I like digging deep. I look at the market, economy, politics, demographics, sociology.”
Brad Neuman was in middle school when his mother introduced him to commodities trading. By the time he was in high school, he was teaching classmates about the history of investment banking. “I knew that after college I was going to come back to Manhattan to do finance from about the age of 13,” he said. Brad’s current role, director of market strategy at Alger, lets him do what he enjoys the most: looking at big picture issues that will shape the future of the economy and the stock market. He spends his time reading nonfiction of all kinds–he admits he hasn’t read a novel in 25 years. Along the way he has become an optimist, convinced that technological progress will make life better, especially for growth investors.
What kind of commodities did your mother trade?
She traded pork bellies, cotton, and soybeans. She was a stay-at-home mom, but she enjoyed trading. She basically made bets that the commodity price would not rise or fall too much. She made a decent amount of money for a few years but then when we were on a family vacation in Paris there was some kind of drought and she lost it all.
But that didn’t discourage your interest in investing?
No. Actually my mother inspired me to go into finance. She taught me the basics. I became obsessed with the stock market and financial instruments. In high school we were allowed to teach a class on a subject of our choice. One of my classmates translated Faust into a language it had not been translated into before. My subject was investment history: how we periodically go from liking mergers and letting companies get bigger to wanting to break them up again.
Most people in investing focus on individual securities. You look across the whole landscape. What’s the appeal?
I like digging deep. I look at the market, economy, politics, demographics, sociology. I enjoy coming up with a theory that unifies a bunch of trends that can move the needle for society.
Alger is a place where people do bottom-up research on stocks. How do you fit in?
In a number of ways. Our clients want to know about the stock market and the economy so I try to produce content that sparks conversations. I also try to provide context to our clients regarding our strategies, explaining what is going on in the environment that is potentially influencing portfolios. Finally, I work internally with our portfolio managers, who want to discuss things like interest rates and risk.
It sounds as if you play a teaching role at the firm.
I like teaching. When I do presentations to investors, I do the equivalent of teaching a class. People have told me that I act like a professor. If I weren’t doing what I do, maybe I would be a teacher.
I am guessing you also do a great deal of reading.
You could know me as the person at the firm with a set of books on my desk. I read long form as well as short form. I read about investing, psychology, science, technology and philosophy. I am lucky because the firm lets me subscribe to academic journals like
The Journal of Portfolio Management.
Do you read anything that is not useful for work?
Nothing comes to mind. It’s all useful for what I do.
You write a lot about innovation and technological progress. Why is that so important?
I am a disciple of Ray Kurzweil. He is the head of engineering at Google and he is a futurist. His big idea is that most people believe in reversion to the mean so they expect growth to slow. He believes in the opposite: the acceleration of growth. Consider Moore’s Law, which shows that the number of computer chips on a transistor doubles every 24 months. The reality is you can find that in all areas of the economy. I think that concept is underappreciated by investors.
Connect the dots for us. What does this all mean for investing?
If innovation is really accelerating, it’s a headwind for value stocks because stocks that appear cheap may simply be the victims of change. The same force is a tailwind for growth stocks because those companies are the purveyors of change. Disruption is happening much faster than most people realize.
Has all this made you more optimistic?
This job has helped me become a lot more optimistic. The long arc of history says that things are getting better at an increasing rate, which means that the future will be very good in terms of output, technology, productivity, even leisure time.
Speaking of leisure time, what do you do in yours?
I am usually busy with my family – my wife and three children. I also play tennis every week. I ski. And I go boating. I was on a boat when I was three days old. My parents had an old boat. They used it like a houseboat. It never left the dock. My boat is only eight minutes from my house. Being on it helps my creativity and I like that it expands my mind.
