An American investment guru said he would prefer to hire quick-witted drug dealers than Harvard graduates.

Courtney D. Smith said character and personality were more important than education for hedge fund and portfolio management.

"I would rather employ one of those guys, those drugs dealers you find on street corners because they respond quickly.

"If they see the Police coming they pack up their stuff and move fast. I would rather hire someone like that, than someone with a Harvard degree to be a hedge fund manager.'' Mr. Smith is a writer and columnist with a weekly column on CBSMarketWatch.com and has spoken at investment conferences throughout North America and Europe.

He is president and chief investment officer of Courtney Smith & Co., a company that has been providing investment management services for individuals and institutions since 1990.

Mr. Smith spoke at a lunchtime talk yesterday organised by the Bermuda chapter of the International Association of Financial Planners (IAFP).

Almost 60 locally based professionals in the field poured into the boardroom of the Chamber of Commerce for the speech. Admitting his ideas may be viewed as extreme, Mr. Smith said that the most important personality traits for hedge fund managers, were the ability to move quickly and the ability to admit failure.

"This is not a good job for the type of people who always have to be right.

"It is essential that hedge fund managers are able to admit failure quickly and get out, in order to minimise their losses. People with strong egos are not ideal to work in this area,'' he claimed.

"You are dealing with high leverage here and the ability to move quickly is critical.

"You always have to assume you are going to be wrong. If you are the kind of person who has to be right you won't get out when you should.

"It may be in the fullness of time that you were right but that sort of thinking is for long term investment types not hedge funds.'' Convinced that discipline was the most valuable asset for a portfolio manager to have, Mr. Smith said when hiring he didn't even look at where the applicant was educated.

"That doesn't matter to me at all,'' he said, "fund managers don't need to have any high degree of education or deep intellect.

" I know because I am one. I would hire a marine or someone who has been involved in competitive sport, someone who is well disciplined,'' he said.

Insight is another attribute Mr. Smith felt is important in a portfolio manager.

Highly critical of those in the business that place a lot of weight in what Wall Street analysts say, Mr. Smith noted that his office is quiet because he doesn't accept calls from them.

"They don't call me anymore,'' he said, " they've learned I don't want to talk to them and that I won't.

"I talk to my clients.'' he insisted, "they all have direct access to me in my office.

"They don't even go through a secretary. To me the client is king.'' And he pointed out that the analysts have no interest in his clients making money.

"That is simply not their job,'' he said.

And he held that they are notorious for being completely wrong with their advice.

"They are totally clueless about what to invest in.'' While noting that the system didn't support flexibility and style shifts in portfolio management, Mr. Smith held that this type of behaviour was what was actually needed for portfolio managers to sustain success.

Photo on page 32 WOULD YOU HIRE A DRUG DEALER? THIS MAN WOULD Outspoken: US investment guru Courtney Smith presented some controversial ideas during a speech. See Page 34.

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