When fear stalks …

An investor relations professional needs perspective.

Of course, it’s hard to make much progress with a company’s growth story, or any story, in a market environment controlled by fear.

Probably the main tasks of an IRO right now are (1) to quickly and proactively answer investors’ urgent questions or concerns as they relate to his or her own company and (2) if the IRO can find any time away from the phone, to think and plan ahead for telling the story once the din of ambulance and fire engine sirens begins to recede.

I am reminded of a psychology lesson from Benjamin Graham in The Intelligent Investor. Graham notes that either the whole market or an individual stock can fall prey to the stalking fears of the crowd:

In the depths of a depressed or “bear” market, the average person can see no ray of light ahead and can think only in terms of worse to come. So too, when an individual company or industry begins to lose ground in the economy, Wall Street is quick to assume that its future is entirely hopeless and it should be avoided at any price. The two types of reasoning are similar and equally fallacious.

Long-term investors know this, of course. They are out there surveying the wreckage for potential values, at least considering when the trend will turn and stocks of great companies will be a “buy.” As IR people, we ought to ask that same question about the companies we work with – and build our story around the information those investors need to find real value.

Advertisements

Tags: , , ,

2 Responses to “When fear stalks …”

  1. This isn’t good … « IR Café Says:

    […] shared some other ideas on “bear market IR” in earlier posts here and here and here. Please feel free to add your ideas, experiences or reactions by commenting on this post […]

  2. Equity School Says:

    Great Article. Graham is considered the first proponent of Value Investing, and I am a great fan of Benjamin Graham myself, I follow most of his rules, I started a site on value investing. The site mainly screens out Low PE, Low PB, High Divident Yeild. Low PB+ High Div etc.. for the India markets. I really appreciate the effort you have put in your blog. Best Wishes.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: