Confessions of a Wall Street Analyst by Dan Reingold Read Free Book Online

flows, often rewarded the powerful and connected over the merely smart. It distorted the entire market in the process.
    Ed Comes Knocking
    By mid-1988, my new career was working out well. I didn’t feel like I was changing the world, exactly, or bringing peace to it, but I was working for a company that was doing some good by making phone calls cheaper and improving the quality of phone service. Plus, I was now making $70,000 a year. By my standard of seeking work that I found intellectually interesting, it was working out well. And by my more practical standard of earning a decent living for my family, I was content too.
    Over time, I had developed a good working relationship with some of the other analysts, particularly Ed Greenberg, the telecom analyst from Morgan Stanley. Physically, there was nothing impressive about him—he was a shortish and baldish guy—but his brain was something worth celebrating. He was one of the smartest people I’d ever met, with an incredible analytical ability but also a variety of other intellectual interests ranging from theater to music to baseball. Even in his forties, he still joked that his dream was to play center field for the Yankees.
    According to Institutional Investor, a magazine that ran what I thought at the time was an obscure survey of buy-siders, Ed was the number-two-rated Wall Street telecom analyst, behind Goldman’s Robert Morris. I was vaguely aware that the ranking meant a lot for analysts in terms of their compensation, and that we in MCI’s investor relations department needed to provide special care and feeding for the top vote-getters, since they were, as that famous line from George Orwell’s Animal Farm goes, more equal than others. But I liked Ed, not because of his ranking, but because of the way he thought. He figured out trends in telecom two or three years ahead of anyone, often even ahead of the chief executives and chief strategists at thecompanies he covered. In fact, he was so prescient that he often recommended investments far too early.
    Unlike that Grubman guy, this was someone whose approach to Wall Street research I appreciated. Ed was a deep thinker and extraordinarily thorough in his analytic work. He also was a no-bullshit kind of person who told you what he thought and why. And he was really good at the other side of the Wall Street job—interacting with buy-side investor clients and executives of companies like mine.
    At the time, I only vaguely understood that being an analyst required a bit of socializing too. Not only were you wined and dined constantly by the companies you covered, all of whom hoped desperately to convince you to say positive things about their company and its stock, but you in turn had to market yourself—and your research—to as many professional analysts and money managers as time would allow. Your reputation didn’t come only from the quality of your thinking, I later learned, but instead that was just one piece of a jigsaw puzzle that included how responsive you were to a client’s questions, how well clients liked you, and what kind of special tidbits you could dole out to them to make them feel special and appreciated. Basically, you had to be smart, you had to work your tail off, and you had to be popular. It reminded me of high school.
    In November 1988, Ed proposed that Morgan Stanley sponsor a European investor-relations “road show” for MCI. A road show for a company was a marketing trip in which its executives traveled around the country or the world, meeting with investors and, hopefully, convincing them to buy its stock. Acting as a friendly adviser, Morgan Stanley had offered to arrange meetings with the largest mutual and pension funds in each of Europe’s major cities. Morgan’s salespeople, along with Ed, would chaperone us around from meeting to meeting, telling our story.
    Jim convinced MCI’s new CFO that the trip made sense, since MCI needed more visibility in Europe and it would be