Financial Thought Leader Charles Ellis has written sixteen books and has traveled the world giving his sage investment advice. How does he do it all? Find out in this EXTRA with Consuelo Mack. His Winning the Loser’s Game is an investment classic. Now he’s written a new investment primer with Princeton economist Burton Malkiel,The Elements of Investing.

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Lessons on Grand Strategy

Grand Strategy,1 whereby all aspects of a nation’s strength—military, economic, political, cultural, and organizational—are combined into an overall, long-term program to advance the nation’s major interests, has important lessons for all leaders
of investment management organizations. For long-term success, such leaders need a coherent, integrated combination of an inspiring purpose or mission and superior recruiting and training of investment managers and professional managers who will excel in information technology, trading, risk controls, efficient and effective support operations, business development, customer service, and both research and portfolio management.

Given the multiple dimensions on which investment organizations compete and seek to excel, the present and future leaders of the world’s many investment organizations would not be surprised to find that history’s masters of Grand Strategy—Clausewitz, Sun Tzu, and Mahan—all have important lessons in leadership to share with the leaders of contemporary investment management firms.

Carl von Clausewitz understood the frustrating importance of the multiple uncertainties in his field, just as investors understand the frustrating uncertainties in their field. As he wrote in his great book On War (whence I gathered all my Clausewitz quotes):2 “War is the realm of uncertainty; threequarters of the facts on which action in war is based are wrapped in a fog of greater or lesser uncertainty. . . . War is the realm of chance.” And every experienced investor would appreciate the importance he attached to that proposition even though not agreeing to leave out investing, as Clausewitz did when he declared that “no other field has such incessant and varied dealings with this intruder.”

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