. You bring your chances of success if you do none of these things from, let's say 5%.
[00:28:49] Simon Evan-Cook: So it's still possible if you just happen to catch the wave.
[00:28:53] Simon Evan-Cook (2): Mm,
[00:28:53] Simon Evan-Cook: 5% up to maybe 70%, you'll never get to a hundred percent. Mm-hmm. But you can take it [00:29:00] percent by percent. From 5% up towards 50 to 60. Mm-hmm. To 70 by just doing more and more of these sensible things and by doing or not doing more and more of these dumb things.
[00:29:13] Yes.
[00:29:14] Simon Evan-Cook: And that's your expertise is telling people don't do this stuff. Yeah. That's gonna decrease your chances of luck and do do this stuff. It's gonna increase your chances of luck. Yes. But what I would imagine you've never said to a fund manager who's signed up with you is we're gonna give you a hundred percent chance of success.
[00:29:32] Simon Evan-Cook: No. This is a stick on. Yeah. You will succeed if you do this because there's no such thing and there's no such process in fund management either. That will definitely work. 'cause we're in the real world and the real world throws spanners in the works. Right. Puts flies in the ointment. Oh my
[00:29:46] Stacy Havener: gosh. That's one of my new favorite phrases.
[00:29:48] Stacy Havener: I can't believe you said spanner in the works.
[00:29:50] Simon Evan-Cook (2): Yeah,
[00:29:51] Stacy Havener: absolutely. Yeah. It's one of my favorite British phrases right now. Okay. So agreed. And now in your research for the book, you [00:30:00] may or may not write the book you're writing not to write.
[00:30:02] Simon Evan-Cook (2): Yeah, yeah, yeah. We'll see.
[00:30:03] Stacy Havener: Yeah, we'll see. I hope you do. Is one of those sides of the coin.
[00:30:08] Stacy Havener: The things that could go against you versus the things that could go right. More important than the other. Because there is asymmetry in there too. Yeah. If the thing that goes against you is so big and so bad that it just takes you out.
[00:30:21] Simon Evan-Cook: Yeah. Yeah.
[00:30:22] Stacy Havener: But on the flip side, if you don't go for that thing, that could be great.
[00:30:26] Stacy Havener: Will you ever actually get great or will you just sort of be mediocre, average, nothing Burger? Yeah,
[00:30:32] Simon Evan-Cook: it is. And lemme just, so the first two Yeah. Of my 13. So the first one is. Don't do stupid things.
[00:30:40] Stacy Havener: So that's what I would say would be first, first, don't do stupid
[00:30:43] Simon Evan-Cook: things. Look, and this is, you might, if you wanna put it in scientific terms, you call this Bayesian reasoning.
[00:30:48] Simon Evan-Cook: You look at that, say you wanna start a restaurant, you look at the odds of that restaurant succeeding, you see that actually there's only one in 10 chance of it succeeding. And that is, that's gone from being quite an interesting and [00:31:00] different way to thinking about things to, I'd say the dominant way.
[00:31:02] Simon Evan-Cook: Okay. So if rule number one is don't do stupid things, okay, my rule number two is. Do stupid things,
[00:31:09] Simon Evan-Cook (2): right? Which
[00:31:09] Simon Evan-Cook: is if everybody is doing the sentiment things, that's right then, and they're using it data to analyze it, and they're using data from the past, which suggests let's, I mean, let's face it today as we record this in 2025, launching an active fund, investing in anything other than the Mag seven looks like a stupid thing to do, right?
[00:31:30] Simon Evan-Cook: I will bet you where we are in markets that actually it turns out to be quite a sensible thing to do because all the competition's just been wiped out. You are buying probably a load of cheap stuff and the odds are on your side, so actually you can do what looks like a stupid thing today. 'cause the data isn't there to tell you.
[00:31:48] Simon Evan-Cook: It's not a stupid thing, but it'll turn out to be an amazing thing. And I think this is where the great stuff comes from. Yes. I think, you know, you look at where we are in the world today. Apologies if I mentioned this on the last I was on podcast. No, it's okay
[00:31:58] Stacy Havener: to come back. Yeah.
[00:31:59] Simon Evan-Cook: But [00:32:00] movies, I mean, every movie today is just a rehash of an old movie or it's a part of a superhero franchise.
[00:32:08] Simon Evan-Cook: Yeah. And that's because the bean counters are saying, okay, you've got an idea for a movie, but prove to me that it'll work. Mm-hmm. A brand new idea. I can't prove that it works, but if someone comes up with the idea of the next matrix, but no one's done it, I don't think that movie gets made today because you're like, well, show me.
[00:32:27] Simon Evan-Cook: There's no proof.
[00:32:28] Stacy Havener: There's no quote proof.
[00:32:29] Simon Evan-Cook: Yeah. It would've been a stupid thing to do back in the late nineties to make that movie. And yet it's the, the mega smash that it is today. And now we're making remakes of that thing because yes, people aren't brave enough to throw a lot of money behind it. I'm glad you said
[00:32:42] Stacy Havener: that word, brave, because I wanted to go to that.
[00:32:44] Stacy Havener: You talked about this concept in the first pod, which everybody should listen to 'cause it's. It is brilliant. But you talked about the concept of Ari.
[00:32:53] Simon Evan-Cook (2): Yes. Yeah.
[00:32:54] Stacy Havener: And I read this fantastic book, which I can't remember if I got for you, but maybe I'll get it for [00:33:00] your 50th if I haven't. Thank you. Which is called The Courage to Be Disliked.
[00:33:03] Stacy Havener: Have you read that book?
[00:33:04] Simon Evan-Cook: Uh, yes I have. You did read that? Yeah. Yeah.
[00:33:07] Stacy Havener: So. Do those two things go? Uh, well, you're gonna have to explain KO if people ha didn't listen to the first podcast. So that's one. But two is, does skill and greatness require us to actually be. Brave enough to be disliked or wrong?
[00:33:24] Simon Evan-Cook: Yes.
[00:33:25] Simon Evan-Cook: Okay. So Ari, first of all, that's a Japanese word, and the closest we have in English is probably, you might call it an artisan. So it's someone who is obsessive about their thing.
[00:33:37] Simon Evan-Cook (2): Yeah.
[00:33:37] Simon Evan-Cook: And it doesn't define what that thing is. It might be making music, it might be making art, it might be making sushi. It could be anything.
[00:33:46] Simon Evan-Cook: Running a fund. Mm-hmm. Running a business. Whatever your thing is, you are obsessive about it. You are obsessed with improving the quality of that thing. So you can probably imagine in your life a product that you love. You like a, [00:34:00] there's a certain chocolate maker, or there's a shoemaker and you just love their stuff.
[00:34:05] Simon Evan-Cook: I bet. That they're obsessing about quality and they are obsessing about, and there will have been people who said, yeah, forget about that. You could make it cheaper, you could make it faster, you could make it right quicker. And they're like, Nope. Yeah, because it ruins the quality of what I do. I will not hear of.
[00:34:21] Simon Evan-Cook: Yeah, and I'm sticking to what is gonna make this the best version of whatever it is that you're doing, so that when you meet someone like that, Steve Jobs is a very good example of someone who was, you might call one of the Ari, who's just obsessive about the quality of of their thing, and you have to be.
[00:34:38] Simon Evan-Cook: Like Steve Jobs be prepared to be disliked if you're gonna do that, because you are probably operating in a niche of your own making. Maybe you are just like a lot of the greatest fund managers. You're not just trying to invest in everything and trying to beat the market every three months. You're like, no, this is the bit I do.
[00:34:55] Simon Evan-Cook: I am looking for the finest companies, or I'm looking for the cheapest [00:35:00]companies, or whatever it might be. That is your thing. And at some point the market, and therefore a lot of fun buyers. They're not gonna like that. Mm-hmm. They're gonna hate you. And the pressure at that point is immense.
[00:35:12] Simon Evan-Cook (2): Yeah.
[00:35:12] Simon Evan-Cook: To fold and to become the thing that the market wants you to become.
[00:35:16] Simon Evan-Cook: Mm-hmm. So, yeah, I think you are right. You have to be happy and willing that the thing that you love doing at some point is gonna be very, very uncomfortable.
[00:35:27] Stacy Havener: Yeah. And that's unlucky.
[00:35:30] Simon Evan-Cook: Yeah. Yeah, it is. When that unlucky period comes,
[00:35:36] Stacy Havener: yes
[00:35:36] Simon Evan-Cook: is that's complete luck that the timing of it is, well, maybe it's not complete luck, but there's a large slice of luck.
[00:35:42] Simon Evan-Cook: I mean, when I think of launching the Downing Fox funds, we had a double dose of bad luck, which has just been the bane of my life. One was. If we launched, it takes a day to become invested in the fund of funds. We spent the first day in cash, so from midday one day to midday the [00:36:00] next because you have to wait before you can buy the underlying funds, and that day happened to be a.
[00:36:05] Simon Evan-Cook: Announcement from the Bank of England, that market to rally by 2%. We were in care. We gave everyone a head start, but also the timing of our launch, because we only invest in the most active fund managers, we launched, we finally got the funds up and running in June. And the white labeled money. We had a great year in 22 because we'd been, didn't have a lot of the mag seven and we didn't have any bonds, and we had cash instead.
[00:36:29] Simon Evan-Cook: So we looked great, but we didn't have any way of proving that in the fund range. So we finally got the launch in June 23. If you had asked me beforehand, Simon, what conditions do you not want to see to launch your fledgling funds into? I would've described exactly the conditions that we had where it was only the world's biggest companies that were just trashing everything else.
[00:36:51] Simon Evan-Cook: So we had to kind of hang in there for a bit. But the good news as we enter 25 is it feels like that world has finally turned a little bit. So [00:37:00] yeah, you catch me in optimistic mood now that maybe, hopefully we've seen off. This nasty period, but it could easily have gone worse. Or if it carries on, it could easily have been toast for us just because of the luck of time.
[00:37:13] Simon Evan-Cook: You just can't tell what you're gonna launch into. Yeah,
[00:37:16] Stacy Havener: it's true, and it reminds me of the. Anecdote you shared earlier about small cap value. Certainly if you've been a value investor over the last more than 10 years, that's been pretty painful.
[00:37:25] Simon Evan-Cook (2): Yeah. Yeah.
[00:37:27] Stacy Havener: Um, at some point there's probably a, another podcast conversation about at what point does unlucky just become like the new thing, right?
[00:37:35] Stacy Havener: And so I think you did see a lot of value managers just capitulate
[00:37:38] Simon Evan-Cook (2): Yeah. Yeah.
[00:37:39] Stacy Havener: And shut their doors or whatever. But that doesn't mean that they're not skilled at what they do.
[00:37:44] Exactly.
[00:37:44] Stacy Havener: And so how do you square that? I mean, if you're a fund manager, I mean, you, you shared your own experience. But if I'm a, let's use the value investing example and you're just getting like kicked in the teeth every day and allocators [00:38:00] are redeeming, do you stay the course and just trust that reversion is real and you know, there is no new thing and it's all gonna come back around.
[00:38:10] Stacy Havener: Or at what point do you just go? I don't know. I, I, I guess from a business perspective, I just can't keep doing this.
[00:38:16] Simon Evan-Cook: I think it's gotta be a personal decision. Yeah. I think it is a beating. It is extremely hard. The world is basically telling you you're a jackass every day and you've gotta take it on the chin.
[00:38:26] Simon Evan-Cook: And you've gotta have belief that what you're doing is worth it. And ultimately, the thing to remember, I think if you are in that journey as well, and you are absolutely certain that it is. Just bad luck. Yeah. What you do still will work. It's just that it's not working at the current time is that everybody else is in the same boat and one by one they are jumping out of that boat.
[00:38:47] Stacy Havener: Yes, that's right.
[00:38:48] Simon Evan-Cook: And if you are the last person left in that boat, you can stay. When it does turn, then every allocator in your market is suddenly gonna be looking for that thing of which you are now not one [00:39:00] of 20 point. You are one of one and coming back commodities thing earlier.
[00:39:04] Simon Evan-Cook (2): Mm-hmm.
[00:39:04] Simon Evan-Cook: And I think now if you look at sort of passive based.
[00:39:08] Simon Evan-Cook: Products or things that are very heavily in one way or another exposed to the magnificent seven. They are 10 a penny. They are everywhere. Um, so you are up against now potentially a shrinking market and lots of competition. Yeah. Whereas if the world has turned and it does start to favor value again, and there's some evidence that perhaps it is, you're in an expanding market and you are one of only a handful of funds, this is the capital cycle.
[00:39:32] Simon Evan-Cook: It happens across all industries. That, I suppose is the carrot or the light at the end of the tunnel that you keep thinking of that if I can get through this
[00:39:41] Simon Evan-Cook (2): Yes.
[00:39:41] Simon Evan-Cook: Then I'm in such an incredible position. So yeah. Ultimately, if it's causing you stress
[00:39:46] Simon Evan-Cook (2): Yeah.
[00:39:47] Simon Evan-Cook: In your home life and your family life, you think I can't handle it anymore.
[00:39:50] Simon Evan-Cook: That's the personal decision. Yeah. You've gotta make,
[00:39:53] Stacy Havener: I love the like just staying alive on the treadmill though. Like if we're on a treadmill and we're all running. I will [00:40:00] outlast you.
[00:40:00] Yeah.
[00:40:01] Stacy Havener: And that in and of itself, I don't know if that's skill, it's grit. It's, but it's probably something that if you are assessing a manager, you'd want to try to unpack it is can this person.
[00:40:15] Stacy Havener: Stand what they're about to go through. I'll tell you what, it's two things. Yeah. It's
[00:40:19] Simon Evan-Cook: so that's resilience. Yeah, absolutely. You've gotta assess the manager's resilience, but you've also gotta assess the position that they are in.
[00:40:26] Stacy Havener: Yes.
[00:40:26] Simon Evan-Cook: And it's the same goes for people's personal life. Like you can have all the resilience in the world, but if you have.
[00:40:31] Simon Evan-Cook: Just taken out a gigantic mortgage and you lose your job. You can be as resilient as you like. You can't afford it. Yeah. Someone's gonna call the money back in. Yeah. And therefore you're out of a job. So we don't just need to assess. Has the fund manager got the resilience for this? There are three people in this bed.
[00:40:47] Simon Evan-Cook: There's me, the fund manager, and then there's the ceo Yeah. Of the company that they're invested in. And that's a lot of the work you have to do there is to assess if they're working for a bigger company or even a a mid-size company. Does this company [00:41:00] have resilience itself to back fund managers? So true.
[00:41:03] Simon Evan-Cook: And not. Flake out at the worst possible point. 'cause then that forces me to flake out if they set the value manager. And being a growth fund manager, I'm a full seller at that point, and I do not want to be a full seller. So yeah, you've gotta look at the resilience of the fund manager, the position they're in, and then the resilience of the management of the firm.
[00:41:22] Simon Evan-Cook: And again, why I like boutiques is it's kind of easier to do that because if the fund manager has set up the boutique. You can see that the boutique themselves are financially stable, then you know they're not gonna capitulate, or you've got a much better feeling that they're not gonna capitulate. But then you also obviously have to make sure that they've got enough money still to run through this period.
[00:41:42] Simon Evan-Cook: So it's, it's not easy. But these are all, that's why that's, that's the job. That's the job. Yeah.
[00:41:47] Stacy Havener: It's an odds management game, isn't it? Completely. Yeah. Like you're just trying to,
[00:41:51] Simon Evan-Cook: as is sales
[00:41:52] Stacy Havener: set. Yeah. 100% is true. Yeah. We were talking about something over coffee before we came into the studio that I wanna come back [00:42:00] to, which is the idea, and we kind of started the pod on this, which is the idea that somehow you can quantitatively get to that root of skill.
[00:42:10] Yes.
[00:42:11] Stacy Havener: And you were giving an example of. If you try to do that, you can, and everybody does, and there is a component of of stats to this whole thing, but just how much you miss if you don't have a conversation with the person who's running the money to understand like the personal situation you just described.
[00:42:31] Stacy Havener: Right? Yeah. To, to manage risk, but also to understand like what they were going through at the time of anything that doesn't sort of make sense, where it would be easy to dismiss them quantitatively. Should we be pausing and trying to understand what's behind that? And if we don't, are we gonna miss out on one of these
[00:42:50] Simon Evan-Cook: folks?
[00:42:50] Simon Evan-Cook: You're, yeah, you absolutely are. I mean, it's where all the good stuff sits. It's why we as fund managers or Yeah, fund selectors who do meetings, have an advantage over those who just rely on [00:43:00] the statistics. We have just bought a fund, for example. I'm quite happy to plug them here. It's a fund called Nutshell Growth.
[00:43:06] Simon Evan-Cook: I think they're a fantastic growth fund manager. Their edge, if you like, is that they're very good at picking quality companies. But then they're very much quicker on their turnover and moving between them based, based on valuation. Interesting. Mm-hmm. Which is, yeah, it's a whole other conversation about whether that is more suited to the world we're in than the kind of buy and hold 10 year mm-hmm.
[00:43:23] Simon Evan-Cook: Approach. That's by the buyer. When you look at their track record, it looks very good recently. But the first sort of year or two doesn't look so good. But then when you speak to them, you find out that they had some seed money in there from a wealthy backer.
[00:43:38] And that
[00:43:38] Simon Evan-Cook: wealthy backer had some personal stuff going on through COVID where they needed to get some of the money.
[00:43:43] Simon Evan-Cook: So they didn't want the money to be invested. I might not be getting the story exactly right here, but it was something along those lines, which meant that they weren't able to invest the way that they wanted to invest. Yeah. For some part of that period. Now, if you are just sat in front of a screen and you just pulled off the track record, you go, well, they look good [00:44:00] recently, but they didn't look very good in that first two years, so forget that.
[00:44:02] Simon Evan-Cook: They've obviously just got lucky, but when you get the context,
[00:44:06] Simon Evan-Cook (2): yeah,
[00:44:06] Simon Evan-Cook: because you've sat down and spoken to them. You get it. Well, you can find out that they've admit, yeah, we made some mistakes in the first year we were trying this thing out and it didn't work. Yeah. And now it does. Or we had a person in the team who was disruptive and was causing problems and they're not here anymore.
[00:44:21] Simon Evan-Cook: Yeah. And the reason why it suddenly started to work is because suddenly the team is, is work. None of that stuff gets picked up in a scientific study. Yeah. Done by someone from. 10,000 kilometers away, who's just looking at the numbers because they don't get necessarily where the manager change. They don't get when somebody left, somebody joined when there was a change at the corporate ownership, which allowed them to.
[00:44:44] Simon Evan-Cook: Release, the risk breaks, whatever it might be. None of that stuff shows up. So all of these scientific things are all obsessed with averages and finding a kind of golden rule. The one thing again, which, yeah, when I wrote an entire series of blog posts, I called the blog, nevermind the [00:45:00] Silver Bullets. That was meant to be, forget about trying to find a silver bullet, right?
[00:45:04] Simon Evan-Cook: Forget trying to find one thing that you can do that will always work because no such thing exists. Anything that's worth doing is gonna take you to work out. 5, 7, 8, 10 different things and consistently do those things and even then it might take years for the good work to show itself. There's yeah, there's just no silver banana.
[00:45:25] Simon Evan-Cook: Yeah, there's no
[00:45:25] Stacy Havener: silver bullet. Yeah. There's always more to the story. I. There's always more to the story, and I think it's a great reminder that those of us willing to ask why and take the time to do that work on understanding the nuances and the layers, you know, we'll be rewarded.
[00:45:45] Simon Evan-Cook: Yeah, absolutely. Right.
[00:45:46] Stacy Havener: I have a couple last questions for you, but before we leave, luck and skill is. Is there any one thing you wanna leave to inspire us on this conversation?
[00:45:58] Simon Evan-Cook: I guess the one to. [00:46:00] It springs to mind in my work life, but also my domestic life as well is 'cause I've got kids. And part of the reason I'm thinking writing this book is I just wanna give them a shortcut to just become luckier at life.
[00:46:15] Simon Evan-Cook: But it's just to take more shots.
[00:46:17] Simon Evan-Cook (2): Mm. This
[00:46:17] Simon Evan-Cook: is a thing again, and it comes to that silver bullet thing, I think. And we were discussing, again over coffee beforehand about maybe the difference between British and Americans. So there's a very British thing where we kind of think. I shouldn't start my own business.
[00:46:31] Simon Evan-Cook: I'm not good enough to do it. I'm not. And then maybe you think you should do and then you put everything behind it and then you, you finally do it and you get something wrong. It's a very British mentality to go. I knew I shouldn't have done that. You know, my parents always told me I wasn't worth it, so I'll just go back and I'll work at the council and that's where I belong.
[00:46:49] Simon Evan-Cook: I think the difference between us and Americans is Americans will go, I got this wrong. Go again.
[00:46:54] Simon Evan-Cook (2): Yeah,
[00:46:55] Simon Evan-Cook: go again, go again, go again now. It's [00:47:00] interesting in fund management that you quite often don't get a chance to go again. One of the, the quirks of it is that if you happen to be given your fund too early, let's say in your career, and you haven't made enough mistakes yet, you can screw that up once and it's on your track record forever.
[00:47:13] Simon Evan-Cook: Yeah. So again, we're coming back to luck where that sits. So you, yeah. Before you get your shot at running a fund, before you get your chance at starting a business, just try and. Do as much stuff, take as many shots in a kind of sandbox if you like beforehand. So you get that experience. You make your mistakes because you, you will make mistakes and the experience is basically working out not to make those mistakes again.
[00:47:39] Simon Evan-Cook: So I was lucky enough before I started running actual money because I was trying to prove to my boss a point that I was running a paper portfolio. The piece of software I used showed a dot every time you made a change. Mm. And for the first nine months of me running that paper portfolio, it's dots all over the place.
[00:47:58] Simon Evan-Cook: I'm ripping things out, putting new things [00:48:00] in. Then gradually the dots get further and further apart and I end up with a thing that's working. But if I've been unlucky enough. To be lucky enough to be given the fund.
[00:48:09] Yeah.
[00:48:09] Simon Evan-Cook: At the start of that period, I either wouldn't have made the changes because I would've felt like I committed.
[00:48:13] Simon Evan-Cook: Yeah. I've said, I've bought this thing, sure. I'm gonna stick to it. Or I just wouldn't have made the mistakes and learned what I learned in the sandbox process. Yeah. So, yeah, it's take shots. I think that applies to your world as well of sales and marketing in terms of you need as many prospects out there as you can possibly get.
[00:48:29] Simon Evan-Cook: It's why LinkedIn's good because you are spreading yourself and you are giving yourself an audience of thousands, not just one or two. And I always, the sales guys. I'm most suspicious of are the ones who are always after the Moby Dick trade. Oh, yeah, yeah. I know. Spending all the time working on this one big trade.
[00:48:48] Simon Evan-Cook: No, I'm not gonna bring in lots of little millions and half a millions. I'm gonna bring in this 100 million whale.
[00:48:54] Simon Evan-Cook (2): Yeah.
[00:48:55] Simon Evan-Cook: And I've never, never seen it. I've seen one or two people who weren't trying to catch a whale. Catch [00:49:00] a whale. Yeah. But I've never seen the whale hunters bring it in. Well,
[00:49:03] Stacy Havener: it's just too binary of a trade, really.
[00:49:05] Stacy Havener: Like Yeah.
[00:49:06] Simon Evan-Cook: And competitive. Right. Everyone's going for the whale. It's,
[00:49:08] Stacy Havener: yes. And also, and you know, I think it's great advice to take the shots, and I also think that it's helpful, at least for me to remember. That we take a lot of shots, whether it's in our craft of investing or in sales, but you know, we only, it only needs to work one at a time.
[00:49:28] Yeah, yeah. Right.
[00:49:29] Stacy Havener: You don't need everyone to like you, you don't need every investment to go. Right. I mean, it's like if you are batting 50%, that's pretty freaking amazing.
[00:49:38] Simon Evan-Cook: It is that, yeah.
[00:49:39] Stacy Havener: Right. And so I think it takes the pressure off of us that like take the shots and if it doesn't work, and again, I'm American, so maybe this is in my DNA, but like it's okay because 50% of the time it's gonna be a miss or we're gonna be wrong.
[00:49:55] Stacy Havener: I might just get that
[00:49:56] Simon Evan-Cook: if fund management, they don't get it with sales and marketing. That's right. So much the light. No. You [00:50:00] said you'd bring in this client here with 10 million and it hasn't happened. You're like, well. Okay. Thought we could and it and it didn't. But there's another one over here who is interested and there's another five who are making good noises
[00:50:10] Stacy Havener: and timing.
[00:50:11] Stacy Havener: Is such a big part of that because going back to the start, we can't control when things happen.
[00:50:16] Simon Evan-Cook: No, no, no control whatsoever.
[00:50:19] Stacy Havener: I mean, we could talk about, this is an awesome conversation. This is No, I'd love this. A book that needs to be written by you. Yes. Right. Those are two. It's a book that needs to be written and you are the person to write it.
[00:50:30] Stacy Havener: So I hope you time is not, I hope you give us that birthday present in your 50th year. Um. Okay, so in the first podcast we had some questions. Prust inspired to let us get to know you a little better. I had to come up with new ones because this reunion tour, so we're gonna start though with, you're a reader.
[00:50:50] Stacy Havener: Is there a book? Is. That's has inspired you recently that you wanna share with us?
[00:50:54] Simon Evan-Cook: Yeah, well I'm just finishing actually, and it's, it's long overdue, but it's um, is it Robert [00:51:00] Cialdini Cini. Oh my gosh. Persuasion. People have years been saying, gotta read this book. And I'm like, yeah, yeah. Love it. Whatever you love.
[00:51:05] Simon Evan-Cook: Oh, I do love it. Yeah. Yeah, it's amazing. And you can see, because I've, I've enjoyed reading writers like Malcolm Gladwell for years as well. You can see now where he got his inspiration from was from him. It's, it was written in the eighties. That amazes me 'cause it. If even released that today, you'd be like, okay, yeah, I've heard of some of this stuff before, but it's great.
[00:51:25] Simon Evan-Cook (2): It's brilliant.
[00:51:25] Simon Evan-Cook: But you've heard it before because he wrote this stuff and he inspired a whole lot of other people to go and do the work. And it is just brilliant and it's entertaining. It's a fun read. Uh, but also it's profound in the sense of what it's telling you about how humans are persuaded to do things
[00:51:40] Stacy Havener: Yeah.
[00:51:40] Simon Evan-Cook: That they don't wanna do. Or maybe they did wanna do, but they didn't know wanted to do. That's right. It's amazing.
[00:51:44] Stacy Havener: It's a must read. I, I love that. Okay. This is a weird one, but I'm very excited to see. Okay. What word or phrase do you most overuse?
[00:51:57] Simon Evan-Cook: There's two answers to the first one is 'cause I've just started recording a [00:52:00] few videos of our own, a few amateur efforts, and I've realized I say right.
[00:52:05] Simon Evan-Cook: Too much and I, and it makes me sound like Basil 40. I'm like, right, let's, let's kick off. And it makes it sound like we're going on a root march or something. And that's not a way to lead into a, any kind of, I like it podcast. It, it's, it's a horrible quirk. But the more profoundly possibly the thing I say the most, and I don't think I say it too much because I, I like that I say it.
[00:52:27] Simon Evan-Cook: Yeah. And I said, I caught myself saying it earlier.
[00:52:30] Stacy Havener: Okay.
[00:52:30] Simon Evan-Cook: Is, we'll see.
[00:52:31] Stacy Havener: We'll see. We were talking about whether I'm gonna write a book. I'm like,
[00:52:34] Simon Evan-Cook: we'll see. Yeah, and I think why that is a great phrase to have. I read another book called, um, paraphrasing. I might get the title wrong, and I think it's called, I May Be Wrong.
[00:52:45] Simon Evan-Cook: Okay. But it was written by a, I think it's a Swedish guy who became a forest monk in Thailand. And the title I may be wrong, was one of his big teachings, which is to always just save when you believe that you are 100% correct [00:53:00] on something is just to catch yourself and go, I may be wrong.
[00:53:03] Ah,
[00:53:04] Simon Evan-Cook: and I say that all the time because.
[00:53:07] Simon Evan-Cook: If I believe that I'm right about something, I just like to say, well, we'll see, because that I might be wrong it, and if somebody else has just said something to. But I disagree. I won't necessarily get into a big fight with 'em. I'll just say
[00:53:23] Stacy Havener: we'll see. We'll see. So it works in both directions?
[00:53:25] Simon Evan-Cook: Yeah, absolutely.
[00:53:25] Simon Evan-Cook: Yeah. Brilliant.
[00:53:26] Stacy Havener: Okay. What was your first job? Not in the investment space. I mean, I'm talking like first job and a life lesson learned.
[00:53:34] Simon Evan-Cook: Lemme go with my second job here. That's fine. First job was stacking fruit in a supermarket I'm in. Second job was working in a bar in a pub. Town I grew up in, which was Wells in Kent, very old pub.
[00:53:50] Simon Evan-Cook: It was, it was a good job. I quite enjoyed it. Uh, it wasn't quite as much like cheers as I hoped it would be. I was hoping there'd be like witty, lovely locals and you'd just be having a constant laugh [00:54:00]in practice. It was old men coughing and talking to you about fishing, and it was, it was mundane. But I did learn a big lesson from that, and it's in.
[00:54:11] Simon Evan-Cook: My trilogy of things that I have learned from dishwashers. So this is the first thing I learned from dishwashers. So I'll take you back to the bar it was operating. It worked pretty well. Every now and again, the whole thing would collapse 'cause we didn't have enough glasses. And so as a barman in which there were about three or four, I realized that what was happening is we were all serving drinks.
[00:54:31] Simon Evan-Cook: And the drinks were just staying on the tables. The empty glasses not being picked up. So I. I'm gonna get the whole thing to work better. Instead of serving drinks, I'm just gonna go around every now and again. Pick up the glasses, put them through the dishwasher, bring them out again, and keep the whole thing running.
[00:54:47] Simon Evan-Cook (2): Yeah.
[00:54:47] Simon Evan-Cook: And that worked much better. The pub didn't collapse every now and again because we, all, the people had to wait for clean glasses and then some of them would've left because you, you couldn't serve them beer. And so it worked a lot better. But then the [00:55:00] owners of the pub basically bollocked me. They were like, Simon, we've looked at your Stats.
[00:55:03] Simon Evan-Cook: Stats again.
[00:55:05] Simon Evan-Cook (2): Oh,
[00:55:05] Simon Evan-Cook: and you are far less productive than all the other bar people 'cause they're looking at the amount of money that you have served. And I'm like, well, I tried to explain to 'em, look. Yeah. The reason I'm not doing that is because I'm letting the other guys serve. Well, I'm taking one for the team.
[00:55:18] Simon Evan-Cook: Yeah. I don't wanna go and collect glasses. Yeah, of
[00:55:19] Stacy Havener: course not. It's
[00:55:20] Simon Evan-Cook: more fun serving drinks, but nobody else is doing it. So I'm doing that bit, which means the whole thing,
[00:55:25] Simon Evan-Cook (2): yeah.
[00:55:25] Simon Evan-Cook: Works better. But they wouldn't buy it. And so I'm like, right, if you are gonna measure me by stats, then I'm gonna win by stats.
[00:55:32] Simon Evan-Cook: So I just hung around in the bar and as soon as anyone came in, I was the first to serve them. Yeah. You know, screw the empty glasses. Do whatever they want.
[00:55:40] Stacy Havener: Not not your circus. And so now the pubs
[00:55:41] Simon Evan-Cook: started to fall again. Yeah, fall apart again. Every now and then, because we didn't have any clean glasses, but my stats improved.
[00:55:48] Simon Evan-Cook: So the lesson there is always look at how people are incentivized. Yeah. And that's so appropriate for the fund management. Well, we always check how people are incentivized. They say they're a long term investor, but their bonus depends on what they do in the [00:56:00] next six months to a year. That's a mismatch.
[00:56:03] Simon Evan-Cook: Mm-hmm. You've gotta really think about that hard. So I learned that lesson early.
[00:56:07] Stacy Havener: That is a very good lesson to learn. And what is that? What you measure matters, right? Yeah. And that's that. Yeah, exactly. Okay, last question. Given your experience now, what's something you'd tell your younger self?
[00:56:20] Simon Evan-Cook: Well, it's, it's funny because it's the thing that you mentioned right at the start of.
[00:56:27] Simon Evan-Cook: Journey more so you mentioned about when we've raised assets and I'm thinking about the next bit.
[00:56:32] Simon Evan-Cook (2): Yeah.
[00:56:32] Simon Evan-Cook: I have got, when I do look back and I think, God, it was, you know, the days in premier when we were raising a lot of money and we were winning awards. Yeah, that was fun. But I was always thinking about the next thing and I was always a bit annoyed that this thing wasn't working as well as it could have been.
[00:56:45] Simon Evan-Cook: And it's the same today. So I haven't learned this lesson still at the grand old age of nearly 50. I'm still not enjoying the journey as much as I should be. But these, like doing stuff like this is fun. Yeah, I'm gonna look back on this very fondly [00:57:00] and I just need to make sure that I enjoy that journey all the way along.
[00:57:05] Simon Evan-Cook: Even the tough bits, you look back and you forget the bits that were hard and the people you met and the triumphs you had. All of it was great, but it didn't necessarily feel great at the time. So I'm, if I can work out how to do it, I'll let you know. Yes. But if I can just enjoy the great bits today and not sweat the stuff that is annoying me, then yeah, I'll be 20% happier.
[00:57:27] Stacy Havener: Yeah. But business, business advice and life advice.
[00:57:30] Simon Evan-Cook: Yes. Absolutely.
[00:57:31] Stacy Havener: Thank you so much for being here. Thank you for getting me into this amazing studio. It's lovely, isn't it? Yeah, it's very lovely modeled on my lounge. Yes. Well, and if people want to follow along, what's the best way for them to do that?
[00:57:43] Simon Evan-Cook: Uh, well check out the Downing Fox website.
[00:57:44] Simon Evan-Cook: Okay. That's where you'll find most of our stuff. I write a quarterly letter, which hopefully is readable and gives you food for thought. Likewise, I write on Medium, my old blog post, nevermind the silver bullets is up there as well. All of these things. Yeah. If you Google me, you'll [00:58:00] find various. Footprints I've left all over the internet.
[00:58:03] Stacy Havener: Awesome. Thank you, Simon.
[00:58:04] Simon Evan-Cook: Pleasure. Thank you.
[00:58:05] Stacy Havener: This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The information is not an offer, solicitation, or recommendation of any of the funds, services, or products, or to adopt any investment strategy.
[00:58:20] Stacy Havener: Investment values may fluctuate and past performance is not a guide to future performance. All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at their firm. Manager's appearance on the show does not constitute an endorsement by Stacey Haven or Haven or Capital Partners.
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