The screens are red again.
– What do you recommend now, the PM asks the analyst.
The analyst swallows.
– I’m sticking with my buys, the analyst says. Good companies.
The PM narrows his eyes at the screens.
– They’re down double digits, the PM says.
The analyst swallows again.
– I like them, the analyst says. You liked them too.
The PM narrows his eyes at the analyst.
– I have to explain to our clients why we’re 300 basis points behind the benchmark. They won’t like that. I won’t like that.
The analyst frowns and nods his head.
– No. But if you liked the stocks then, you’ve got to love them now. Right?
The PM pushes back his chair.
– Your reasoned analysis is to buy the dip?
The analyst frowns and shakes his head.
– Good companies are trading cheaper.
The PM shakes his head.
– That’s it? That’s what we pay you for?
The analyst stands up.
– I’ll go run the models again.
The PM shakes his head again.
– Stop, he says to the analyst.
The PM picks up the phone.
– Cut my top five, he says into the phone. By a third.
The PM turns back to the screens.
– No need to run your models, he says to the analyst. Just go.
- What might the PM be trying to achieve by treating the analyst this way?
- What might be the unintended consequences for the PM?
- What advice would you give to the PM? And to the analyst?