Pants on Fire

by StockJockey

Thursday, October 26, 2006 - 12:24 am

Running money can be a pain in the ass. Sure, the money is great but sometimes you wonder if its worth the sacrifices.

Its not just the boring conferences where some loud jerk sitting behind you drowns out the presentation as he yaps on his cellphone. Or punching up endless charts as you try to find the ideal setup. Perhaps the ultimate downer is a perfect summer days when the tape is frozen in time and the beach seems to mock you in your Aeron chair.

How about crushing your benchmark but getting screwed while the new hire down the hall snags a fat signing bonus and drains the compensation pool dry? Becoming the most jaded, cynical guy on your block is the only thing you are guaranteed when you work on the street.

Still, money never sleeps. And while its great to be on the right side of a steep stock ramp or a spectacular blowup, piecing together a mosaic that gives you an edge can take months of hard work. Part of this process includes endless meetings with sell-side analysts and company management teams who, for lack of a better word, lie.

They lie through their teeth.

Analysts blast your voicemail touting banking clients. Syndicate managers cut your 10% orders back to odd-lot allocations. Salespeople promise you one-on-one meetings with your favorite management teams but never deliver. And you can never get these folks on the phone when the shit hits the fan.

CEO’s and CFO’s sit across the table from you and tell you the quarter is “tracking to expectations”. Until they preannounce later because the quarter “is back end loaded”.

For many years the best analysts and money managers have had a secret technique that filters out the crooks and crims. A way to sift through the BS and stay away from the daily “% losers list”. So simple that its worth 500 basis points a year versus your peers.

Let it be our little secret (weapon).

Warning: Sometimes Ignorance is bliss; after gaining this knowledge, you may be hurt when it is obvious that someone is lying to you.

Comments:

Nah, none of that stuff works. Worrying about it is like worrying about “tells” in a poker game. As in poker, there is only one thing that matters inassessing information and veracity: money.

In a poker game, watch the bets, and only the bets. When you talk to [analysts|management|touts|whomoever], follow the money, and only the money. Unlike poker, in real life, you can then *ask about the money*. When the answers are responsive and congrue with independently verified fact, be reassured. Even then, verify twice. Otherwise, be suspicious.

Posted by on 12/31/1969 at 03:00 PM

Actually, one thing in that is dead wrong - A liar will make and hold direct eye contact much more than normal - because “everyone knows a liar won’t look you in the eye”.

Posted by on 12/31/1969 at 03:00 PM