"Essentially, this is one pretty bulled up crowd," writes Colas in a note to clients. "And it’s not just the presenters, many of whom run mutual funds or exchange traded funds. You’d expect them to be optimistic. No – it is the warm embrace of the message by the RIAs here that is most notable."
Colas's observations at the conference reminded him of something he calls the "Boston buy, New York sell" routine on Wall Street, which he describes as such:
For as much as Wall Street has changed over the last few decades, one ritual still begins the day at virtually all research-driven brokerage firms: the “Morning Call.” If you haven’t worked at one of these operations, you probably have a fairly antiseptic view of what this entails. Sector analysts and strategists gathering with the firm’s salespeople to opine on markets and stocks and guzzle on 20 ounce Starbucks… Some polite questioning, perhaps... And then all the salespeople hitting the phones to spread the word to clients on the firm’s investment viewpoints as expressed by the analysts.
The reality is somewhat sloppier. Analysts give their perspectives, yes, on the investment merits of the public companies under their coverage. But the most likely question from the sales staff is either “Why isn’t everything you just said already in the stock?” or “What are the 24 words I can say on the off chance I actually get a client on the phone?” And every salesperson serves accounts with a wide variety of investment perspectives. What the guy covering hedge funds needs from an analyst call is very different from the gal covering long-only mutual funds.
As a result, the same analyst morning call gets transmitted in very different ways. It might start as an upbeat reiteration of a “Buy” recommendation with some color about the current quarter that the analyst believes will be a penny below consensus. The hedgie salesman will call every account saying “My guy/gal says that this company is going to miss. Short the stock.” The mutual fund saleswoman will go out with “Gotta buy this name if/when it pukes on the quarter.” Old school Wall Street salespeople call this a “New York sell, Boston buy” call.
"To sum up, this is essentially one of those ' New York sell , Boston buy' calls," says Colas of the bullishness on display at the RIA conference.
"Is this group too amped up in the near term? Probably," writes Colas. "But I think it’s a mistake to call an absolute market top on the basis of this enthusiasm."
After all, says Colas, " this crowd has lived through so much in the last five years that I doubt their currently bullish tendencies will be easily derailed."
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