Dinner’s in the Dog!
A Month in the Life of a Stock Broker
.png)
The results season has ended - Hooray - we can get back to thinking rather than reporting. You might not know it, but for the broker analysts whose job it is to analyse stocks, February is purgatory. Poor brokers. Here’s why.
In order to be competitive, at the very least,
on the announcement of an important company result the big broker analyst has to hit the biggest institutional clients straight away with a crisp and accurate analysis including an action recommendation that hopefully generates an order, and is correct, making the fund manager look clever to his bosses. You wouldn’t want to get the ‘first reaction’ wrong.
On top of that, the analyst has to verbally brief the whole of their dealer group with a similarly accurate, informed and hero-making opinion that their dealers can disperse rapidly down the phone lines to the other clients in the pursuit of even more first-mover-inspired salary justifying orders. And all before the competition do the same thing.
Then the analyst has to tune into the analyst’s conference call with the company (which allows them to say they 'met' with the company, which they didn’t), with the job of furthering their personal and broker’s brand through the teleconference protocol, which includes stating your name and institution and asking brilliantly insightful questions you already know the answers to and that your future employers, who are almost certainly listening, might be impressed by. Then, in less than half an hour, the analyst has to put out a written summary of the results that further carries their brand and brilliance to the inboxes of the whole industry.
If you've ever felt overwhelmed about your superannuation, you're not alone. It's time to take control.
Join Marcus Padley on March 26 for an exclusive live workshop.
At the same time, if they want to remain employed, their opinion mustn’t jeopardise any relationships their broking house might already have with the company itself and, if they know which side their bread is buttered, actually furthers their corporate department’s relationship with the company (by saying 'Buy') just in case the company has a corporate deal to hand out sometime in the future.
And finally, whilst parrying the barrage of client and dealer emails and questions, and conducting an in-person visit or two to the biggest fund manager’s offices to brief
their analysts, the broker analyst has to write a fresh and original twenty-page piece of research for the next day’s morning note that will "stand out" from the other broker research after it is proofed and submitted by the research editor’s deadline, which resides somewhere between closing time and 4am.
.png)
And that’s if the analyst only has one result a day. Some analysts get two or three a day. On the biggest day of the results season, there are twenty top two hundred results, all of which have to be digested, analysed and regurgitated before the research is sent out at 6am. Good luck getting home that day, week, month. "Dinner’s in the dog" is a great "welcome home" post-it note when you’re busting your arse bringing home the bacon. Tough stuff being the 'Cash Cow'.
But before you pull out your violins, imagine doing all that and getting it wrong. Imagine what it’s like for an analyst running with a buy recommendation when the results are terrible, or a sell recommendation when the results are great. There’s standing out and there’s standing out for the wrong reasons. Get it wrong and you’ll be pushing research out at 4am in a cloud of shame. Your dealer group will abuse you for their lost goodwill, the corporate department will send you to Coventry forever, the clients will drop you for your lack of value, and your competitors, and potential employers, will rejoice in your misfortune. Is it any wonder forecasts hug the consensus? In a broker-eat-broker world, just remaining a broker is sometimes reward enough. Survival is a bonus. Success is a rarity.
So spare a thought for the brokers as you read their research during the results season. You have the luxury, in the clarity of the morning, on a full stomach, after a good night’s rest, with the love of your family, with the power of hindsight, in the context of multiple opinions, of casting judgment on a professional, under a lot of pressure, with an empty stomach, operating at 4am in the morning whilst their dog sleeps at home, bloated by a well-done rump steak. They’re a tough breed those broker analysts, in a dog-eat-dinner world.
More about the author – Marcus Padley
is a highly-recognised stockbroker and business media personality. He founded
Marcus Today Stock Market Newsletter in 1998. The business has built a community of like-minded investors who want to survive and thrive in the stock market. We achieve that through a combination of daily stock market education, ideas and activities.
Get access to more market commentary, sign up for a free trial now and become a better investor.
