Real media training, bull riding and pet lions

There was a time in the late 1990s, early 00s when I was quoted in the print media a lot.  In the early stages, diligent bureaucrats that they were, the company demanded I take a full day of media training and a more pointless exercise I have rarely undertaken, The emphasis on obfuscation and ending each comment with a restatement of corporate initiatives was by and large an exercise in “How to ensure a Reporter Never Calls You Again Under Any Circumstances”.  There is, in the end,  only one real rule about dealing with media, as immutable as death and taxes : never say anything negative about any specific person or entity.  I was about to have this demonstrated in no uncertain terms.

At some point in 1998 I got a typical call from the media asking for comments on the relative performance of different investment styles. My comment at the time was, I thought, pretty innocuous. I indicated that sector rotator managers (in the parlance of the time), having positioned for a conventional late cycle rally in commodities, were blindsided by the Asian/LTCM crises. I actually said “sector rotators like Mr. X”, carefully choosing a no-load fund manager. I worked for a full service brokerage and our brokers would not sell a no-load fund at knifepoint, so I thought I was good. I hung up the phone and went about my business for the rest of the day.

The next morning, the story is printed and for reasons I still don’t fully understand, the reporter had added “Mr. Y and Mrs. Z” to my comments when I had never mentioned them. And here’s the important part – combined, Mr. X, Mr. Y and Mrs. Z composed three of the top five institutional commission generators and Mr. X in particular had called early in the morning and demanded my head on a plate.  Upper management, peon that i was at the time, was only happy to oblige.

Thankfully, this was a rare period where I did not physically sit on the trading floor (they would have walked over and fired me immediately) and got enough warning to escape the building before they could find me. Things resumed as normal, except for the anxiety, the next day when everyone calmed down.

This, I realized, was real media training.  Like a complete moron, I assumed that the media was merely an unwitting pawn, the free marketing wing of my plan to take over the world.  After the incident, I realized I was never in control of anything at all and that my position in the whole process was much more akin to a professional bull rider, with the media as bull.  Sure, I could benefit from the media, but could also get tossed on my head and stomped through little fault of my own.

The bull rider metaphor has interesting applications to investors’ current experience with the market.  Up until the GFC, the general feeling was that the market was a benign, even helpful force, automatically creating future wealth. Post-GFC, the average investor views the market like a pet lion owner in a small condo, or like a penitent to a bi-polar god from Greek mythology.

Longer term, there are benefits to this newfound respect for risk, and recent volatility can be seen as instructive and not just penance for the Great Moderation illusion.  The market, like the media in my example, has its own agenda and was never our friend. Thoughtlessly tossing money at it with the expectation of future wealth was, in hindsight, merely another sign of overall cultural complacency. The punishment may not be commensurate with the crime, but if the gut-wrenching volatility of the past three years results in more financial diligence, then that at least something positive has occurred.

Investors would, I think, benefit from thinking more like a bull rider in the current environment. Recognizing that, while opportunities are available, the bull/market has the upper hand and that the possibility of being blindsided at any time forms a helpful reminder regarding portfolio risk.

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4 thoughts on “Real media training, bull riding and pet lions

  1. […] On the value of a new found respect for market risk.  (Interloper) […]

  2. […] On the value of a new found respect for market risk.  (Interloper) […]

  3. PD says:

    This blog entry marks a good point that many overlook. There are numerous books, articles or pamphlets that conclude that when a city’s or nation’s peoples become preoccupied with speculation and gambling that it is on the road to ruin. There’s little novelty in morals preaching.

    What very few ever note is that when a nation holds an economic hegemony and its primary interests shift from non-financial production to financial investment that its hegemony is likely to end. A nation of interest coupon clippers and dividend payees won’t keep its relative wealth for very long.

    Though historians debate the causes of their economic primacy, the Netherlands in the 18th century and the UK and Japan in the 20th century are good examples of this phenomenon.

    Hostile takeovers during the 1980s became frontpage news in mainstream US media. These takeovers became common in the ‘60s conglomerate boom with hardly a peep from the same media. The last three decades have been very good for the financial services industry (many forget that the industry was flat on its back in the ‘70s when there were numerous Wall Street firm failures, the NASD changed its policies to allow its professional members to accept non-industry work as many brokers became cab drivers and that NYSE seats sold for less than a NYC taxi medallion).

    Profitability in the financial services industry had until recently overshadowed many other US non-financial sectors. While a growing and prosperous nation needs a healthy financial services sector to remain competitive, the pendulum may have swung too far and a reversion seems likely. If not, it risks not having much to revert to in the future.

    PS: Some considering getting on the alternative investments (i.e. hedge fund, private equity, etc.) bandwagon today may want to note that almost all of its ‘60s era forbearers were gone before the end of the ‘70s and, of those, most didn’t make it to mid-decade. There’s a good chance that we’re watching a sequel in this decade (actually not a sequel as this recurs in different forms over the last couple hundred years and earlier in the US and other countries).

  4. Great, timeless lessons. Love bull analogy for media and markets.

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