Tag Archive for: investment commentary

Reader challenge: Your favorite tool for investment commentary?

Investment commentary is a key component of client communications for many asset managers and financial advisors. Having the right tools can make your life easier, so let’s share information about them.

Share your favorite tool below

What’s YOUR favorite tool for creating commentary? Please share your top choice in the comments section below.

Any kind of tool is fine. For example: writing book, commentary template, data source, investment strategist, website, data source, software, or company.

My favorite tool is mind mapping because it helps me organize the information I collect from interviews when I ghostwrite investment commentary. I use mind maps to find and organize the most important information.

I’m looking forward to learning about YOUR favorite tools.

Market commentary with wit and wisdom

Can you recommend sources of market commentary with wit and wisdom? This request from a reader inspired me to ask my social media colleagues for suggestions.

Personally, I enjoy Off the Charts by Floyd Norris in The New York Times. If you’re a longtime reader of this blog, this may not surprise you. I’ve written several blog posts in praise of his writing skill, including “Plain English can bring your financial topic to life.”

Below you’ll find a list of other people’s suggestions. I credit the source in brackets when they gave me permission to name them. Some of the commentaries were recommended by their writers or someone working for their firm.

Still looking for more ideas? Check out the commentaries at Advisor Perspectives. To see what others like, click on the link to the most popular commentaries.

Your suggestions for witty and wise commentary

Did we miss any great sources of market commentary?

Please mention any other great market commentaries in the comments below.

Thank you very much, all of you who so generously contributed to this list.

Image courtesy of Keattikorn/ FreeDigitalPhotos.net

Poll: When can’t you replace “headwinds” in your commentary?

Is there any time you can’t substitute “challenges” for “headwinds” in investment or economic commentary?

“Headwinds” shows up everywhere in market and economic commentary. I don’t like it because its meaning isn’t clear in the context of commentary. I prefer plainer language, such as “challenges” or “barriers.”

When I posed this question on Twitter, Justin Smith of Jonathan Smith & Co. sent a tongue-in-cheek tweet about one situation in which it’s okay to use headwinds.




What do YOU think about headwinds?

Headwinds has a long history of use in our industry, so I won’t be surprised if many of you vote to continue using it.

Please answer the following question in the poll in the right-hand column of my blog: What is the best substitute for “headwinds” in market or economic commentary?

Your choices include:

  • Barriers
  • Challenges
  • There is no substitute for headwinds
  • (Add your own choice)

I look forward to hearing from you!



Ideal quarterly investment letters: Meaningful, specific, and short

Investment managers’ quarterly investment letters should be meaningful to clients, specific to the manager, and short. These are the key conclusions I drew from my quarterly investment letter survey.

Meaningful content

“Clarity,” “insight,” and “candor” were the most popular answers to the question, “What’s the ONE WORD that best describes what investment managers should strive for in their quarterly letters to clients?” I think these popular answers can be summed up by the term “meaningful content.”

The image below gives a visual overview of the responses. Type size is proportional to the number of respondents choosing a word as their answer.


Here are examples of how respondents explained their word choices.

  • “Clarity” suggests that you have done the reading, research, analysis and due diligence on what you’ve taken in. You have synthesized it. Rather than repeating a litany of what you’ve read, you provide a simple summary of what key points you commend to their attention and why.
  • Clarity. Clients appreciate honesty, and the best way to demonstrate honesty is to be clear in what you are saying. Always consider the client’s perspective. Put yourself in their shoes and ask yourself what is important / relevant, and how you would want it shown. And be honest with your answers.
  • Candid. Warren Buffet discusses both types of investment – the ones that made money and ones where he lost – candidly.
  • Clarity – The world and financial markets are very dynamic, intertwined, and complex. The ability of an investment manager to take seemingly disparate and complex topics and distill them down to an explainable relationship, etc is rare but very value-added.
  • Needs to reflect the voice of the investment team not marketing fluff.
  • Relevance – As a customer, it’s about my money, my future, my family, it’s not about your strategy, your brilliance, your research department. I need to know: Can I count on you?

Content specific to the manager

The survey asked respondents to specify whether various letter components were very important, important, somewhat important, unimportant, or not applicable. Respondents placed the highest importance on the manager’s investment strategy and review of the past quarter’s portfolio performance. Here’s the rank order:

  1. Manager’s investment strategy
  2. Review of the past quarter’s portfolio performance
  3. Manager’s market outlook
  4. Graphs, tables, or other illustrations
  5. Client-specific portfolio returns
  6. Stock-specific or security-specific comments
  7. Sector-level strategy
  8. Review of the past quarter’s market and economy
  9. Something not listed above

These results say to me that readers want content they couldn’t read elsewhere.

Here are some relevant responses:

  • The investments are a commodity…the client bought the firm and that brand should be consistently presented in all interactions.
  • What is missing in the vast majority of reports from managers is any genuine clue as to how and why they made/lost money. Market or asset class reviews or forecasts and returns summaries are ultimately meaningless if the manager doesn’t understand the drivers of his return. I like to see a thorough and genuinely insightful “attributions analysis” that makes it plain to the reader that the manager knows precisely why/how/where the money was made.
  • Needs to be something more than what I get from Bloomberg or WSJ commentary. I want to understand their outlook, and how that shapes their strategy.
  • Manager should include “what went right, what went wrong” during the quarter relative to investment performance. In other words, performance attribution at a high level.

Keep it short

More than 40% of respondents thought a quarterly investment letter should run two pages or less. A length of five pages or more was the least popular response, as you can see in the graph below.

Respondents favor shorter letters that are reader-friendly, as the comments below show.

  • Investors want you to tell them what THEY need to know, not everything YOU know!
  • I read a lot of quarterly letters, and I selfishly would like to be able to pull out the important nugget(s) quickly. More importantly, as an investment advisor I know that my clients will not put a lot of time into reading these letters. If they look long and boring, they simply won’t bother.
  • As an investment manager researcher, I read numerous quarterly commentaries from our sub advisors. The managers that are able to deliver the highlights clearly and in a concise manner stand out because they are better able to communicate their message to me and our clients.
  • In my experience in investment communications, I’ve learned that less can be more. Get to the point quickly! Most financial advisors (and investors) don’t have much time to read and are in a state of information overload. Many receiving a 3-page commentary will put it in their “read later” pile (meaning it may never be read). However, if they received a shorter commentary (1-page would be ideal), they might read it upon receipt, getting information in a much more timely manner.
  • People are busy and finance isn’t always the easiest or most scintillating topic; keep it short and sweet so you can keep your clients engaged and informed, Value their time.
  • After three pages, most people get bored 🙂

Make it personal

It’s not easy to make quarterly letters feel personal and customized without spending lots of time on them. Some of the techniques that respondents suggested for achieving this included:

  • Using “you”
  • Integrating data from portfolio accounting
  • Know the type of client that is attracted to your investment strategy and speak to that client’s biases and need for information.
  • Answer the question, what is in it for them? Comfort them? Encourage them?
  • Add a personal note within the body of the letter. “I took my son shopping for school supplies and Walmart…” and if there is an investment tie-in, so much the better.
  • Include  a personal touch regardless of how long it takes. These clients give us their hard earned money to manage and we should take time to report to them.


A number of comments supported my belief that letters should be well written.

  • I’m busy and I read a lot of investment letters, I don’t have time to reread investment letters in an effort to understand what the manager is really trying to tell me. I want a straightforward letter that I only have to read once to understand.
  • You must write to the level of the average individual, not at a level that will impress your peers. Your clients would not be working with you if they did not believe you are intelligent…you don’t have to show them how intelligent you are by spewing out words that fly over their heads. If you want personalized and relevant letters, you must bring yourself to their level.
  • I try to speak in my natural voice, rather than a “writing” voice. I also find that humor and self-deprecation (on non-professional issues) resonate with clients.

Thank you, CFA Institute LinkedIn Group members and other respondents!

I am very grateful to all of the people who responded. Your comments made this topic come alive. I wish I could have included more of them.

I believe most of the survey respondents are financial or marketing professionals, but I didn’t collect their demographics. However, I suspect that members of two of my LinkedIn Groups–CFA Institute Members and Financial Writing/Marketing Communications–were particularly generous with their contributions.

Note: I edited some of the language for clarity on June 1, 2014.

“The Which Trials” according to “Woe is I”

Woe Is I

If you’ve ever worried whether to use “which” or “that” you’re not alone. It took me years to figure out. However, Patricia O’Connor lays out the rules nicely in “The Which Trials” section of her book, Woe is I: The Grammarphobe’s Guide to Better English in Plain English.

Which vs. that

Here are O’Connor’s rules from page 3 of her book.

  • If you can drop the clause and not lose the point of the sentence, use which. If you can’t, use that.
  • A which clause goes inside commas. A that clause doesn’t.

Investment commentary example

I grabbed a sentence from a John Mauldin commentary to illustrate O’Connor’s rules for using which. In “A Player to Be Named Later,” he wrote, “The carrot is 1% financing for your banks, which can then buy your bonds at 4-5-6% (depending on the country).”

Which is proper in this sentence because the following sentence makes sense: “The carrot is 1% financing for your banks.” Mauldin properly places a comma before the start of the which clause.

Here’s a Mauldin sentence that properly uses that: “Will those lines look like the one that Colonel Travis drew with his sword at the Alamo, where those who crossed and joined him knew their fate?” A sentence consisting only of “Will those lines look like the one?” doesn’t make sense. Thus, that is required.

The first sentence of Mauldin’s commentary requires a judgment call about whether the second clause is essential to the meaning of the sentence. It says, “We have come to the end of yet another European Summit that was supposed to be the one to fix the problem.” The shortened version of the sentence–“We have come to the end of yet another European Summit”–works, suggesting which should replace that. However, it seems important to me that the summit failed to fix the problem. Without that phrase, the meaning of the sentence would change. Thus, it satisfies O’Connor’s stipulation that without the that clause you would “lose the point of the sentence.”

You’ll find more on these rules in “Which Versus That” by Grammar Girl Mignon Fogarty, one of my favorite online grammar resources. For a more technical explanation, see “Introduction and General Usage in Defining Clauses” on the Purdue Online Writing Lab site.

By the way, I wish Mauldin hadn’t capitalized “Summit.” But that’s a whole other issue, which I’ve explored in “Do you use ‘pride capitals’?

Woe is I is a fun read

I recommend O’Connor’s Woe is I as a fun read. Plus, you may learn something from it. I know I did. I’m glad I learned about it from a post on the Copyediting Facebook page.

Quarterly investment letters–Tell me “What makes them great?”

Quarterly investment letters are central to many asset managers’ communications with their clients. That’s why I’m asking your help in defining what makes them great.

Please answer my six-question survey (NOTE: I’ve removed the link to this expired survey]. I’ll report on the results in a future blog post.

You inspired me. Thanks!

Investment professionals care intensely about these letters, as I learned when I asked members of  my LinkedIn Groups the following question:

The responses to this “one word” question inspired this survey. I feel fortunate to belong to this community. Thank you!

If a “nobody” wrote Jeremy Grantham’s quarterly letter…

Jeremy Grantham of GMO is a thinker whose words command attention. Financial professionals will read his quarterly investment letters regardless of how well they’re written. But if an unknown strategist delivered the same content, she or he would not benefit from the same indulgence. In fact, few people might have advanced beyond the initial paragraph about his busy schedule. This realization prompted me to think about how I’d rewrite “The Shortest Quarterly Letter Ever,” Grantham’s December 2011 missive.

Headings: An easy fix for bullet point overload

The first two pages of Grantham’s four-page letter consists almost solely of bullet points. It isn’t easy for the human brain to process more than three to six bullet points.

If Grantham didn’t have time to do more than write bullet points, he could have asked a colleague to group his bullet points by topic under a heading. For example, he has a number of bullet points addressing the position of the U.S., which could have been grouped under headings such as

  • Challenges faced by the U.S. and the rest of the developed world
  • America’s competitive weaknesses vs. other countries
  • American social weaknesses

My headings may not be perfect, but they offer more direction to the reader who skims the letter. Right now, the only headings seen by the reader are not informative: “Notes to Myself” and “Recommendations.” Based on these headings, I’d zoom right to “Recommendations,” missing the views that underlie Grantham’s recommendations.

Bold type: Another easy aid to reading

Bold type is another way to help readers distinguish what’s more important.

For example, the following is a sentence I might have bolded in Grantham’s letter:

When one of these old fashioned but typical declines occurs, professional investors, conditioned by our more recent ephemeral bear markets, will have a permanent built-in expectation of an imminent recovery that will not come.

However, this sentence is currently buried in a 15-line paragraph. However, I do like that the paragraph starts with a bolded phrase: “No Market for Young Men.” This phrase helps readers grasp the point that Grantham gradually builds toward in his paragraph. The graph that follows is also helpful.

Massive overhaul

If I had my druthers, I’d rewrite this piece into paragraphs. The piece would start with an introductory overview. It would use headings, and possibly subheadings.

Here’s my quick, bullet-pointed introduction to Grantham’s content, with an emphasis on his strongest point.

S&P Headed for a L-O-N-G Correction

The U.S. stock market could be headed for a 14-year correction, if historical averages for corrections following bubbles hold true. Other negatives for the U.S. include

  • Demographics that also plague the rest of the developed world
  • Inadequate savings
  • The weaknesses in our infrastructure, education, and government
  • Social issues, such as greater income inequality

In light of these and other factors, I recommend

  • Avoiding low quality U.S. stocks
  • Tilting toward safety
  • Avoiding duration risk
  • Moving slowly into resources in the ground

If you’re not a “Grantham”

If you write investment commentary–and you’re not a strategist of Grantham’s stature–please keep my suggestions in mind as you draft your quarterly market commentary.

You’ll find links to more investment commentary tips in “Resources for quarterly investment commentary writers.”

Feb. 8, 2018 update: I removed the broken link to Grantham’s commentary, which is no longer available online.

Tweets from Jack Malvey’s Boston Security Analysts Society talk

BNY Mellon’s Jack Malvey spoke about the Search for Global Relative Value During the Great Transition Age, 2009-2025, to the Boston Security Analysts Society yesterday.

I tweeted some of the bits that interested me the most. I was especially interested to learn that he holds no bonds in his personal portfolio.

If YOU attended the session, I’m interested to learn your thoughts about it.

Reader question: How can communicators manage difficult portfolio managers?

Investment communications professionals and portfolio managers don’t always see eye to eye on investment commentary, white papers, and other publications. But there are ways to manage business people in discussionyour differences, especially if you set expectations before portfolio managers write or even propose publications.

You asked, so I’m answering

Some of my readers asked, “What you can do when portfolio managers think their topics and writing are great, but you know they’re not?” Sometimes the experts propose topics that fascinate them, but they struggle to explain how the topics will appeal to their intended audience. Also, it’s not uncommon for experts to become engrossed in details and technical terms, but neglect to explain the big picture.

I had some ideas about how to manage these situations. And I picked up some more from my colleagues on LinkedIn, after bouncing my ideas off them. I’m quoting people only if they gave me their permission. Thank you, friends!

A five-part approach

In my opinion, there are five parts to an effective strategy for dealing with the portfolio managers.

  1. Use a process for considering topics.
  2. Create communications standards.
  3. Discuss.
  4. Edit.
  5. Get support from your boss.

1. Establish a process

Communicators can avoid conflicts by putting a process in place. As David Scales suggests, “If someone has what they think is a great idea, they should come to you first and discuss. Together, you can define the target audience…and key points to include.”

Julie Fordyce agrees, saying “If you get him thinking about these things seriously before he starts writing, then you can help him structure the paper properly at the outset and avoid the brain dump — the ‘here’s everything I know about this topic, and every chart and graph I’ve ever come up with’ problem.”

This is also the best time to squash potential white paper topics by pressing the portfolio manager about “Why will this topic interest the audience?” I like to ask “What problem does this topic solve for your readers?” and “Why will readers care about this topic?” Writer Nancy Miller says, “Investment professionals tend to think about what they know and what they want to tell. I try to get them to flip it around: What does your reader want or need to know? What’s the best way to make that happen?”

2. Create communications standards

Establishing written guidelines for your communications helps portfolio managers to understand why communications managers balk at their topic ideas and drafts. Your guidelines might be as broad as “You must establish in the first paragraph how this affects an affluent investor’s portfolio” or as nitpicky as “The plural of Treasury is Treasuries.”

I’m a big believer in explaining right away why the reader should care about the topic of any communication. If I worked on staff, I’d make that part of my firm’s communications standards. I’d also implement standards about exhibits, in addition to the usual style guidelines.

Style guidelines can defuse disagreements. Jenny L. Herring, who established style guidelines based on AP style, says, “It helped to be able to back up my guidelines with a standard reference work. It also helped when the heads of certain asset classes scheduled meetings with the portfolio managers to emphasize the importance of meeting deadlines and following style guidelines.” Support from the top always helps.

Your standards may vary depending on the audience for the final document. “Basis points” or even “bps” is fine for a time-sensitive communication between bond managers, but neither expression belongs in a document for individuals who are new to investing.

3. Discuss

Even if you have a process in place and your portfolio managers do their best to follow your guidelines, you still may run into problems. After all, portfolio managers aren’t professional writers.

This is when you should discuss the document. I suggest that communicators first say what is good about the document and then ask for help in building on the good things. Identify why the document doesn’t meet your firm’s communications standards. Criticize the piece, not the person.

I like this suggestion by Miller for dealing with portfolio managers who get bogged down in details: “I ask what they prefer to read — a document that shows the writer’s expertise or the document that gets to the point right away?”

Be realistic in your expectations. You can’t expect a busy portfolio manager to memorize your style guide. The communications professionals will probably have to do some fine-tuning before a document reaches the public.

4. Edit

Communications professionals should be prepared to edit as necessary. Do the best that you can, but you don’t have to fight over every little mistake. As Jeff McLean says, “Financial markets move too quickly to worry about a hyphen that the CEO mistakenly insisted on changing because it ‘didn’t look right.’ Recall that his or her name is on the piece, not the name of the ghostwriter or editor.” Bennett Inkeles agrees, “Do your best work, make a case for what’s right, then move on with a smile.”

Remember that sometimes the portfolio manager is right, even when their phrasing seems wrong. “I had a conversation with a financial writer who came to blows with a PM over verbiage he believed did not make sense. However, based on my experience, the verbiage in question made perfect sense,” says Inkeles.

In some cases, it makes sense to let portfolio managers sound like themselves, especially when a piece runs under the manager’s byline. “Readers want an authentic voice, not a Victorian grammar lesson,” says David Lufkin.

5. Get support from your boss

Sometimes you have to override a portfolio manager’s objections. I’d do that if a manager threw terms like duration and convexity into a piece for individual investors. In cases like this, it’s helpful to have your manager’s support.

March 11, 2013 update: I corrected a grammatical error in this piece. Yes, I make them, too.

Image courtesy of Ambro at FreeDigitalPhotos.net

Resources for quarterly investment commentary writers

If you’re about to start writing your quarterly investment performance commentary, you may find the following resources useful.