About Security Analysts
There was a time in history, like from 1942 to 1975, when Security Analysts were respected people. They were a tad bookish, not very good at cocktail parties and somewhat obsessed with odd math things like ratios. Very few of them got rich, even fewer of them went to jail and most of them were (as far as we know) good fathers and husbands because, back then, very few of them were women.
Something went wrong in the late 70’s and into the early 80’s (maybe something in the water?), when SA’s became a slightly different breed; ego driven, greedy and generally unpleasant in many ways. While the old school folks drifted off Wall Street and became “buy siders”, newcomers began arriving with VERY impressive degrees in math, economics and finance from VERY impressive schools and started becoming famous as “sell siders”. There were a few of us, iconoclasts and outcasts generally, who sat in private companies, doing our analysis and watching (with scorn and, perhaps, some envy) as the profession soared to weird, incomprehensible heights before flaming out in the late 90’s, often with large fines and/or jail sentences attached.
Buy-side analysts are, probably, the best of the breed. They work for private companies, often times insurance or finance companies or, more lately, hedge funds and private equity orgs, and astutely guide their firms to good investment returns using solid analytic techniques. They are, by and large, intelligent, well informed and alert to new trends, changing cultures and societies, good soldiers for their employers and no more or less dull than the rest of us.
Sell-side analysts are, conversely, tarred with the brush of the TV talking heads and overt corruption evidenced in the madness of the dot.com era. Sell siders were, at one time, reliable sources of information for serious investors separated by the Chinese Wall from investment banking decisions, M&A business and all the other freakish nonsense conducted in the 90’s. While there are probably some good, honest, uncorrupted sell siders left, we don’t know any of them and wouldn’t trust them with our teenage daughter if we did. Sell siders profit by convincing investors to do something, anything, and they do that without shame or conscience.
Independent analysts are, by their nature, independent. We work for ourselves, uniquely incapable, it seems, to survive inside corporate bureaucracies with buy siders and completely intolerant of the sales motivation of sell siders. We deliver to our clients the highest quality, objective reports we can possibly put together knowing that anything less means we lose clients and our livelihood.
Independent Analysts today are male and female, black and white, old and young (not very young) and have backgrounds in almost any conceivable area of American commerce. We are from accounting, purchasing, operations, and finance; have worked as cops, dentists, truck drivers, teachers and roofers with an occasional lawyer thrown in to provide a glimmer of tawdriness. We have little in common with each other, in fact, other than the pleasure we get from the analyses we do and a weird camaraderie that comes from debating the merits of corporate balance sheets.