Perspectives

The stock market world is, above all, a world of communication. Of very sophisticated and very specialized communication, but it is nonetheless a world of communication.

As in all other scenarios in life, in the world of stock market communication and relationships, there is a sender (the company), a receiver (the funds, the shareholders, the retailers), a context (the market), and a message.

For better or worse, there is always a message. Keeping silent is also conveying a message. Saying something and thinking about how to control a narrative is best.

As Winston Churchill understood well in the middle of World War II, when he appointed Brendan Bracken as Minister of Information, as important as fighting, is communicating how you fight. Bracken would later found The Banker magazine and resurrect the Financial Times. As Churchill wrote, “the empires of the future will be empires of the mind.”

And stock market life is all about planning campaigns, stockpiling ammunition, and taking positions. Not on the battlefields, but in the minds of investors. In the short, medium, and long term.

I have always said that for a company to be known and recognized, it takes at least 18 months of consistent work. From there, everything is a little easier. It doesn’t matter if the company is a local business, or a multinational technology company. Investors, consumers, and market players need a reasonable amount of time to assume, understand and comprehend a company’s strategy and its fundamentals.

My experience has taught me that the men and women who succeed in these battles always have a team by their side, usually discreetly, working on designing the perfect Equity Story. This economic narrative integrates the financial data with the company’s strategy and coordinates the distribution of the message.

In essence, the stock market is not (only) the space where small parts of a company are bought and sold. It is where messages are conveyed to those who want to participate in today’s economic narrative.

Clausewitz said that the objective of any campaign is to take possession of the center of gravity of a conflict. In capitalism, the center of gravity is not in money, nor capital flows, nor financing. It is in the minds of shareholders. Being listed on the stock exchange is a daily struggle to maintain a position in shareholders’ minds. To position yourself solidly there and stay there.

When the center of gravity of the conflict is controlled, shareholders’ minds hardly move from there. Abbot Laboratories has been in the S&P 500 since 1964, Altria since 1957, agricultural company ADM since 1980, railroad corporation CSX since 1967, and telecom Verizon since 1983.

Consider what it can mean to have an audience that listens to your message, attentively, for 40 or 50 years. To have year after year after year, a group of investors betting on the way you and your team do your job. That they trust the way you manage the company, recruit the next generation of leaders, pay dividends, innovate, create, and grow. Consider what it can mean to be in the conversation of a family year after year and contribute to the wealth of others.

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The Equity Story is not a marketing document, nor is it a document intended to dictate to journalists what to write about us. It is the company’s core strategic document, articulated not around what we are, but what we are going to be as a result of the capital we have raised and our own talent. What sector we work in and why we are here, what our competitive advantage is, how we manage our resources, and how we will continue to do so in the future.

It is our economic narrative. It is not just a matter of dumping Excel spreadsheets and numbers into a poorly designed PowerPoint presentation, but of explaining the context behind the decisions and identifying the decision-makers.

All listed companies, as well as those that issue debt or aspire to go public, need an equity story. Don’t be fooled by investment bankers who leave everything in the hands of endless prospectuses that no one reads. The financial markets will all but collapse the day we let lawyers write press releases full of acronyms, parentheses, and incomprehensible phrases.

When an investor puts money into your stock or bond, they cannot put that money into another company. Choosing a stock is like selecting a spouse or a dance partner. You had better be clear about why you are investing.

Many shareholders bet on companies and remain shareholders for years because they want to be part of a story. A company without a narrative is an invisible company. Silence in the markets is punished, and the price of not telling your story well is a discount that is paid every day in the market, and it is paid very dearly.

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