A recent book called Range: Why Generalists in a Specialized World by David Epstein re-opens an argument on whether it is better to be a specialist or a generalist. Is it good to just focus on one subject to the exclusion of anything else? Is it okay to be a person that knows about many things but can still have a good career? Like most things, there are good things about being a generalist or a specialist.
The career of Max Salk, a landscape photographer and an investment analyst in New York, backs the argument that a generalist can be successful in this world.
Who is this generalist called Max Salk? Salk is an undergraduate of the University of Illinois at Urbana-Champaign. He studied finance and history. His interest in financial markets started at college and it is where he eventually invested in stocks in his spare time.
Salk was not just interested in financial affairs in college. In the junior year of college, he went to study in Rotterdam, Netherlands. When he was walking around the harbor on a foggy morning with his camera, he took one of his first photos and fell in love with the art of photography. This photo is actually on his website at maxsalkphotography.com..
After graduating from college, he became part of PPM America, a Chicago investment management firm. He loved working at this firm. It quenched his financial thirst for making investing recommendations and researching financial and capital markets. He then Blackstone where he still works today. Even thought he is a Vice President at this company, he still continues to take photos of landscapes on his travels and they can be found on Instagram.
Max Salk is considered to be a good financial analyst as well as a good landscape photographer. Salk makes a good argument for a generalist who has still been successful in life.
The credit markets are an important part of the financial system. Lenders are usually more conservative than equity holders and expect to receive their money back with interest. As such, lenders are known to be more conservative because they know that they will not make a significant portion of money but will be able to have the right slow and steady returns over time from top notch companies if they invest correctly. Bondholders don’t gain from the upside of owning the company via equities like stock but they are able to minimize their risk and add a little more capital to their initial capital each day. Bondholders are fans of yield and continuous payments per year. They lend out their money and expect to receive a certain level of return for the risk that they are taking.
As such, it is important to watch what the credit markets do and what these participants within these markets do. A larger appetite for risk within these markets show that the economy is booming, much less appetite for risk show that these markets are contracting for some reason or other. It is important to pay attention to these markets to understand how equities might play out as well.
Max Salk Analyzes Credit to Understand Markets
Max Salk may look at stocks that track high yield corporate bond instruments such as iShares iBoxx $ High Yield Corporate Bond (HYG) and compare that with the iShares 7-10 Year Treasury Bond tracker (IEF). The higher the ratio, the better that it may be for the economy. This shows that investors and bondholders are interested in high yield corporate debt, and remember, high yield corporate debt usually means that individuals have to take on more risk.
If they have to take on more risk within these credit markets, they will usually expect these companies to have the ability to pay these bonds back. They expect these companies to pay these bonds back because they think that the economy is doing well and that these companies are in a position to capture the interest of consumers. As such, it follows that the better these bondholders think that the economy is doing the more risk for appetite, the higher the appetite for risk, the more that stocks should go up.
Max Salk may look at these types of ratios and others to understand how the credit markets are doing in the present and how they might do in the future.