It's All In The Way You Frame It

There's an old saying, I think, where it doesn't matter if you're an expert about something, if you come off sounding like an insensitive dick or a clueless chump or an arrogant pundit no one (or at least some will be turned off) will listen. 

When I head Senate Majority leader Harry Reid say "only 36 000 people lost their jobs" and that it's "good," I remember a valuable lesson about humans I learned as a broker: Choose your words carefully.

Back when I had the responsibility of managing people's money (I know, me handling so sensitive a commodity for other people is a scary thought) one of my function and service was to call people on a quarterly basis to discuss their portfolio. The whole crux of the call was to keep things in perspective relative to the overall direction of the economy and markets.

Soon after the tech bubble burst like a teenager's zit, I had the difficult task of facing clients about the sudden drop in returns - even though our exposure to tech was limited in most cases to 10-15% of total assets. Those P/E multiples were insane. Such were the advantages of maintaining a conservative outlook and demeanour. No excitement led to sober thoughts.

Still, some portfolios were down in the negatives. The key for us, relative to the drop in the markets, clients were outperforming comparable indices. For example, if the S&P was down -5% and our client was down -2% that's a good thing. Perspective remember?

But the client doesn't see it that way. All they care about is they "lost" money. They don't go for all the "well, at least many people are in the same boat" routine. Sure, there are some clients, mostly experienced and sophisticated investors, take it in stride but for the overwhelming majority, it was little consolation.

We were aware of it and that's why we never said to a client "You only lost $14 000 today as opposed to the $28 000 you lost three months ago." A loss is a loss. You're still not in the positives. A client is emotional; not rational. He or she may intellectually grasp your point but emotionally they're a nervous wreck. It's just the way it is.

Instead, we'd day something like "market conditions remain difficult and your portfolio reflects these events" or "we're not overly pleased ourselves but if there's any positives to be taken from this" or"at this time the portfolio is down 2% but we anticipate a turn around" or "here's what we suggest we do" or  whatever. The point is we'd never upset them by saying, "it's good that you're down only 2%" because you just don't know how they're going to react. Playing defense is the best offense. 

Reid was not "wrong" in what he said. The thinking is, he hopes the bloodshed of loss jobs has stopped. Relative to previous numbers, this was welcomed news. However, he poorly conveyed that message. It may have been "only" 36 000 jobs lost but try and tell that to the 36 000! And then to add, it was "good" is just plain bad politics; if not insensitive.

Politicians don't seem to view unemployment numbers carrying a face. It's just that, numbers. And it shows when they speak this way.

It's all in the way you frame things. I remember reading about Dodgers boss Branch Rickey complaining about losing money. When a reporter asked his accountant if it was true, the accountant said they actually made money. It was how Rickey viewed profits. The previous year he made $4 million (I'm picking the number I can't remember what it was), this year he made $2 million. In his mind, he "lost" $2 million.

Politicians should keep this in mind when dealing with the public; people.