When Muriel Siebert was asked what the secret to her success was, she answered: "I put my head down, and charge."
Typical. Siebert was a research analyst in the U.S., at a time when women were a virtual non-entity on Wall Street. In 1967, there were 1,375 men on Wall Street and herself. The media dubbed the First Lady of Wall Street a total badass.
When analyst meetings were held at luncheon clubs where women were banned or not allowed through the front door, she entered through the kitchen.
She confessed that she became an expert in vulgarity and often told some of the men to “do the physically impossible to themselves”. To her, they were just words. And she wanted to be accepted as one of them.
Once at a restaurant, the chairman of the stock exchange ridiculed her in front of the guests with: “Muriel, some men object to your being on a floor. Why don't you ABC your seat to a man?" Her response: “Mr. Lasker, the day I ABC my seat to a man for a reason not to my liking, I will hold the goddamn biggest press conference the city of New York has ever seen."
[An ABC Agreement is a contract between a purchasing member with a seat on the NYSE and the brokerage firm for which they work. The Agreement states that the employee of the firm can: transfer their seat to another employee in the same firm; retain ownership and purchase a new seat for another delegate of the firm and sell the seat and transfer any gains to the firm.]
Indomitable, fearless and gutsy, Muriel Siebert was a trailblazer for women in the all-male bastion of Wall Street. Here are three learnings we can benefit from.
Know a lot about a little.
The first stock she really pushed was Boeing. When everyone else was offloading the stock, she was advising her clients to buy. (Those institutions that did pay heed to her buy call tripled their money).
Boeing already had the 707 jet (jet aircraft had been invented during WWII and the Boeing 707 was a commercial edition of the military jet tanker) and the 3-engine 727. The new 737 was a 2-engine jet that could get into smaller airports and could make money with fewer passengers.
That information was coupled with the fact that a senior official from United Airlines informed her that aircraft had passed every performance test it had been given on the day it was delivered. Moreover, she obtained a brochure showing the interchangeable spare parts that could be used for different planes in the fleet, thus lowering the operating costs.
When Siebert referred to doing her homework, she studied the company from every possible angle, and talked to customers, suppliers and engineers. She zeroed in on 15 to 20 companies and really delved into her subject, spending time with executives and keeping up to date on all contracts, cancellations, slowdowns and bids. She studied everything there was to know about management, production, suppliers, competition, research and labour conditions. If a company had a disappointing quarter, she could figure out whether it was a systemic problem in the organization or something beyond its control.
But with all the information amassed, she had a keen business acumen. In her interactions with company staff and management, it was obvious they would hold back information. The trick was in asking the right questions to benefit from informative answers. Her trick: Know a lot about a little.
At one time she heard rumours about a new development at Kodak. She dropped in at two camera stores on Wall Street and asked the salesmen what they thought. She was informed that the company was planning to introduce a drastically different model in a few months and showed it to her. She found it easy to use and took it to a Christmas party, where it caused quite a stir among the other guests. On visiting the company and analysing the numbers, she found that the stock was priced without reflecting any new possible developments. Her recommendation was a hit. That camera was an Instamatic. By 1970, 50 million had been produced.
Analyzing the market is both an art and a science.
The financial data that indicate how a company fits into the economy make up the science part, but seeing a pattern in those numbers and then looking ahead is an art.
From the beginning, the recondite world of figures seemed like second nature to me. At college, I didn't have to do any homework in my accounting courses and still could ace the exams because I could look at a page of numbers, and they would light up like a Broadway marquee.
When learning everything possible there is to know about a company, it is the numbers that eventually tell the story. The depreciation and cash flow that she learned in accounting classes was most valuable.
Captain Eddie Rickenbacker was a demi-god during the fifties. This American Ace of Aces was not just a celebrated fighter pilot (26 aerial victories in just two months of combat flying), but also a race car driver, airline executive and wartime adviser.
At an analyst meet, during his tenure as President of Eastern Airlines, she loudly told him: "Captain, I've figured out the company's earnings three ways, based on the three different depreciation schedules."
An aircraft, like most physical assets, exhibits a depreciation profile whereby its current market value depreciates to a residual value over time. Siebert read a footnote in the annual report stating that the company depreciated its aircraft three different ways: 5 years for taxes, 4 years for stockholders, 7 years internally. Incidentally, the accounting strategy was all legal.
Siebert’s diligent observation and courage to sidestep the fact that she was a female analyst venturing into unchartered territory impressed the Captain. He magnanimously paid her the highest compliment by loudly declaring: "Young lady, are you permanently employed? If not, there's a job for you at Eastern Airlines."
Another time, when looking at the annual report of National Cash Register (NCR), she noted that it depreciated its computers rapidly by 40% (first year), 30% (second year), 20% (third year), 10% (fourth year). That method is called a four-year "sum-of-the-digits," and any revenue after the four years was all profit, with no depreciation expenses. On playing around with the numbers, she found that the stock appeared cheap. On digging deeper and meeting the company officials, she concluded that NCR was not in the forefront of new technology, but it did have a lot of computers in the field. She began to recommend the stock because the earnings were going to pop as the computers that were installed became fully depreciated.
She called Chase Manhattan Bank, which already had a large piece of NCR, and requested that they buy. They declined. In fact, they reverted with a decision to sell the stock. They invited her to come in with a bid which would probably earn her $2,00,000 in commissions. She called Jack Bridgewood, who ran the entire investment department at Chase, and explained how NCR's earnings were going to increase sharply because of the depreciation schedule and advised him not to sell the stock but to buy more. He agreed. She lost the commission, but bagged a customer -- and a friend.
Understand Risk.
She once was invited to speak to female entrepreneurs in Hungary about running and growing a business. She suggested that they write down the best that could happen and the worst that could happen. If you aren’t willing to accept the worst, don’t do it. Recognizing a capacity for calculated risk is key to success. To Siebert, that meant analysing a situation and asking tough questions.
She put down her success to three 4-letter words ending in k.
Work.
Luck.
Risk.
Risk is the ability to study the information, assess liability and be brave enough to make a decision.
In the mid-1980's, she testified in Congress that junk bonds should be labelled as ''hazardous to your financial health.'' Fred Joseph, the CEO at Drexel Burnham Lambert, sent her a letter telling her she didn't know what she was talking about.
In an interview in 1999, she expressed her scepticism of the dot.com boom: “I don't like the craziness that anything that has "dot.com" can just zoom. I want to see revenues. I want to see a position in an industry.” She cautioned investors about the 2-tiered market where some companies were vastly overpriced, while others vastly underpriced. Her advice was to pay deep attention to the numbers and the cash flow.
Advice that is extremely relevant two decades later.
