What You Need to Know About the Most Sacred Part of the Day

There are three classes of people who don’t think markets work: the Cubans, the North Koreans and the active find managers.”-Rex Sinquefield, Dimensional Fund Managers

All industries have their quirks and specific culture that newbies and those considering entering ignore at their absolute peril. In the equities business it all boils down to the morning meeting. The morning meeting is sacred. You can be out all night long with clients and have the world’s worst hangover the next day but you better not miss the morning meeting.

It is perfectly OK to stumble in to work in time for the morning meeting, reeking of booze and ciggies and unshaven and then go back to your desk and throw up. If you miss the morning meeting you have sinned, big time.

The Most Critical Time

The morning meeting is critical because it is the one time of the day that all parts of the business get together and plan out the business for that day. The analysts in research will present their new reports, or updates to the sales (stockbrokers) and sales traders. Management often attends and if you are unlucky, even compliance might be there. Often other offices will also dial in to the call. In Asia, we always have all the offices in each country call in.

In the better firms, sales generally lead the meeting. They (and sometimes the traders) drill the analysts on each and every story. We do this to better understand what we need to tell the clients right after the meeting and to convince ourselves the story actually makes sense. We are on the front line everyday talking to the clients and we better have the story right and it better make sense or we lose credibility and that means we lose business.

The morning meeting usually starts around 6:30 AM or 7:00 AM. (Yes, if you can’t get out of bed early in the morning this business is not for you). If an analyst is traveling they will often call in to the meeting, even if they are in a completely different time zone. This is particularly true if they have something to say.

The Daily Pack

All sales and traders have a large notebook in which they write down the day’s stories and data that back it up. “The Daily pack” is a report that is given to everyone when they enter the room. It contains all the research for that day. After the final edit, post morning meeting, “The Daily” is sent to all clients electronically.

If the analyst downgrades a big stock all our clients need to know about it right after the meeting. If the client actually owns the stock you call him first. If he doesn’t own the stock and is a hedge fund you call him up and see if you can get him to short it. If he disagrees with the analyst’s call then get him to buy it. YOU DON’T CARE. The idea is to generate a trade off the work the analyst has done. Some analysts have great market timing and move markets with their calls. Others are equally consistent at being contra-indicators; when they say sell, the stock soars. When they say it’s time to buy, the stock tanks. Although they may be frustrated, these analysts are equally valuable to the clients!

Eat, Drink, Pray

It is acceptable to bring a coffee or tea into the morning meeting. Wolfing down a pastrami on rye with extra mustard is frowned upon. Eat at your desk, you slob. Reading a newspaper during the morning meeting is also bad form – you should be listening or asking questions. And finally, don’t fall asleep during the meeting. I see junior analysts doing that a lot and it doesn’t do them any favors.

Most morning meetings last anywhere from half an hour to an hour. It depends on the size of the firm and how many stories there are that day. If you miss the morning meeting you may as well not go to work that day because you won’t know what is going on. It is mission critical.

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2 Comments Add yours

  1. Andrew Riddick
    September 29, 2011
    1:41 pm #comment-1

    ….and dont look at Blackberries either under the desk during the morning meeting. Research have worked hard to get their notes out. The least you as a salesperson can do it to have the manners to listen to them present the story, even if you may question the validity of their conclusion. As a salesman you are allow to be cynical about the conclusions of an analyst. You can bet that the clients will be. If an analyst cannot justify his work to a saleman and prove that he has considered most angles to a story, then he is going to find it even harder dealing with clients whose job is to be cynical of nearly ever story shown to them by a broking company.

    • Derek
      September 29, 2011
      3:24 pm #comment-2

      Excellent comment and very true. Words from an expert, everyone. Andrew loves his morning meetings and has been know to grill an analyst till smoke fills the room. Thanks again. Derek

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