PROFILE: Arno Lawrenz, Chief Investment Officer, Sasfin Wealth

How did you get involved in financial markets – is it something you always wanted to do?

In my (very much) younger days, all I wanted to do was play chess. One of the lessons I learnt from chess is that you can resign or at least propose a draw if you see unhopedfor outcomes. So, by the time I was in high school and my other dream of becoming a pilot seemed increasingly unlikely, I resigned myself to other interests. I had noticed my father poring over the financial pages in newspapers, and having only just become good enough to beat him at chess, I decided to try to beat him at stock-picking as well. That’s where my interest started, and by the time I started university, the bug had bitten to the extent that I realised my passion for investing would be a life-long interest and that my career could be built around that.

What was your first investment and do you still have it?

My very first investment on the stock market was a long since defunct stock that old-timers would recognise: Gefco (which in today’s ESG-focused world would never pass muster, as it was, horror of horrors, an asbestos company.) But at the time I observed a pattern that it traded at a price between 2c and 6c per share. So, I figured if I bought it at the bottom and sold it at the top of the range, I could enhance my ratherlimited pocket money budget. I have, of course, moved on from my teenage day-trading career and realised my success at the time was more luck than skill.

What have been your best – and worst – financial moments?

There are many moments in my career that I feel enormously proud of in terms of making the right decisions for clients invested in the funds I have managed – especially at times of crisis, such as the Emerging Markets Crisis in 1997- 98, or the Global Financial Crisis in 2008. But one of the moments I feel most proud of at a deeply personal level was a refusal to turn a blind eye and accede to an incident of unethical trading at the company I was working for, and, as this was at a relatively early stage of my career, I had to sacrifice my future prospects there and rather move on in life. That seared into my mind the importance of one’s value system in the investment management process. The worst moment was the realisation that I had sold the company I started to the wrong buyers, as there was a dissonance in the corporate culture and value system.

Has the COVID-19 pandemic changed the way we invest?

It almost certainly has, as people have realised that there is such a thing as a once-in-100-years event. It has made us so much more aware of the unforecastable Black Swan risk events that we may have thought impossible, but which have enormous impact on markets. So, risk perceptions (and appetite) have shifted. The perception is also growing that the pandemic has accelerated some of the nascent technological trends, so in some sense we have a heightened awareness of risk and yet a desire to also capitalise on market trends that seem increasingly likely to succeed.

What’s the best book on investing that you’ve ever read, and why would you recommend it to others?

The most influential book I’ve ever read in developing the right mindset for successful investing was Nassim Taleb’s Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. The essence of the book is that humans don’t really understand probability properly and assign too much or too little probability to events. We often acknowledge life and markets as not being linear, yet we spend too much time extrapolating the past. So, why read a book that makes you look a bit stupid? Simply put, it’s entertaining in that it covers life and not just markets, and it induces an important value into your decisionmaking framework – that of humility, which I believe is one of the most important tools in any investor’s toolkits.