Executives of companies with active investor relations programs might be considering whether to trim activities or "hunker down," given the choppy stock markets. They shouldn't.
For those considering going quiet, they believe that with news headlines whipsawing the equity markets, most investors will stay on the sidelines until the storm passes. At first glance, such reasoning rings true, but I think it could easily work against them.
While some investors will surely seek shelter through the rough times, this is not true for the overwhelming majority of money and fund managers. Their job is to invest. And just like postal workers, they are expected to deliver no matter the weather. Sure, they'll be a bit more cautious and avoid certain industry sectors or stocks, but they know that if they are any good, they can make money for their clients regardless of a tough time. Let's remember that in a typical day, there are more than 1.6 billion shares handled on the New York Stock Exchange.
With fear dominating the risk-reward ratio, managers may take a bit longer before they buy and sell, but they have no choice and have to put the capital to use. In fact, a tough market is often when young managers make names for themselves, proving that they can find opportunity in any market.
For the IR officer, now is the time to stay visible to investors, assuming that is their usual stance. Keeping a lower profile can easily send the wrong and damaging message: That you're hiding and bad news is just around the corner. Shareholders - both current and prospective - will likely have more questions now than before, and are seeking more assurance that your company is on track to meet its business objectives.
Instead of hiding, companies must continue to attend and present at investor conferences. Some organizations may argue that with the amount of market volatility, such time and resources are better spent skipping conferences, but investors want to hear from you and know how well you're navigating the choppy seas.
Now, even if your business objectives are modest, is a good time for a company's management to demonstrate its prowess at cutting costs and nimbleness to react in real time. Investors are waiting to see how quickly management can move to eliminate costs that are a drag on the business, a sign of a company's integration.
The same goes for communicating directly with investors, who even in good times can take months before taking a position. Now is the ideal time to connect and help them understand how your company is performing and how it stands to benefit when the market regains its footing. The same can be said of communicating with your own employees, who are also often shareholders. They're reading the newspapers and getting nervous. They need reassurance.
In some ways, these market conditions are similar to the week between Christmas and New Year's, a period when people assume that nothing gets done, but it actually can be the year's most productive week. Take advantage.
Fred Bratman is president of Hyde Park Financial Communications.