All times are Eastern.
GOOD DAY
6:00AM – Wake up, shower, eat a nutritious protein-packed breakfast (Greek yogurt is good in this regard).
6:45AM – Commute to work. Read emails – nothing urgent. Check Bloomberg Top Stories – Asian and European markets are modestly up on the day, no major news.
7:30AM – Stop for a Starbucks Americano because the generic coffee-service coffee at work tastes something worse than awful. Arrive at work, realize your PM is out seeing clients today. Good start, sip Americano.
8:30AM – Someone set up a meeting with a sell side analyst who is out on a marketing trip.
“Are you coming to the meeting?”
“Did they bring breakfast?”
“Yes.”
“All right, I’ll be right there.”
9:29AM – Futures point to a slightly positive market open.
9:45AM – Check your Bloomberg Launchpad monitors: your longs are outperforming slightly and your shorts are underperforming slightly. Today is going to be a good day.
10:00AM – Company research: read sell side reports, talk to sell side analysts, work on your valuation models. In a nutshell, you are searching for investable ideas. Christopher Browne of the famous value investing firm Tweedy, Browne & Co. once remarked in a letter to shareholders that, “Were you to visit our offices, you would be reminded more of the reading room in a college library than some frenetic trading room at a major brokerage firm.”
12:30PM – Go get lunch and bring it back to your desk. Check out Dealbreaker, WallStreetOasis, and maybe even Deadspin.
1:30PM – More company research, tweaking models, etc.
4:00PM – Market closes and your stocks finish the day they same way they started – you added a couple of bps of outperformance today. Pat self on back.
6:00PM – Commute home.
11:00PM – Head to bed to get a nice 7 hours of sleep.
BAD DAY
Note: The bad day actually starts at 4:00PM on the good day with everything the same up until then.
4:10PM – Your largest overweight, ticker BETA, pre-announces earnings two weeks early.
4:12PM – The Bloomberg headlines start flashing:
“BETA PRE-ANNOUNCES BELOW RANGE”
“BETA SEES EPS 1.20 VS CONSENSUS 1.26”
“BETA TO HOLD CONFERENCE CALL AT 4:30PM”
F*ck. F*ck. F*CK!
4:15PM – Print out BETA’s press release and proceed to frantically pace around the office. Your good day has just gone to sh*t.
4:25PM – Check with your traders.
“What are you guys hearing on BETA?”
“Stock is down 10% in after hours trading. This thing is f*cked.”
Fantastic.
4:30PM – BETA conference call. Turns out they overestimated their revenue for the quarter and underestimated their expenses. Just f*cking fantastic.
5:30PM – Re-run your numbers and try to make sense of what just happened. Your PM tells you to figure it out and have a recommendation first thing tomorrow morning. Also, you need to prepare a written explanation for our Japanese clients because you know they will be asking about this name overnight tonight.
7:30PM – Commute home and nearly walk into traffic because your are distracted analyzing BETA in your head.
8:30PM – 11:00PM – Agonize over BETA. Replay all your analysis over and over in your head. What the f*ck do I do now?
11:00PM – Bed. Stare at wall.
3:00AM – Wake up dreaming about analyzing BETA. Yep, you are still f*cked when the market opens tomorrow.
3:00AM – 4:00AM – Stare at wall.
5:00AM – Give up trying to sleep and head to the office.
6:00AM – 8:00AM – Re-analyze everything you know about BETA. Read all the sell side research reports that have come out on BETA since the pre-announcement. As it turns out, the miss was due to a number of one-time items that will not be repeated. However, these items were something the company should have foreseen so it’s a ding against management’s credibility. Overall, you still believe in the story but lower your expected valuation for the company. You already know the stock is going to open down 10%, but you think the negative news is already reflected at that level. You recommend doing nothing and just watching it on the open – if it drops below 10% you are a better buyer.
8:00AM – 9:00AM – Investment team meeting to discuss your major f*ck up. You get berated and raked over the coals, but in the end the PMs agree with you final assessment to wait this out and be patient. This is not a time to sell on bad news as the long-term story is still good.
9:30AM – Stock opens down 10% as the after hours trading predicted.
9:35AM – You watch the real-time free fall using Bloomberg’s GIP function. Look! BETA just ticked up off its lows! Maybe the market will look through the one-time items and see this as a buying opportunity!
9:36AM – BETA ticks back down. Aw f*ck! I think I might vomit but I can’t remember the last time I ate. The lack of food saves my Bloomberg keyboard.
9:37AM – 4:00PM – Check the price of BETA every 3 minutes. The entire trading day feels like an eternity.
5:00PM – Go home, get drunk, and pass out. At least drunken sleep is better than no sleep.
FINAL THOUGHTS
Good days are easy, it’s how you handle the bad days that will define you as an analyst and an investor. Always remember Ben Graham’s sage advice: “The investor’s chief problem and worst enemy is likely to be himself.”
First things first, awesome website, reminds me of the quality/usefulness of Mergersandinquisitions. Just wanted to point out that theres a spelling error in the sentence. As it turns out, the miss was do to a number of one-time items that will not be repeated. It should be due instead of do. Keep up the good work Mike. Feel free to delete this comment as soon as you read it.
Thanks for the kind words … and the proofreading!
sounds like a hellava day of gamblin.. sign me up
Well, at least there’s good days.