Why It's Best to Stick to What You Know
And at the same time learn a lot.
Boots on the ground means to use direct contact and information-gathering skills (your boots). If there's a controversy about what's true, this is the tactic to find out what you believe and what you don't. Lately, I'm surprised it isn't used more, especially since one side of the media claims 70,000 protesters showed up to the anti-administration protest 9.12 while another says two million.
Then there's interpretation. The other day I heard the 24th permutation of yet another macro statistic (this time, new jobless claims) pitched by economic-focused reporters at AP Radio News, letting me know that "less bleeding" means "improvement."
Chew that concept over next time you make a trip to your local emergency room and there's a guy next to you who got stabbed in the gut, bled a quart the first hour, then only bled a pint during the second hour; let me know if you overhear a doctor or nurse judge the victim's condition as having "improved" during that timeframe.
In the mid-1970s Sanford C. Bernstein & Co., Inc. was grappling with the consolidation of converging formerly separated flavors of financial institutions -- competitive pricing conditions were brought on by the end of fixed institutional rates, and an accompanying industry-wide decline in research professionals dependent on evaporating institutional trading-desk income.
Nevertheless, Sandy Bernstein held fast to his strategic vision of the present and future value of painstakingly detailed research, and to his commitment to depth over breadth. There were some very smart folks pacing around that cage full of tigers, as Sandy liked to say, but lazy intelligence -- even genius -- was never tolerated as a substitute for hard work, diligence, and getting the real-time story firsthand from reliable sources.
Bernstein believed you couldn't understand a company or industry financially unless you understood it operationally first. The restaurant-industry analyst was up there with the best because he was a muffler-franchise owner on the side and had a list of his brother franchisees in the burger and doughnut rackets, called every single one of them, and conducted individual, meticulous interviews to dig up the true and properly overhead-allocated margin on a serving of french fries and the number of unit sales for the past 30 days versus the month before, the quarter before, and the year before.
If you looked at the numerous charts in those reports today, you'd be hard-pressed to believe they were assembled before the dawn of the "world-beating Frieden calculator." The craziness of foreseeing something as far-fetched as even an early version of VisiCalc or Lotus, let alone a modern rendition of Excel, hadn't yet gotten beyond the collective crania of the inmates at Creedmoor Psychiatric Center. Yet none of these cavemen conditions obviated dead-on research integrity, many times accurate out to several significant digits, because the secret sauce was thoroughness and immediacy, not fancy pants and filigrees.
"We are not an organization of assistants," Sandy well summarized.
Indeed, the work was so exhaustive, corporate strategic planners outside of Wall Street's institutional clientele exploited it. The underlying philosophical legitimacy and qualitative foundation validated its quantitative reliability: excellence in, excellence out.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter