Eat What You Order, Not What You’re Served: Tips for Taking Command of Your Information Flow

You enter a restaurant and the server walks over to your table and serves you four plates of random food, most of which don’t appeal to your tastes. Unfortunately, many equity research analysts are getting just this in terms of their daily information flow, which is giving them the equivalent of professional indigestion.

In most fields, professionals can put parameters around their day such as:

• Doctors know how many patients they’ll see in a day
• Attorneys know how many depositions they can take in a day
• Salespeople know how many clients they can pitch in a day

We as analysts are bombarded by so much information (emails, news flow, company press releases, etc.), most could fill 24 hours just consuming the information made public that day. That’s why it’s so critical to take command of your information flow.

Proactively taking command of information flow can make a good analyst great

I’ve found the best analysts follow these best practices for processing information:

1. Pull vs. push
2. Fine tune news filters
3. Use mail rules
4. Follow GTD principles

Pull vs. Push: Don’t put yourself onto broad dissemination blast email systems such as those of the companies you cover, news services or sell-side firms. Their “push” strategy may give you comfort in knowing you won’t miss anything, but there’s a greater risk you’ll get crushed by the weight of everything you really don’t need.

Instead, set up systems to “pull” just the type of information you need when you need it. You might be worried about missing a key company press release, but you’ll pick it up in your news filter (discussed below), which you’ll check a few times during the day, when it works with your schedule, getting only what you want. If you’re on the buy-side and worried you’ll miss a great sell-side report, either tell your salesperson to alert you for certain types of reports, or check your favorite analyst’s work periodically (some sell-side systems allow you to set up specific filters to receive only research that meets very specific criteria).

Fine Tune News Filters: Many analysts set up their news filters to send them all stories on every company in their assigned universe, which results in two problems: 1) they often get too many stories; and 2) they don’t get insights about other companies or industries outside of those they follow that may impact their stocks.

If you’re getting more than 2-3 stories per stock per day, change your filter to only pull out those that have the “company name” and a key term like “earnings” or “EPS.” Also create keyword filters for the critical factors in your sector. When I followed the Western railroads, I had “Powder River Basin” as a key word so I could see when there were stories about that subject which, at times, was a critical factor for my stocks.

Fine tuning a news filter is like mastering a sport…it requires continuous effort and even then, there’s still room for improvement. Think of the filter as a key weapon against distractions of your time: the more you invest the more effective the weapon becomes. If you find you’re getting too many irrelevant stories, adjust the filter to remove them.

Use Mail Rules: After you take yourself off all of the blast email systems and news services, if you still find you’re getting more than 100 emails a day, use mail rules to send mail to folders for later review. Also, always unsubscribe from unwanted emails because if you don’t do it now, you’ll be spending time for the rest of your career deleting future emails from that source.

Follow GTD Principles: “Getting Things Done”, which is one of the two best time management tools I’ve come across (the other is FranklinCovey), has a basic and critically important principle: when you receive “stuff” (email, voicemail, report, phone call). They recommend putting this “stuff” into one of the following buckets:

• If you don’t need to act on it now or in the future immediately delete/bin it (don’t say “I’ll look at this again later and decide what to do with it” unless it absolutely requires another look)
• If you need to act on it and it takes less than 2 minutes to process, do it now
• If you need more than 2 minutes to process it, delegate or defer (defer to a time when you review information)

Batch process your information by having certain times of the day; 1) for quickly scanning information (such as emails and news), and 2) other times for more deeply reviewing information (such as reading a research report). If you try to mix the two, you’re destined to fall into one of the worst time killers. The mind is incapable of quickly switching between fast processing (like scanning emails or news stories) and deep thinking (such as reading a report or creating a detailed spreadsheet). Have 2-3 times a day for the quick scanning, such as 7:30 am, noon and 4 pm, while also creating blocks for the deep thinking activities (put it on your calendar like you would an important appointment).

Celebrate at Your Favorite Restaurant
Adopting the four practices above is not easy to do. Ask yourself at the end of each week for the next 3-4 weeks how well you’re doing in these four areas. Don’t forget it takes effort…if it were easy, everyone would be doing it. By getting command of your information flow, it will allow you to find more insights and become an even better analyst. When it comes time to celebrate at your favorite restaurant, just remember how great it is that the server is going to bring you what you order.

AnalystSolutions offers a workshop to help analyst manage their time and information flow, Maximize Your Time for Alpha Generation, which is available 24×7 on-demand.

This Best Practices Bulletin™ targets the following activity within our GAMMA PI™ framework:

#6. Productivity

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©AnalystSolutions LLP All rights reserved. James J. Valentine, CFA is author of Best Practices for Equity Research Analysts, founder of AnalystSolutions and was a top-ranked equity research analyst for ten consecutive years