To Jim Caron, portfolio construction is a lot like rebuilding an old Harley-Davidson.
“I love the challenge," says Caron, who restores motorcycles in his spare time. “There's a formulaic way to do both, but eventually you realize there's some stuff that doesn't come from a book."
Caron, who is a portfolio manager and senior member of the Morgan Stanley Investment Management Global Fixed Income team, is an avid motorcycle rider and an engineer at heart. He recalls the time he went to a junkyard as a child, picked out a bike frame, paired it with a lawn mower engine, and got it running. Except he forgot to put brakes on it and crashed. Then he got right back up and tried again.
Caron's desire to build motorcycles traces back to undergraduate degrees in physics and aeronautics; his desire to build portfolios traces back to a summer internship with J.P. Morgan, where he fell in love with the financial markets.
No one in Caron's family worked in finance, but from a young age he was taken with the supply-demand dynamics that stemmed from the local radio's fish report in coastal New Bedford, Mass., where he grew up. Fishermen tuned in from their boats to see what demand was like on land. If it was high, they might stay out at sea longer to drive prices even higher before returning with their catch. “It always captured my imagination," says Caron. "I was intrigued by how the market worked."
He arrived at Morgan Stanley years later, having long admired the Firm's innovative thinkers like Barton Biggs and Stephen Roach; he felt the Firm valued bright ideas. Eventually, Caron gravitated toward research and analytics. "That was more aligned with what I was trying to do in my career," he recalls.
During the decade that Caron has been at Morgan Stanley, he has made his mark on analytics. Caron had a hand in creating Matrix, a unique web-based analytics program that relies on data to make informed, tailored investment decisions.
Caron, who earned an MBA from NYU, uses his own analytics and formulas to create portfolios. When he crafts them, the goal is to make them durable over time. That means revisiting them often to retool; what's working well today might not work three months from now.
"It's a challenge that will never go away because the markets are a bigger opponent than we are," Caron says.
Tackling the markets inspires camaraderie, debate and idea-sharing among Caron's circles at the Firm. For example, as part of the Asset Allocation Committee, Caron and the other members of the committee come together to debate investing strategies and portfolio ideas.
“We challenge each other because we want to make sure ideas that go into a portfolio are well vetted," says Caron, who focuses on macro strategies. “We'll all play devil's advocate. I think it makes us better as a team. I want to be challenged—I don't want people to agree with me."
Raising assets is a big part of Caron's job, and Caron enjoys sharing with clients his thinking on the strategies he's created. “I enjoy taking clients through our framework and how we arrive at our conclusions," he says. “I'm proud of the work we do—it never gets old."