Chuck Christensen was one of the wisest human beings I ever knew. He’d learned a lot in his “rags to riches” career and he shared it freely.
Chuck had started out working on the loading dock at a trucking company that became part of Consolidated Freightways. He’d climbed the corporate ladder to Executive Vice President. I met him after he retired, when he was the Chair of the Finance Committee at the graduate school where I was the Business Manager.
Chuck thought there were two kinds of people who bought stocks. There were investors, who selected stocks based on their intrinsic value. Like Warren Buffett, investors were followers of Benjamin Graham. They expected to hold their stocks for a long time.
Traders were different. They selected stocks based on their market value. Traders wanted their stock to rise quickly in value, so they could sell it and make a profit. It was all about transactions.
Chuck wanted us to be investors. He thought that trading was a game you couldn’t win in the end. There are investors and traders in the world of human capital, too.
Investors hire based on a person’s potential. They’re in it for the long term.
Traders hire to fill a slot. It’s almost like they rent people, mostly by the hour.
Investors in human capital are committed to helping people develop. They know that people, with their knowledge and relationships are the key to long term competitive advantage.
Traders see people as parts to be gotten for the lowest cost and let go when it’s time to cut costs. They don’t spend any more on training and development than they have to.
Investors spend more on training and development than traders. But, traders spend more on hiring and separation costs than investors.
In the Knowledge Economy, investors will increasingly have the edge. The more knowledge and relationships, which can’t be separated from people, are important, the more important investing in human capital will become.
Which are you? An investor? Or a trader?
One Trackback
[…] as leadership expert, Wally Bock, points out in a recent post there are traders and there are investors. Too many fund managers (especially hedge fund managers) are quarterly driven traders. They are […]