What a Work is Research!

How do you know what’s happened?

That’s what investors need to understand. How many cases of Coca-Cola shipped last year? How much new cash did Apple generate? How is trend for tax revenue in Puerto Rico? Current investments and future market values depend on the answers to these questions.

But as hard as investors try to find the answers, there are managers who want to hide them.. It might be to qualify for an incentive payment, it might be to avoid an embarrassing conversation. There are any number or reasons for management to shade the truth.

So how do we find out? Not surprisingly, Shakespeare wrote about uncovering the truth when he penned Hamlet. In the play, Prince Hamlet needs to determine whether his step-father—also his uncle—murdered his father. There are all kinds of ways for Hamlet’s uncle to conceal things. But eventually, he unburdens his soul in what he thinks is a private moment with Hamlet listening in the background.

And what is Hamlet’s method for figuring this out? He has a disciplined process. First, he feigns madness to get the chief suspects to act differently towards him. There’s an analytical side to what he does. Second, he discusses his findings with someone he trusts. He reviews his mistakes and tries to learn from them—a behavioral component. And finally he arranges to confront his uncle at an opportune moment—an organizational plan.

Successful research has to be analytical, behavioral, and organizational. You have to have a systematic way to look at the data, review your conclusions, and implement them. Hamlet found what he was looking for because he had a plan. “Though there be madness, there is method in it.”

Douglas R. Tengdin, CFA

Chief Investment Officer

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