When it comes to investing, some would say it's a skill that runs in the family. Dan Skelly, who leads Morgan Stanley Wealth Management's Equity Model Portfolio team, comes from a long line of talented stock-pickers.
“My grandmother had a real knack for stock-picking," says Skelly. “She listened to men talk around the dinner table and read the business section of the newspaper. She loved it." Her investments did so well that they helped pay for Skelly's education.
Skelly and his grandmother are proof that a successful investment strategy is not always backed by a business degree—and that curiosity and a hunger for information may matter more.
As an undergrad at Brown University (where today he is active with Morgan Stanley's recruiting efforts), Skelly researched investments for a club that helped manage the university's endowment, but his major—international relations—was decidedly liberal arts. Nevertheless, after graduating college in 2005, Skelly moved back home to New York and began a career in finance at Morgan Stanley, where he's worked since.
“Because I studied liberal arts, I have an intellectual outlook that's different from people who might have only studied finance," he says. “Most of my education was framed by debate and discussion across a variety of subjects, so I learned the value of critical thinking, challenging convention and how to formulate a solid argument early on. In addition, I have constantly tried to improve how I market ideas to clients. There's so much investment advice out there. I have learned how crucial it is to be concise with your views."
Above all, that approach is grounded in analysis. Skelly might spend a typical day studying companies under consideration for his team's U.S. Equity Model Portfolio, which took first place in the Barron's-Zacks 2014 rankings of top stock selections.
The U.S. Equity Model Portfolio, which leverages “top down” asset allocation and investment theme advice from the GIC as well as the model portfolio team’s “bottom-up” analysis, is one of many portfolio solutions offered by Morgan Stanley Wealth Management. Using the portfolios, Morgan Stanley financial advisors can better serve their clients by building customized solutions that help meet their clients' personal investing goals. The large amount of research that crosses Skelly's desk is part of what he likes about the job.
“Working at Morgan Stanley is like an intellectual candy store. I get to study all the different sectors of the equity market and learn from the Morgan Stanley analysts who cover them," he says.
Another day, he might present to clients or brainstorm with his team. On a good day, he's devised a new investment strategy that hasn't yet made it to the front page of the newspaper.
Investment ideas can come from anywhere. Skelly is a voracious reader, regularly devouring financial content, including pieces written by Morgan Stanley's industry analysts and strategists. History books are another area of interest; recently the 2016 presidential election got Skelly thinking about America's beginnings, so he picked up a copy of 1776 by David McCullough.
Skelly stays informed to boost his chances of landing on a really good idea. In 2011 at the height of the European Debt Crisis, Skelly and his team kept an ear to the ground, gathering input from all kinds of sources—politicians and think tanks among them—to publish a series of reports that broke through the then pervasive gloom and identified 10 to 15 promising secular growth themes for investors. For instance, his team determined that U.S. healthcare companies would benefit as China tackled a big pollution problem in Beijing, signaling a new focus on the health of the population.
When making investment decisions, Skelly and the team scout out well-managed companies with long-term growth prospects that have, for one reason or another, experienced a short-term hiccup and a dip in the stock price. “We try to hit singles and doubles—not home runs," Skelly said.
“We always try to think how our portfolios are positioned relative to consensus, and I want to be sure I've incorporated what the Firm is saying about the market and the economic cycle as a whole," he says. “But at the end of the day, I want to have a handful of out-of-consensus ideas that are counter to what people are thinking."
Recalling advice from former Morgan Stanley CEO John Mack, Skelly says he believes it's important to “think like an owner," especially when he's interacting with clients.
“That mentality really resonates with me," Skelly says. “Even though I work for a big, prestigious investment bank, I still treat my product like a small business and hold myself accountable for the decisions I make."