Being a sensitive human being is “a good thing in your personal life,” allows Ajay Kapur, who last month joined Salomon Smith Barney in Hong Kong from Morgan Stanley, where he ranked No. 1 in equity strategy in Institutional Investor’s 2002 Asia Research Team. “But nothing could be worse than being an emotional investor. So you become an android during office hours.”
The 37-year-old Kapur’s tongue is only partly wedged in his cheek. His investment approach requires that he render himself as dispassionate as humanly (or inhumanly) possible. His proprietary “risk-love” computer model unemotionally tracks how euphoric or terrified investors are by measuring fund flows, investor-sentiment surveys, volatility, bond spreads, margin data and knowledgeable insiders’ positions. It is vital, he contends, to “fight loss-making impulses from our brain.” To clear his own head, he listens to Britney Spears or Pink Floyd during his early morning workouts.
Kapur, who has degrees from India’s prestigious St. Stephen’s College, the Indian Institute of Management and Princeton, does rely on human judgment from time to time: “The best androidlike model would not pick up on things like politics.” He cautions, however, against the “excessive credibility” that most investors bestow on strategists, economists, analysts and central bankers. “Financial markets,” he says, “have been put on this planet to humiliate as many investors as possible.”
