In the last few days I have been thinking and debating about the timing for quarterly communications to reach existing investors. Here I am not talking about the press releases in newspapers or investor presentations sent only to institutional clients. Its also about the timeliness of the communication received by other investors – read retail investors.
What should be the ideal time for them (retail investors) to receive these newsletters or communication? I believe the ideal time is three days with one day for the printing and two for the postal communication to reach the investor. As a retail investor I don’t think it is too much to expect. We should remember that news articles and research reports are available to them by the next day, and hence I believe that any delay beyond three days does not serve the purpose of retail investor communication.
I also believe that the communication to retail investors (as compared to institutional investor communication) needs to be in easier to understand language and in a simple two page format. Anything more and the investors’ interest in reading it is lost.
When I write and design retail investor communication, I try to stick to the two-page rule with the following sections
- Key highlights – business and overall financial performances
- Segmental highlights and results
- Reasons for deviation from expectations of the management
- Management’s perception of the outlook for the rest of the fiscal and the next year
An additional page can contain the reported financial results for the investors’ ready reference.
In India, a lot of the retail investors are now web and email savvy. Corporates should start accepting requests for email communications from both investor and potential investors. I know a few corporates already do this, and this I hope catches on with the others.
To sum up, I believe and encourage all my clients to use my two-three rule, i.e. keep the communication no longer than two pages and do not delay it beyond three days.