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Gal^Stad
Investments Inc.

spacer January 2005
Commentary

Once upon a time, in a land far, far away -- okay, in London, Ontario -- a very wet-behind-the-ears Benjy Gallander took a speech class at the University of Western Ontario.

His professor was a delightful gent, by the name of Mike Manson, whom he had known in a previous incarnation as a little fiddle at Camp White Pine. (Mike was then the head of riding.) Benjy was now somewhat bigger, and Professor Manson smelled much better, having exchanged his riding togs for the relaxed dress of a teacher not intent on suits and ties.

It occurred to Benjy that learning how to speak in front of a group was a skill that might one day come in handy -- certainly, he figured, more so than learning about chemical formulas or the socialization of nuns in Biafra. Though it is difficult to come to conclusions without absolute proof, Benj feels that he made the right decision.

Ben, on the other hand, went the baptism-by-fire route, cutting his teeth by moving from short interviews to progressively longer ones on television. Then he would sit down and analyze his performance.

And he was by far his harshest critic: where others would find no fault, Ben would notice ghosts and goblins that he wished to eradicate.

In addition to their television and radio appearances, speaking engagements include MoneySaver events, financial forums and talks at the public library's central branch in Toronto.

Recent invitations also took Benj back to the Universities of Western Ontario and Toronto and a special school for youths who are perhaps more streetwise than advisable. Sometimes, mainstream corporations like RBC Dominion Securities inquire about availability, although most "blue-chip" outfits probably remain oblivious of our contrarian existence. C'mon, no need to be afraid of little old us.

Overall, most of these appearances are enjoyable experiences. In the main, moderators are just doing their job and trying to extract information. From time to time an interviewer will try to put us on the spot, whether to be especially provocative, to slant the story to fulfill a given agenda, or simply to satisfy his or her own ego -- "Hmm, I'll look like the big dog if I find a way to make the guest seem smaller." Ho hum.

Sometimes, though, without any prodding, we manage to put hoof in mouth and say something that was not meant to be uddered [sic]. Other times, it is the very human act of misspeaking, and we don't catch our error until someone points it out or we listen to the poorly chosen words.

Take, for instance, the time that Benj talked about Novell winning its lawsuit against IBM. Oops. In fact, Big Blue spent mega millions buying Novell shares -- the court case actually involved a little company called Microsoft. Which is understandable: those darned blue chips and blue suits can often seem so interchangeable.

This is a hazard of speaking in public. Though we do not mean to mislead, sometimes, on the spur of the moment, mistakes are made. And as much as we try to choose our words carefully, even with the best of intentions the unhappy reality is that it will happen again.

But someone who is wilfully misleading is a whole other kettle of fish. There are some in the domains of money management and the capital markets who resort to this -- the cases in the courts today are manifold. The current trend -- one we support -- is to punish these people more rigorously.

While the consequences of their crimes are not as evident as, say, the robbery of a household, there isn't really a lot of difference between stealing a DVD player and raiding an investment account.

Then there is the other extreme, where corporate bigwigs are put in a lasso and information conveyed to the public is swaddled in blanket-safe language. At the opening of every conference call or AGM, the disclaimer is issued about some comments being "forward-looking statements" -- and guess what, they might be looking altogether in the wrong direction!

Wow, you mean these people can't reliably predict the future? It's almost like the "For Entertainment Purposes Only" caveat that appears at the bottom of the screen during an infomercial for a psychic.

Let's think about this: when everything is warned against, which auguries should investors take seriously?

Then there are the so-called "quiet periods," which seem to be getting longer and longer. While we appreciate that limits on investor access to information are meant to create a level playing field, if applied too harshly, they may leave everyone worse off.

Management philosophies may colour the information we as investors are subjected to. Some bigwigs seem hard-wired to present the glass-half-full scenario. Which raises the question: where is the line between a firm putting its best foot forward and misleading investors with unduly rosy projections?

At the other extreme, some leaders adopt foreboding tones that would make Eeyore seem cheerful -- and then, lo and behold, the results are invariably better than anticipated. While corporate spin sometimes plays a role here, at other times it is simply the product of people obeying their genetic codes. Of course things will be good -- my DNA is encoded with happy beans!

Some folks complain that our own presentation of both sides of issues leaves them too confused to do anything -- perhaps we have a Hamlet gene?

Management can swing between the positive and the negative according to the exigencies of the moment. We cannot count the number of times that organizations have acquired wonderful firms that are expected to immediately add to earnings.

Then, a few years later, in a stunning turnabout, they are divested -- as coolly as yesterday's newspaper -- as non-core operations. When this happens, it's especially humorous to watch the CEO treat his own decision as if it were made, not by him, but by some demented alien pod creature.

There is often a wide variance between a thought dashed off the top of the head and a carefully crafted message. What appears as an incandescent brainstorm in the evening can pale in the cold light of day; the clever is unmasked as the banal.

When we prepare our rants for Contra or The Globe and Mail, we have the luxury of time to refine our thoughts, as well as to research and give them greater depth. Editors step into the fray and correct errors or misleading statements and help us communicate ideas more succinctly.

This process offers a better chance of getting it right, and is one reason amongst many that words on a page are so very worthwhile.


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