Priceless Advice from an Financial Analyst

When I worked at KRON-TV in San Francisco in the 1990s, I was a publicist and got to see young financial print journalists Herb Greenberg cut his teeth in TV. His column in the business section of the San Francisco Chronicle was always a good read, even for a non-business or financial industry savvy person like me.

I remember his column speaking to me not just from a business perspective, but from a philosophical perspective. He may have offered sound financial advice, but what rang true for me were his observations described so simply, succinctly and honestly. Observations keenly attuned to the stories that brought meaning to numbers and businesses decisions impacting the market. His great writing spun analogies in my mind. Analogies to human behavior, to “gives and gets” and cause and effect.

After reading his April 26-27, 2008 story in The Wall Street Journal, “A Columinst’s Parting Advice,” I tore it from page B3 and kept it on my desk for a few weeks. I read it several times. I especially like Lesson No. 1 = the numbers don’t lie. For me, the numbers may be true but I believe people. And I see even great financial wizards see the sway power of people, even on absolute numbers. Here are some lines from his article I like most:

Like most journalists, much of what I know about business, investing and economics has been picked up through osmosis. It is the closest you can get to a backdoor MBA. — getting paid, in the process. Of course, just when you think you have figured it out, something comes out of left field to remind you that the lessons never really stop.

Lesson No. 1: The numbers don’t lie… avoid the spin or the face-to-face meeting that can create a psychological connection that may skew what otherwise would be black-and-white analysis. Don’t ever underestimate the power and influence of the human factor.

Lesson No. 2: Quality, not quantity….The more complex and convoluted the financial statements get, especially for businesses that aren’t overly complicated, the more reason to worry.

Lesson No. 5: Risk isn’t a four-letter word. A good rule of thumb is that before you buy, instead of asking how much you can make, first ask how much you can lose. That is what the smart guys do.

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Tags: HerbGreenberg, Advice, philosophy