Take Reporters Beyond the Numbers
Past performance is not indicative of future results.
This is one of the most common phrases in finance, and, somewhat ironically, are also the words that usually come right before and immediately after breathless charts and descriptions of a firm’s performance.
Writers that cover asset management, fund managers, hedge funds and mutual funds all oscillate between crowing the performance of individual managers and complaining about overall performance failing to meet benchmarks.
A record year is a credential for listening to them about the future. John Paulson and Nouriel Roubini made prescient calls about mortgage and financial crises in 2008, which led to thousands of headlines about record runs in the gold market, a crashing dollar and other things in the years that followed that never came to pass. We also see returns cited over and over in Icarian morality tales – the once high-flying manager laid low by a bust year or two.
It’s a tempting game for journalists to play, especially those reporters that are increasingly compensated for higher clicks and shares.
But there are five good reasons why executives and communicators should not give in:
- The good times never last
- Regulators hate bragging – and it’s easy to run afoul of the rules
- You appear shallow to smart investors
- It reduces the entire company into a single number
- It’s unseemly
Many managers intuitively understand this, or at least know that this is how they should act. Too often, however, this position gets thrown out the window at the first question from a reporter. I have seen this during countless interviews and phone calls. The reporter doesn’t get to even finish asking about last month’s numbers before the spokesperson starts getting defensive and spouting facts about market conditions and unfortunate timing.
It’s human nature to want to explain and justify decisions. But these also shift the conversation away from what makes the firm different, something that should remain true regardless of the market condition. I recommend these three ways for my clients to help turn the focus away from performance.
Explain your process. This may seem basic, but it is incredible how many portfolio managers can descend into generalizations when asked a simple question about investing. For some, there is a fear of giving away the secret sauce. For others, there is concern about just how to describe a process that has been in place for decades.
Whatever the cause, saying something like “we just are out there looking for alpha,” is about as useful as the post-game locker room interview where a quarterback explains a victory by saying “we really went out there and tried hard.” It may be true, but it’s also not good copy. It’s no wonder that reporters lead with numbers.
Before any interview create three to five specific points about what makes the process different. Look through investor presentations or ask a colleague to break it down.
Focus on decision points. Why did you sell when another firm bought into a company? What did you see at that Euro level that others did not? A large reason behind interviews is to get perspective and see into someone’s decision making process. Walk reporters through how an action was made step by step. Look closely at news stories and you will see that this vivid, descriptive text usually winds up towards the top of stories. Readers love this material, and it often can be more illuminating than the final direction taken.
Look to the markets. Reporters need something new. This is why they discus today’s issues rather than yesterday’s successes. The markets provide an endless source of ways to prove and disprove a theory. Journalists almost always want to ask about recent events, so come to interviews armed with two or three recent stories and how your investment strategy plays into – or perhaps challenges – these trends.
No smart editor will cut an interesting number out of a story. But if you do the work to offer additional details, it doesn’t have to be the whole story.comments powered by Disqus