Dear Tim,

Just imagine that you were a mathematician, trying to illustrate an advanced concept with a two-dimensional graph.  How could you possibly do that?  Quite unlike the elegant proofs that Ian Stewart talks about in his book,the research puzzle | My series of letters (see the linked index) was inspired by Letters to a Young Mathematician. an investment analyst can often get across an important concept in just that way:

This is the trailing twelve-month net income versus free cash flow of one of the hottest momentum stocks of 2010.  Immediately you can see that there’s something worth pondering, investigating, and understanding.

Too often, those who analyze investments are unable to communicate their ideas very well.  For you, at the start of your career, the time that you spend honing your communication skills and developing your own style and voice will pay off year after year.  Everyone will be diving into the analyses and you’ll be doing so too, but if you can communicate what you find better than others, you’ll be ahead of 95% of the group immediately and will never lose ground.

I admire your writing.  You can’t believe what a powerful weapon it will be for you in this business, no matter where you end up.  Who knows what forms of transmission will carry your words over the next fifty years?  I sure don’t.  But a good writer will be read by others, no matter the mechanism by which the words are delivered.  Exercise your voice early and often, and you’ll get noticed.  Most of those you work with won’t take the time.

Sometimes you’ll be asked to summarize your analysis in a lengthy document and sometimes you’ll have to craft just a few sentences that really count.  Make it as good as it can be every time.  And, as above, throw in some “pictures” when you can.  There’s a reason that Ed Hyman has topped the charts in the Institutional Investor rankings for 31 years:  He differentiates his work by annotating charts of interest to decision makers.  Pretty simple stuff.  And look at Carl Richards, who has made a name for himself in a hurry by sketching basic but important personal finance concepts on digital napkins.Behavior Gap | You can find them here.

Of course, much of the business doesn’t involve writing at all, so you’ll need to brush up on your presentation skills too.  One on one or in front of an audience of hundreds, you will be judged by your ability to convey your opinions and to convince others of your point of view.  Never forget that you are telling a story and that it has to be a well-crafted story, and a well-told one.

The materials that you bring with you can work against you rather than for you.  Some pages of analysis presented in a small conference room, a “pitch book” walked through with a prospective client, PowerPoint slides on a big screen during your talk at an industry conference — all can be done in a way that help you get your views across effectively.  But most aren’t.  Just because there is a suite of office tools that allows you to create those materials on your own doesn’t mean that the ones you produce will be any good.  Spend the time to make them great or find someone who can help you to do so.

And, learn to get past your fears and to make the words you speak come alive.  You might even try a stint at Toastmasters if you need some practice.  They probably won’t tell you to listen to music as part of your preparation, but I will.  Almost any genre will do, but since you play the guitar, reflect on Clapton, Santana, and the great blues guitarists:  Look at the range of emotion that they put into their work.  And how they use silence.  Give a presentation in that way and people will take notice.  Rush through your points in a flat, “professional” manner, and they’ll be nodding off or looking for the exits.

In one group of analysts I studied, I saw more fail because they couldn’t communicate well than because they didn’t have the analytical chops for the job.  It’s  a well-kept secret:  One of the best ways to differentiate yourself in this business is to learn to tell your story and your stories so that people will listen.

Later,

tom

P.S.  I’m sure you’d rather be enjoying your holiday time off, but I’ll have more letters coming your way.