January 10, 2012

You Can Change the World

At county fairs when I was a kid you could buy a “Shoshoni Weather Gauge,” which hawkers said could forecast the weather like an American Indian.

It was a rock tied with a leather strand to a wooden stand. The instructions said: “If rock is wet, it’s raining. If rock is dry and hot, it’s sunny. If rock is cold and covered with fluffy white layer, it’s snowing.”

Similarly, I saw this in a recent Bloomberg article: “The best way to keep pace with the S&P last year would have been a strategy that rotated between sectors based on the macro headlines,” said David Spika, fund manager at Westwood Holdings in Dallas.

That sounds a lot like “if rock is wet, it’s raining.” The elegance of simplicity notwithstanding, how do you distinguish the IR chair and your company’s shares in a market moving on whether the rock is wet or not?

One argument says you change your focus. Deemphasize the capital markets and instead get baptized in Dodd-Frank, proxy evolution, say-on-pay and myriad others rules and regulations oozing like molasses through public capital markets. Become a compliance concierge. Well and good. But you’ll be competing with internal and external legal counsel for thought leadership, and I find that the advantage lawyers have is they have law degrees.

Or you could change the world. Sure, that sounds hard and complying seems easy. But come on, who wants to just mark time on the IR hamster wheel?

Try this bold strategy. Ask your CFO to add three things to your job description: A responsibility to become the internal expert on trading markets. Point person for monitoring your exchange and the SEC for rules affecting how your stock trades. And “Chief Economist” for your company’s currency – your traded shares.

Which one sounds like more fun? Complying or changing the world?

You can’t change the world in eleven seconds. Only Tim Tebow can do that. But you can spend time each week educating yourself on how trading markets work. You can read rules your listing exchange proposes and advise management on whether to comment on ones harmful to your investors’ interests. One reason why markets are great for 5-second investment and lousy for 5-year investment is that those making the rules love 5-second investment.

And if you do those, and add in knowledge of macro factors, you’ll be an effective Chief Economist. A step at a time, instead of an 80-yard pass play to the end zone, you can help restore sanity and vitality to our profession. That’s good news, rewarding, and fun to boot.

And, go Broncos!

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