Investor Relations What does investor relations mean? To the practitioner, it means a craft of communication striving to be a profession. To a shareholder receiving its output, it is a necessary path to understanding markets and companies. To corporate officials, it is a convenience to fend off the time consuming quest for information that is often a distraction from running a business. All are correct but far from the story of investor relations today. An unprecedented 18-year bull market has multiplied all financial service tasks. Abby Joseph Cohen notes compensation for financial service workers has been the only area of wage inflation in this business cycle. And many others note that financial assets are the only inflating assets in a deflationary economy. It is reasonable to look at the macro-influence of a bull market creating the need ever more, ever more competent and ever more highly paid investor relations people. But that is not the whole story either. At its base, investor relations is about communication of fact. Usually it is what we call today "push" through releases, attractive venues and targeted sources. Investor meetings and lunches have given way to conference calls, and Internet group emails in turn to global videoconferences. Facts are still distilled by lawyers with the most important facts, curiously, withheld during blackout periods when the most significant developments are taking place. With computer data bases and search capabilities remarkable things can be done to turn masses of data into information. Most of the innovations have already taken place in the corporate world, especially in comparative retail sales and now are finding their way into finance. Screening of the type used in www.fortuneinvestor.com can survey 16k securities on 600 hundred variablesand this is only this month's level of capability. Charts of historical activity on almost anything are available at www.bigcharts.com and www.yardeni.com. These tools and hundreds of others are converting the push from investor relations into a pull by users in control of what they want, what they do with it and the conclusions to be reached. We are getting to the story now. Investor persuasion is moving to the user through the empowerment of technology. The nub of judgement remains in an elusive corner of agency finance, behavior sciences and computation. But each single user has access to machinery that is low-cost, readily available, global, instantaneous to do the chores. Like Microsoft endorsing the Internet, which may ultimately be its downfall, so the alert investor relations person will provide these tools to make the users job easier and better. Now this is the whole story. The next step of investor relations is simple and obvious. First, companies, funds, countries who wish to inform their constituency should maintain and publish FAQ's, which is a common practice in industry. All questions with whatever favorable or unfavorable answer can be made available on a bulletin board; www.hitachi.com/MPEG is one of thousands. It is the next step to the ultimate in transparency (the ultimate is when the answers are created automatically regardless of the questions to be asked). Secondly, companies should actively trade their own shares with open disclosure of transactions on an instantaneous basis. Companies would reveal their own interplay between business conditions, availability of capital and their assessment of prospects by their actions. Thirdly, and it the same vein, insiders would be encouraged to trade with no reservations on when except that they would have to be identified as an insider. Technology makes all these possible and investor relations would be advanced providing the user with live, real and significant information individually customized for each. It is possible today. But no one has done it. Dean LeBaron [back to index] [add reply] [view replies] |