Tag Archive for: research

Describing an interview-based assignment to writers

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Recently a company contacted me to write an interview-based post for its blog. I’ve often done this for blog posts that show off the expertise of the company’s staff. However, what was unusual about this request was that I’d need to interview experts outside the company for the post. The need to find external experts makes an interview-based assignment more time-consuming and less attractive to writers. It’s more like writing a magazine article than a typical content marketing piece.

I learned later that the company’s marketing director had omitted an important piece of information when it described its interview-based assignment. It could have reduced my qualms about accepting an assignment requiring interviews of external experts. I describe it below.

The challenges of using external experts

Using external experts is challenging for two reasons.

First, it takes time to find and schedule them. If the writer doesn’t know relevant experts, a good deal of networking may be required to find them. That’s especially true if there’s no trade association or other group where such experts gather.

Scheduling can be more challenging than when working with a company’s internal experts. Internal experts are motivated to participate for the good of their employer (though they still can be challenging to schedule, but that’s another story). External experts don’t feel a pressing need for your company to succeed at its marketing.

Second, the experts may not wish to use their expertise on behalf of the company that’s your client. It’s generally less prestigious to appear on a corporate blog or in a corporate magazine than in a publication that’s perceived as independent. Also, the expert may worry about appearing to endorse the products or services offered by your client. On the other hand, some corporate publications don’t quote experts by name. That’s even worse because the expert gets no visibility in exchange for sharing insights.

The missing information

After I turned down the interview-based assignment, I learned that the marketing director had unwittingly withheld a piece of information that would have made it more attractive. He told me that he planned to find experts for the writer. That was potentially a big timesaver for the writer.

Of course, just naming experts isn’t enough. For the reasons mentioned above, experts may not want to help a corporate publication. However, if you’re a marketer assigning articles, and you can promise cooperative sources to your outside writers, that’s a big plus. Don’t hide that; feature it!

Of course, there’s other information that writers will seek, including:

  • Your topic, defined as specifically as possible
  • Pay
  • Word count
  • Place of publication
  • Target audience and why they’ll care about your topic
  • Your timeline and editing process

When you provide complete information up front, you’ll get a more realistic price from your writer. Also, the entire writing and editing process will go more smoothly.

Japanese crisis good for European economies, strategists say

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Will the Japanese crisis help or hurt European economies?

The answer hinges on how it affects nominal growth in European countries’ gross domestic product, said David Bowers, managing director of global strategy for Absolute Strategy Research (ASR), a London-based macroeconomic research firm. He spoke during the Q&A session following “Europe: ‘This could be Heaven or this could be Hell,’ ” a March 17 presentation to the Boston Security Analysts Society.

Higher capital expenditures

In Europe, as in the U.S., companies have been hoarding cash. It’s likely these firms will open their capital expenditure spigots wider, according to Bowers. Why? Because the crisis presents an opportunity to gain market share at Japanese companies’ expense, Bowers said.

Ian Harnett, ASR’s managing director for European strategy, said this opening should appeal to Germany, which competes directly with Japan in areas such as heavy machinery.

Another plus for European economies is that Japan’s plight makes central banks less likely to raise interest rates for fear of sparking a return to recession.

Financial writing tip: Don’t ignore the elephant in the room

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Don’t write about something controversial as if it is an accepted fact.

“Research has shown that the most active managers can beat their benchmarks handily,” wrote Eleanor Laise in “The Return of The Market-Beating Fund Manager” in The Wall Street Journal.

Oh, really? Many financial advisors and investment professionals disagree.

Laise should have acknowledged that her statement was controversial. Her failure to do so undercuts the credibility of her article. Keep this in mind the next time you say something that isn’t widely accepted.

Laise could have rephrased her sentence along the following lines: “New research suggests that most active managers can beat their benchmarks handily.”

Research on active managers’ outperformance

Laise’s article alerted me to an interesting research paper, “Active Share and Mutual Fund Performance,” by Antti Petajisto of NYU University’s business school.

Here’s a provocative quote from Petajisto’s abstract:

I find that over my sample period until the end of 2009, the most active stock pickers have outperformed their benchmark indices even after fees and transaction costs. In contrast, closet indexers or funds focusing on factor bets have lost to their benchmarks after fees. The same long-term performance patterns held up over the 2008-2009 financial crisis.

My LinkedIn contacts responded with scepticism when I quoted Laise’s sentence. What do YOU think about the performance record of actively managed funds?


Reader question: Writing resources for equity research analysts?

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“What are some good resources to improve my investment writing skills with an emphasis on equity research writing?” This question recently arrived in my email in-box.

Here are my suggestions:

I offer customized writing workshops for corporate clients in investment and wealth management. I’m not a research analyst. However, I’m good at analyzing client writing samples and then using them as the basis for training.

Equity analysts, can you suggest any additional resources?

I’m always interested in readers’ ideas.

 

July 24, 2013 update: Warren Miller, CFA, CPA of Beckmill Research, LLC has some more suggestions for you, starting with “Read what good analysts write, and then copy it by typing it into a Word document.” As you re-type that research, study what makes the reports good. That means looking at how the analyst tells the company’s story and at details such as sentence length, transitions, and measures of reading difficulty, such as the Fog Index. As Miller says, “Good writers read great writers.”

Disclosure: If you click on the Amazon link in this post and then buy something, I will receive a small commission. I only link to books in which I find some value for my blog’s readers. – See more at: http://investmentwriting.com/blog/?s=disclosure#sthash.NlvDZLSB.dpuf

May 30, June 3, and June 27, 2014: I updated this with additional links.

Disclosure: If you click on the Amazon link in this post and then buy something, I will receive a small commission. I only link to books in which I find some value for my blog’s readers.

Disclosure: If you click on the Amazon link in this post and then buy something, I will receive a small commission. I only link to books in which I find some value for my blog’s readers. – See more at: http://investmentwriting.com/blog/?s=disclosure#sthash.NlvDZLSB.dpuf

 

 

 

Guest post: “Investment analysts and social media”

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Pat Allen of RockTheBoatMarketing is one of my “go to” people when I’m looking for information on how asset managers use social media. If you’re interested in tracking this topic, follow Pat’s Twitter feed at RockTheBoatMKTG and check out her Twitter list of investment managers. If your interests focus more on financial advisors, then Pat’s AdvisorTweets Twitter account is for you.

In her guest post below, Pat suggests that investment analysts and portfolio managers need to learn how to do research using social media or risk missing–or being late to obtain–information that influences the prices of securities.

Investment analysts and social media

By Pat Allen

Institutional analysts and investors rely most on information that comes directly from companies.

This was a finding in a survey conducted last year by the Brunswick Group that I remember reading and finding unremarkable.  And yet it’s increasingly obvious that corporate information can be relied upon for a company’s plans and intentions—but how an organization moves forward will be influenced by a marketplace reacting in real-time.

To be sure, that complicates things and not just for corporations pursuing business agendas but also for analysts and investors trying to assess companies’ prospects.

Social media is messy. There are zillions of media and networking sites and blogs, lots of noise and plenty of false signals. Still, we think it’s a faulty investment decision that’s made today without consideration for what consumers and influencers are saying.

Gap’s October 4 introduction of a new logo is a recent case in point.

In an October 7 essay on the Huffington Post, Gap North America president Marka Hansen explained that the company’s product selection and retail presence was evolving.

“The natural step for us on this journey is to see how our logo–one that we’ve had for more than 20 years–should evolve. Our brand and our clothes are changing and rethinking our logo is part of aligning with that,” wrote Hansen.

“The natural step for us on this journey is to see how our logo–one that we’ve had for more than 20 years–should evolve. Our brand and our clothes are changing and rethinking our logo is part of aligning with that,” wrote Hansen.

Not so long ago a company executive might have mentioned a new logo on a conference call. If the company’s marketing was believed to be stale and a growth inhibitor, a rebranding plan might have bolstered investor confidence–if only temporarily–prior to the market’s reaction to the change.

In thinking about this post, I flashed back to Peter Lynch’s One Up on Wall Street: How to Use What You Already Know to Make Money in the Market. I was pretty green when I read that book but even then I was skeptical about Lynch’s thesis. Listen to what shoppers said at one store in one mall and invest based on that? I had my doubts and there was something about it that I found condescending. Surely that’s not how professional investors did it?Institutional analysts and investors rely most on information that comes directly from companies.

But Lynch’s recommended approach foreshadowed what is today called online listening. The difference today is that the vast majority of social media sites are architected to serve as databases—easy for interested parties to query, filter and subscribe to for efficient listening and ongoing temperature-checking.
Company information, primary market research, real time subscription information services, analyst research, the business media—all are inputs that ranked higher than “new media” in the 2009 Brunswick research into what influences analysts’ decisions or recommendations. New media, defined as blogs, message boards and social networking sites, were consulted by just 4% of respondents.

The next time such research is conducted we’d expect the monitoring of new media to soar as professional investors learn more about social influence.

Pat Allen is a Chicago-based digital marketing strategy consultant whose Rock The Boat Marketing firm helps investment companies think through what they do on the Web. Pat also operates AdvisorTweets.com, a site that aggregates the tweets of U.S.‐based financial advisors.

Should the Morningstar style box go 3-D? Quality counts, says Atlanta Capital

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Investment professionals and financial advisors are familiar with the Morningstar style box, which categorizes stock funds by market capitalization and style. A recent CFA Magazine article made me wonder if Morningstar should turn the style box into a style cube by adding a third dimension: quality.

Stock quality may overwhelm size and style

Quality counts for just as much as size and style.

That’s according to Brian Smith, director of institutional services and principal at Atlanta Capital Management, in “3-D Investing” in the Sept.-Oct. issue of CFA Magazine. The CFA Magazine article is based on a longer white paper, “The Third Dimension: An Investor’s Guide to Understanding the Impact of ‘Quality’ on Portfolio Performance.” To access the original white paper, click on “Publications” across the top of the Atlanta Capital website.

“…our research indicates that ignoring quality and investing solely by capitalization and style dimensions is unwise. In fact, the performance of high- and low-quality stocks can have a significant influence on an investor’s risk and return characteristics, in many cases overwhelming the influence of either size or style,” writes Smith in his CFA Magazine article.

I wondered if there might be something other than quality at work.  Could one style be more associated with quality than another?

Smith notes in the white paper that certain value and growth styles are sometimes associated with high- or low-quality stocks. “Conservative growth” and “relative value” tend toward high-quality vs. low-quality for “absolute value” and “aggressive growth,” he says. Smith refers to this as a “hidden quality bias.”

Smith compared returns by quality, size, and style using Russell indexes and custom benchmarks based on the Standard and Poor’s Earnings and Dividend rankings. Looking at 2009 returns, he found that “Clearly, each size, style, and quality index responded differently to the same economic stimuli….”

In other words, the correlations among the quality, size, and style indexes were weak.

The “quality cycle” in the stock market

Smith suggests that a “quality cycle” exists because fluctuations in the performance of high- and low-quality stocks are associated with the economic and stock market cycle. Low-quality stocks briefly outperform high-quality stocks at both ends of a market cycle. This is probably because they’re more sensitive to the economy, the availability of credit, and investor speculation. High-quality stocks win the rest of the time.

Smith concludes,”If history is a guide, high-quality stock should post stronger relative returns in 2010 and 2011….”

Do you agree? You’ll probably want to read more of the CFA Magazine article or Atlanta Capital white paper before you decide.

Guest post: “Making Research Readable”

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Investment research analysts can learn to write better. In his guest post, Joe Polidoro gives directors of research his advice on how to make this happen. I’m delighted to have met another advocate of good investment writing thanks to Twitter, where Joe tweets as @joepolidoro.

Making Research Readable
By Joe Polidoro

Is it worthwhile, or even possible, to improve the quality of your research analysts’ writing? Yes and yes, and I’ll tell you how. First, the business case.

It seems reasonable that good writing—clear, engaging, memorable—should be more effective than sub-par writing at reaching your audience. But let’s see the numbers.

One of the best proofs I’ve come across is courtesy of Dame Marjorie Scardino, CEO of Pearson PLC and former CEO of the Economist Group (hat tip: Vicki Cobb and I.N.K.)

Scardino located a study in which three groups—linguists, writing professors, and journalists –were asked to improve passages taken from a history textbook. Students were then asked to read the original passages and the rewrites and immediately record as much as they could remember.

Recall of the journalists’ rewrites beat recall of the other groups’ rewrites and of the original text by a whopping 40%. Good writing matters.

And I think average writers, including research analysts, can measurably improve their writing—with the right help.

First, look for a writer
In your quest for a writing coach, avoid anyone who doesn’t make a living—and a decent one—by writing. As Stephen King said, anyone who is paid to write knows how to write effectively. Professional writers “get the story told memorably … and quickly,” says Scardino. Those who make their living doing other things, including the teaching of writing, usually can’t.

Hire a writer/coach
A writing pro isn’t necessarily a good writing teacher, however. Aside from references, here’s how to tell. Effective teaching is less about charisma, more about preparation, perseverance, and a passion for the work. So ask questions: What are you going to teach my analysts? What are your goals? What’s your plan? How will you deal with indifference or egomania?

Your writer/coach should be quick with confidence-inspiring answers.  Look for someone who emphasizes telling a story (yes, even in a research report), clarity, and effective editing. Steer clear of those who get deep into grammar and theory. Good writer/coaches use real examples and show how it’s done.

Follow through with your swing
No writer/coach worth hiring will promise to improve your analysts’ writing in one session. A golfer won’t significantly improve her game with a 3-hour lesson. If she’s serious, she’ll take a series of lessons over the season. And writing well is harder than golfing well.

It doesn’t have to be extensive—even three 45-minute sessions over four to eight weeks with your most problematic analysts will work. But set aside budget for this. It’ll show you’re serious. And it will make whoever you hire that much more effective.

Joe Polidoro spent over a year improving the equity research reports at Bear Stearns, where he worked with past and future research stars including Lee Seidler, Lincoln Anderson, Larry Kudlow, Joe Buckley, Jami Rubin, and Steve Binder. Joe now co-heads Triplestop LLC, a marketing agency specializing in asset management and related industries.

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Copyright 2010 by Susan B. Weiner All rights reserved

Technical analysis of stocks can boost the power of your fundamental research

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You can use technical analysis in combination with your firm’s fundamental equity analysis to help decide when to buy or sell stocks. This is the message I took away from “Applying Technical Analysis to a Fundamental Investment Strategy,” a March 23 presentation to the Boston Security Analysts Society by David Keller, who oversees technical analysis as a managing director of research for Fidelity Investments. 

Technical analysis is not voodoo science, throwing darts at a board, or even a prediction of the future, said Keller. Rather, it’s a way to analyze supply and demand using patterns, he said.

Fundamental research and technical analysis tackle different parts of the decision to trade a stock. Here’s how Keller described them.

  1. Fundamental research analyzes the company for the what and why of buy and sell decisions.
  2. Technical analysis analyzes the stock, looking purely at market activity for when and how to buy or sell

These two approaches overlap, in the opinion of Keller and the Fidelity portfolio managers who use his team’s research. Technical research helps to identify the best time to execute a fundamental strategy, he said. You can think of technical analysis as a trigger, he said.  

When the results of technical analysis diverge from those of fundamental research, portfolio managers should pay attention, according to Keller. He referred to point and figure charts as “a gut check on how I look at individual stocks.”

Relative strength indicators are among the most important technical indicators, Keller said. They can be warning signs, he added.

Keller’s message was warmly received by members of the audience, most of whom raised their hands when asked if they regularly consulted technical indicators. 

Related post
* Fidelity’s head of technical research addresses “Where will the stock market go from here?”
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The next session of “How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors” will start in April. For more information, sign up to receive “Information on upcoming classes, workshops, and other events” as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Fidelity’s head of technical research addresses "Where will the stock market go from here?"

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Will the bull market continue? 

Investment professionals are always curious. So naturally the question came up during a Q&A session with David Keller, who oversees technical analysis as a managing director of research for Fidelity Investments. The question followed Keller’s March 23 presentation to the Boston Security Analysts Society on “Applying Technical Analysis to a Fundamental Investment Strategy.”

The bottom line: It appears that the market is in an uptrend and the offensive sectors will outperform their defensive peers. 

However, Keller framed his comments cautiously, saying that there is little evidence that the stock market is not in a sustained uptrend. Nor does he see evidence that the market is overbought.

“I can’t say,” replied Keller, when asked to identify his favorite sector. He’s looking at groups that are traditionally considering offensive. “But it’s not as clear cut as in the past,” he said.

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The next session of “How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors” will start in April. For more information, sign up to receive “Information on upcoming classes, workshops, and other events” as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Institutional equity research job hunters, check out this site!

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If you’re an analyst looking for a job in institutional equity research, you should read the ResearchWatch blog published by Integrity Research.

The blog will help you stay current on trends and players–especially independent research firms–in institutional equity research. Some recent topics included 

You can subscribe to ResearchWatch by email or RSS feed.