BOB ROBBINS, SENIOR VP, PORTFOLIO MANAGEMENT DIR., HEAD; THE ROBBINS Farley GROUP AT MSSB; MANCHESTER, N.H.
AUM: about $85 million
HOW TO BE A STANDOUT FA? “Go that extra step. Nowadays financial planning [is] almost a given. You need to focus on your experience, collaborate and understand the client very well.”
Portfolio manager Bob Robbins, a former engineer, is a business-cycle signal seeker. He’s on the lookout for economic indicators to help him pick stocks and to know when to buy and sell them.
As a new advisor nearly 20 years ago, the curious Robbins sought to understand what makes the market rise and fall.
“I went back and read the basic papers about Modern Portfolio Theory and found they were full of errors. Their original equations weren’t valid. They said that market movements were random. But it is not a random process — there’s causality, a reason,” says Robbins, senior vice president, portfolio management director and head of The Robbins Farley Group at Morgan Stanley Smith Barney in Manchester, N.H.
A reason, Robbins found, is that when a quality company has good earnings in good economic times, its predictions typically turn out to be right. But when the economy is in a down cycle, corporate projections usually are off, he says.
“So I decided the smart thing to do is invest in companies where earnings are increasing in good economic times and get out of the way in bad economic times,” Robbins explains.
Before becoming an FA in 1992, Robbins, 75, enjoyed a long, successful career as an entrepreneurial electrical engineer. Now as an advisor, his client niche is manufacturing engineering business owners, especially those undergoing a lifestyle transition. He and 28-year-old partner Colleen Farley (née Casey) have about $85 million in assets under management.
“Bob has a really inquisitive nature. He wants to know how things tick and how to improve them. He’s carried that over from his years in the science field and applies it to his practice,” says Michael Shearin, Robbins’ branch manager.
Key to his signal-and-harvesting investment process, which the certified portfolio manager says helps reduce risk, is to know when to “reap and when to sow. Every time there’s a real pop in the stock or market price, you take a little off the table — you reap it and change your asset allocation.”
He continues. “You’re not trading on a quick in-and-out basis. A business cycle of good economic conditions can last, say, seven years; then there’ll be, maybe, 18 months of bad economic conditions.”
Robbins’s methodology — which he implements with MSSB’s Portfolio Management Group Program — is most of all pegged to earnings. “I pick good-quality companies that are growing their earnings. And like any business owner,” he says, “when one division doesn’t do well and meet expectations, I fire [the stocks] and get another company. They have to meet the earnings’ predictions that they promised…. The reason a stock does poorly is that in bad economic conditions, business owners can’t project what their income will be.”