Market commentary is changing. For the better. We’re getting smarter as consumers. More sophisticated. But we’re demanding more from our opinion-givers too. It’s not enough to have insight. We need to know where you’re coming from as a person. The best commentators are rolling with it. Adapting. They’re letting you in.

In the olden days, you would spout an opinion, be wrong, pretend you never said it, then spout another opinion to take people’s minds off the last one. And that worked for awhile. There were hundreds of “names” on Wall Street who kept getting booked on the shows and the conference circuit because people had heard of them. What they had gotten right and wrong was almost irrelevant. And as a result they had only rarely - if ever - been forced to examine the results of their calls. “Forget what I said last month, here’s what I really think!” 

How did this persist for so long? There were more hiding spots. The gatekeepers were more powerful than they are today. You could be wrong all the time and they would protect you. They didn’t know the difference. All they knew was whether or not you had a famous name or employment at a large company. The results of what you had been saying were beside the point.

The gatekeepers are smarter now and have a better collective memory. Because the gatekeepers are us. All of us. We get a vote. Win the crowd, Gladiator-style, and you win your freedom. You get to keep talking. Lose the crowd and you lose your standing. The show booker on network television can’t keep you relevant. The Barron’s editor can’t make fetch happen. The list-makers can keep you on their lists, but they can’t get people to care. Or click. They’ve been disintermediated. The gates have been crashed.

The people who’ve been congenitally wrong about the stock market over the last fifteen years are all punchlines now. We humor them. We’ll link to them, but ironically. We’ll platform them on our podcasts as one might book a novelty act for a talk show. “Here’s a guy in a safari jacket with a lemur wrapped around his neck. Here’s a gal who plays the violin with her feet. Look at this freak who’s been telling retail investors to short the stock market since 2010! Look at this Fed-bashing misanthrope who’s been obsessing over copper charts and trashing Apple for 4,000 percentage points. Look at this weirdo whose economic models predict constant recessions while GDP grows at 3% every quarter.”

Next Generation

In the place of the old punditry guard, there is a new generation of market commentators. They are smart and well spoken, but there is an added element of authenticity that truly delineates the current moment from what came before.

Nick Colas and Jessica Rabe of DataTrek Research are two of the smartest people I know. I love talking with them and, from what I can tell, you guys love hearing their insights. So we decided to try something new. We’re calling it “What Did We Learn” and it’s going to be a monthly check-in between The Compound and DataTrek - me, Jessica and Nick - to catch up on all the latest developments in the markets.

These are the type of conversations that people on Wall Street normally have behind closed doors, or at a restaurant in midtown over lunch, or in a board room for an institutional investor’s quarterly portfolio review. We’re doing this all on YouTube and on the podcast. It’s a new era. The fourth wall no longer exists.

Nick and Jessica are not only bright - they are reputable, credible, authentic and humble. They know a lot - and they know enough to know what they don’t know. This sounds obvious - why wouldn’t everyone carry themselves this way? It’s not obvious.

Spend enough time on Wall Street and you’ll soon learn that most people believe their job is to pretend they know everything. It’s not their fault. You’d be amazed at the monetary rewards for keeping this facade alive from one year to the next. You learn how to walk and talk this way from the people you work under. Then, before you know it, you’re walking and talking the same way.

Certainty sells and everyone has to sell themselves to keep their spot on the ship. So the bullshit artistry becomes cultural. It’s embedded.

That’s why when you come across people who are genuine in their own uncertainty, despite their obvious expertise, it makes a real impression. These are the people who stand out. I try to surround myself with people like this. I populate my shows with them. I keep them in my orbit and do my best to make sure they get the attention they deserve.

Inside-Out

The modern money manager or research firm understands the necessity of sincerity and authenticity. The next generation of investors practically demands it. They don’t just want to know what you know - they want to know how you know it and why you came to that conclusion. And they want to know about the people behind the opinions, not just the opinions themselves. It’s about trust, not authority or prestige. “I hear what you’re saying, but who are you? Why should I listen to you?”

This is the challenge for financial services firms right now. Are you comfortable turning your practice inside-out? Opening the doll house and letting your audience see the inner workings? Allowing the true personalities of the people within your organization to shine through? Taking the risk that your customers are willing to look past whatever imperfections may exist because you’re showing them something better than feigned perfection - you’re showing them the truth? Can you even fathom doing this? Many firms cannot. They’ve gone so long without taking this risk and worked so hard on the optics…how does one make the turn?

Their loss, our opportunity. It takes a lot for people on Wall Street to be caught thinking out loud, musing publicly over theories that may or may not look foolish in hindsight. It’s gutsy to put opinions and hypotheses out there for public consumption and then be forced to reverse some of them when the information changes. How does one do this and not come off as a blunderer or a hypocrite? Process helps. Transparency helps. “Here’s what I was thinking, here’s why I was thinking it, here’s why I now know that I was wrong, here’s my new opinion based on what I’ve learned since.”

The audience has a role to play in this new era too. Forgiveness. Understanding. They have to accept the process and recognize it as superior to the way things were. The audience for investing insights has to allow for the possibility that not all of the insights will prove to have been prescient. In baseball, you can bat .300 and make Cooperstown. On Wall Street, if you’re nine of ten, somebody somewhere only heard the one call you got wrong, and you are an idiot in that person’s eyes, irredeemably, forever. We have to knock that off. It’s silly.

I wrote the definitive book about financial experts in the media a decade ago. My co-author and I, Jeff Macke, talked to the legends of market commentary and did a deep dive into the history of financial punditry. The big conclusion I had drawn from writing and researching the book was that choosing whom to listen to was every bit as important as selecting investments. I came away thinking about how influential commentators could be on the investing public, for better or for worse.

Since then, I have tried to be the very best market commentator I could be. To ensure that the people listening were getting the most helpful, interesting and authentic version of myself I could possibly put forward. I don’t know if it’s coming across that way, but that’s the intent. It always will be.

What Are Your Thoughts

Michael Batnick and I covered the run up to the Nvidia earnings report, the state of the bull market and so much more on YouTube last night as we do every Tuesday. Full episode below in case you missed it:

Okay, talk soon - Josh