How We Can Be Better Analysts and Investors

By Jim Wiandt

I'm answering Matt Hougan's call for what we can do to make the flood of information at our fingertips actually make some sense.

Maybe Matt should get off-line more often. There's some real clarity and a refreshing, almost zen lack of noise in his thoughts about the barrage of information we all face. Sometimes I think we can lose track of that when we're so buried in these issues all the time.

To me, it's a little bit like the backlash against strip malls and suburban sprawl and the renewed popularity of urban centers and small towns with local shops. Quality of life. Peace of mind. I think it's something people crave not only in life, but also in the middle of the noisiest of noisy places - the investment information area. I mean, how much MAD MAD MONEY!!! can you take. (Yes, some offense, Jim Kramer.)

That's why a guy like John Bogle resonates so much with people. In the middle of the relentless sales pitches and intraday chatter, people are just looking for some sanity, some simple small-town common sense. And it is out there, but it seems like even as the array of investment products improves, it gets harder and harder to get our hands around it all.

So in direct answer to Matt's question (and I'm talking about all of you in the financial media, ETF bloggers, Diehards, and all the index and fund product and marketing guys), what are the things I think we can do to make the fire hose of information make more sense to ourselves and our readers and clients? Here are a few things for starters.

1. Tell the unvarnished truth. This seems like a pretty simple one. But there are so many people with interests in the business and there is so much pressure on financial media, analysts, etc., to paint things a certain way, that we end up with rose-colored glasses covered in fog. And it really doesn't do anyone any good.

2. Get it before you talk about it. My pet peeve on bad reporting is the awful habit of talking about something you don't really understand. How can you talk about anything with clarity unless you really have your hands around it? You see an ugly blurring where there's a lack of knowledge all of the time. If you can't get it, talk about something else, please. But even better, read that prospectus and talk to that manager until you're absolutely sure what you're talking about and THEN write about it, clearly and with some passion and insight.

3. Stack up the comparing products side by side and look at the issues that matter. Often this is about laying things out clearly so that people who have one goal or another can make sure they pick the fund that best fits those goals. And sometimes it just amounts to, this product in that asset class is simply better than those products in the same asset class. The sort of profile, press release coverage doesn't do anyone much good. People are looking for something actionable, not an E profile.

4. Don't forget the little guy. We have sometimes been as guilty of this as anyone. By "little guy," I also mean "novice investor." Remember that the vast majority of people have no idea what we're talking about. So let's make sure these guys are covered with the clearest basic explanations possible of what we're covering. We're working on this one & WILL have the end-all index and ETF education center available soon. And on the issuer side, there's a HUGE completely untapped market among the bottom 75% in net worth. Put some effort in there. Goodness knows we need that as a society. The majority of the population is largely neglected by the quality side of the financial services industry and preyed on by those serving out the worst products. Shouldn't it be the opposite? Look alive! Make a little effort there in pricing and marketing for beginners and smaller investors.

5. Organize the features of your analysis in the order that they matter and make the data about the things that matter. It's easy to just throw out a million data points for thousands of products. But what really matters for an ETF, for a mutual fund? Take that and put it out front.

6. Don't be afraid to have an opinion - just don't do it in a gratuitous way. Another pet peeve of mine about the financial services industry: people are often just pursuing the controversial story that will grab people's attention, regardless of whether it's really important or not. Come to think of it, the rest of the world operates in the same sort of random, negatively skewed way. A strong opinion is GREAT if it's about something that matters. Get out there and rant and rave if you're feeling righteous, but make real sure that it matters, and always keep what it should all be about, investor interest (and not voyeuristic indulgence) out in front.

7. Do some actual reporting! 95% of the big stories in the financial services business that hit the national papers and magazines are plants from competition. Do some work on your own. There are dirty little secrets all over the place that you'll NEVER get from the inside. Get out there. Know what you're doing. Tell the truth. Work to make things better for investors.

There you go, Matt - I'd say that could make up some core tenets of a mantra to making the barrage of information more clear and more useful.

Comments

[fran]

great points, especially towards "the little guy" in too many instances it is obvious the author's objective is to write for writing"s sake, not for user"s use.