DIANE HARRISON In Investing, Theres No Denying The Importance Of Being Earnest

This article appeared on 6 November 2013 in the Comment section of HFMWeek

In Investing, Theres No Denying The Importance Of Being Earnest

scar Wildes masterpiece play, The Importance of Being Earnest, was first performed in 1895 at the St. James's Theatre in London. As summarized by Wikipedia: it is a farcical comedy in which the protagonists maintain fictitious person in order to escape burdensome social obligations. Working within the social conventions of late Victorian London, the play's major themes are the triviality with which it treats institutions as serious as marriage, and the resulting satire of Victorian ways. It was a tour de force of deception masquerading as clarity, from the moniker in the title (Ernest, a masculine name, and earnest, the virtue of steadfastness and seriousness) which sets the theme for the entire farce. The play is regarded as both Wildes best work as well as the reason for his downfall, treading as he did on the head of the proverbial pin between satire and outright hostility towards the London society he sought to impress. Ultimately, society bested him, and Wilde was cast out, a broken man with a reputation in tatters. Hubris is Everywhere in the Financial Community What does this have to do with investing? Several interesting parallels can be drawn, with lessons to be learned from poor Wildes debacle. The Oxford dictionary defines earnest (the adjective) as resulting from or showing sincere and intense conviction and its derivation, earnest money, as money paid to confirm a contract. Theres no doubt that these qualities, sincerity and conviction, will stand most investment managers in good stead with investors seeking a relationship. However, managers with the brilliance and the skills of a Wilde in terms of their financial prowess need to caution themselves against falling prey to the hubris which ultimately ruined Wilde. They should try to represent what they can expect to deliver and perform according to those expectations within reason in order to satisfy the relationship contract with their investors. Some attributes that will assist them in this effort with investors include the following: BE CLEAR. Take precaution against trying to be too granular and specific in what is presented to investors. If it sounds like a science experience or a Ph.D. thesis then its too complicated to be readily absorbed by the audience. It seems elementary to point out that the descriptions of the investment approach and process should be simplified, yet it takes a surprising amount of effort to streamline what has taken a manager sometime years to learn and build.
PANEGYRIC MARKETING| NOVEMBER 2013

DIANE HARRISON In Investing, Theres No Denying The Importance Of Being Earnest

ACT IN GOOD FAITH AND BE STRAIGHTFORWARD. Say what you mean and mean what you say. No more, no less. If you dont embody it in your regular business activities, then dont claim it. Investors appreciate real information delivered in real time. They can handle the news, good or bad, about the current state of the investment relationship. What they dont want, and ultimately will shun, is obfuscation and spin when things are less than optimal. Theres an old saying in the Italian community, The fish stinks from the head. If investors smell something b ad, they will blame the manager, so be sure all representatives in the firm are singing from the same songbook. ADVERTISE OR NOT, BUT PROMOTE YOUR AUTHENTICITY. Being true to your promise and your style is the hallmark of a successful message and brand, and this holds true for investment managers as well as any business. This is critical in the world of private placements, where all contact with potential investors is scrutinized for compliance with or exemptions from the regulatory rules that govern the business. Every exchange and experience investors have with a manager either reinforces or weakens the impression made on them. Be sure to conduct an ongoing diligence process on who and what is in touch with the investor community, in person, in print, on-line, and through your service providers. If something doesnt fit with the others, fix it or get rid of it. Otherwise, you run the risk, like Oscar Wilde, of being cast out of the society you wish to impress.

The Higher They Rise, The Harder They Fall Examples of managers who have sought to do an end run around these basic guidelines are legendary. They provide the fodder for much of the salacious gossip that titillates the investment community, and need no further clarification to the audience that has watched them fall. Dont become one of the future fallen heroes. Exercising common sense, good business practices, and straightforward, honest interactions with investors will keep you on the moral side of the investment society for the long term.

Diane Harrison is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 and specializing in a wide range of writing services within the alternative assets sector. She has over 20 y ears of expertise in hedge fund marketing, investor relations, sales collateral, and a variety of thought leadership deliverables. A published author and speaker, Ms. Harrisons work has appeared in many industry publications, both in print and on -line. Contact: dharrison@panegyricmarketing.com or visit www.panegyricmarketing.com.

PANEGYRIC MARKETING| NOVEMBER 2013