The Analyst – From Detective to Athlete

The information age is a boon to security analysts.  Only 20 years ago, an analyst had to make a phone call to the company they were studying and request they mail him information such as proxies, and 10-K’s and Q’s.  Outside of these SEC fillings, the only way to research a company was to talk to people. Today all of this information and much more is available at our finger tips.  And not just to those in the investment profession, but to everyone!  It used to be that the investment analyst had to be a detective.  The late Phil Fisher writes about his scuttlebutt approach to researching companies where he would talk to suppliers and customers of a company and employees to try and get a feel for how a company was run.  Today, a multitude of blogs and news sources can get you this sort of information.  One of the blogs I read is called The Consumerist.  The author posts complaints from consumers about all kinds of companies.  To find information about a company, all you have to Google it and read.  If you want information about the company executives, first always look through the tabloids (if you find them there, avoid the stock).  Rather than having to dig to uncover information, the challenge has shifted to diciphering which sources of information are trust worthy and which to filter out as noise.  The required skillset of an analyst has shifted to that of a professional athlete in a stadium packed with fans – block the noise, focus on the goal.

Ofcourse in this shift from detective to athlete, there are ofcourse plenty of similarities with the analyst profession of yesteryear.  Deciding which sources to trust has always been a challenge.  One used to have to judge the character of their source or the manager they were speaking with, now you must do the same for the author of a blog or Twitter post.  And regardless of where you get your information, the analyst must always apply logic and judgement to discern whether the information they have learned is plausible and makes sense.

The information available at our finger tips is hugely valuable to society.  Being bombarded by it simply requires a slightly tweaked skillset in order to arrive at good results.