Meet The Strategist: Kate Moore

by: Kate Moore
Summary

I look for opportunities in the equity market by analyzing the macro environment, equity fundamentals, valuations and sentiment.

The longer-term growth trajectory, the potential for monetary and fiscal stimulus, and the fundamentals are all supporting EMs.

The big challenge is to identify opportunities where there is discontinuous change, where sectors, markets and consumption patterns are being disrupted.

We recently chatted with BlackRock’s Chief Equity Strategist Kate Moore to learn more about her. This post features highlights from our discussion, including details about Kate’s four-bucket investment process approach and her love of science fiction.

It’s the second in an ongoing series of Q&As with BlackRock investment strategists. The first in the series featured BlackRock’s Chief Multi-Asset Strategist Isabelle Mateos y Lago.

You majored in political and social thought in college and hold an M.A. in political economy from the University of Chicago. How did you end up in asset management?

A: I sort of fell into it after grad school. After working in finance for a few years after college, I went back to graduate school to get a PhD with the goal of becoming an academic. I began to worry that a doctorate program would lead me to become overly specialized. I ended up pursuing think tank and non-governmental organization type opportunities as I was concluding my master’s degree.

Just before I was about to graduate, I got a call from the University of Chicago’s career services department asking me to interview with Morgan Stanley, as the firm was looking to hire someone with my background. I had done a lot of research on China, spoke Mandarin, understood policy and politics and had a macro and micro perspective. I didn’t want to go into finance and told career services I wasn’t interested. They asked me to do them a favor and go on the interview.

During the interview, I discovered many on the team had graduate degrees in subjects such as philosophy and history, and their approach was very different than the narrow view I had assumed went into an investment process. They asked me for my view on the renminbi and China’s exchange rate policy, and we had a great discussion as part of the interview process. I realized these were people who could make me smarter. Two weeks later, I accepted a job as part of Morgan Stanley’s Global Strategy team.

As BlackRock’s Chief Equity Strategist, you are responsible for developing views on global equity markets. What’s your approach?

A: I look for opportunities in the equity market by analyzing four fronts. The first involves understanding the macro environment, which includes having a view on growth, inflation and the direction of monetary and fiscal policy. The second focuses on equity fundamentals. I look at metrics including earnings per share growth, earnings revision ratios, sales growth, revenue growth, margin trends and leverage. The third involves analyzing valuations to determine what is priced in. And the fourth: gauging sentiment via flow and positing data. It’s not enough to get the first three buckets right. You also have to understand how everyone else is positioned. You may see an opportunity based on the first three buckets, but if that opportunity is already crowded, the upside might be limited.

Where do you see investing opportunities right now in the global equity market?

A: Emerging market (EM) equities. The longer-term growth trajectory, the potential for monetary and fiscal stimulus, and the fundamentals are all supporting EMs. And as we wrote in our 2019 Global investment outlook, we see the stocks offering improved compensation for risk.

What has been the biggest challenge during your career?

A: The biggest challenge is also the biggest opportunity. It’s the requirement to be flexible, open minded and constantly challenge your investment processes. Assumptions you hold aren’t necessarily always going to hold. It’s important not to be afraid to step away from a process or framework you were using in the past, and to be able to incorporate new information into your process. The big challenge is to identify opportunities where there is discontinuous change, where sectors, markets and consumption patterns are being disrupted. Being a global equity strategist feels like constantly solving a puzzle that is changing every day.

What is the toughest part of your job?

A: The toughest part of all jobs that cover global markets it that the world never stops. There aren’t enough hours in the day to take in all the information that is out there. I apply an 80-20 rule. I try to identify what is the 20% of information that is most critical for achieving 80% of the outcome.

What is your favorite part of your job?

A: I love that it’s impossible to get bored. My friends who work in other industries say they are quite envious of the level of enthusiasm and passion that I have for my job. It can be overwhelming to constantly try and take in new information and disrupt my process, but I find this to be one of the most exciting and interesting careers. Being a student of the market is something that I can pursue for the rest of my life. I also love the travel. There is nothing more valuable than being on the ground and able to talk to people running companies. That gives you a completely different perspective than just looking at the data, and it’s a huge part of my investment process.

How has it been being a woman in a traditionally male-dominated industry?

A: I’m not going to pretend that it has been an easy trip. My skin has had to be pretty thick. For many of the women that started in this industry some time ago, we have had to be smarter, faster and tougher in order to survive. Some things are changing, but women are still underrepresented as senior investors in the industry, and we have a long way to go. What has helped? I have found an amazing network of women and men in the business, and we support each other.

What are you interested in outside of work?

A: I really identify myself as an athlete. Skiing is a huge part of my life. I grew up a ski racer, and raced in high school and college. I like to joke I have two speeds: mountain or city. I’m either at work in the city, or I’m climbing, hiking, skiing, camping, fly fishing or golfing. When I’m not working, I like to be really active. Sometimes my best thinking and problem solving around markets comes when I’m out for a run. Vinyasa yoga is a big part of my life too. I find it a really good way to clear my head.

I’m also an avid reader. I obsessively read science fiction and fantasy. I took a graduate level sociology course in college where we analyzed the social, political and cultural context surrounding science fiction and fantasy books, trying to understand from a historical perspective why the authors were exploring a reality different from their own. That got me hooked. Basically, I’m either doing something athletic or nose deep in a science fiction book.

Investing involves risks, including possible loss of principal. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. Non-investment-grade debt securities (high-yield/junk bonds) may be subject to greater market fluctuations, risk of default or loss of income and principal than higher-rated securities. International investing involves special risks including, but not limited to currency fluctuations, illiquidity and volatility. These risks may be heightened for investments in emerging markets. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of March 2019 and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. ©2019 BlackRock, Inc. All rights reserved. BLACKROCK is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

This post originally appeared on the BlackRock Blog.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.