Dressing the Part

I suppose that we can look to a return to greater formality in office dress. Those whose investment experience goes back quite a long way may recall the heady days of 1973, which preceded 1974’s catastrophic bear market. Not a few of the “favorite fifty” stocks of that era lost nine-tenths of their value. The particular heresy of that time was that almost no price was too high to pay for perpetual steady growth—the “one-decision” stock. This notion fed on itself until good but still standard stocks reached fifty, sixty, even seventy times earnings, on the grounds that you could buy them and put them away forever, making the money manager’s job ever so much simpler.

In those days, just as a couple of years back, young folk who were getting richer by the minute felt that there was no reason to dress up or to look serious. It was all so easy! All one had to do was buy the latest hot underwriting, or the latest wizard wheeze being flogged by any of several “in” brokers. The stocks soared, and everybody was happy. New funds and hedge funds poured out and promptly soared.

As a result, the dress styles on Wall Street became quite a lot like what we have seen recently. You would have nice young fellows (very few girls then) with shirts open to the navel, chests enhanced by medallions on chains around the neck, looking out the windows over the Battery with telescopes, or playing backgammon.

Everything was speculation, so that there was no use doing serious company analysis. Some managers even concluded that the sure way to make a buck was to be able to say “Yes” instantly, before the salesman had even completed his pitch, so that you could count on getting his “first call.” Thus, every later buyer would push up the stock you’d just bought.

Under these circumstances, with neophytes coining huge sums, it was silly and square (today, un-cool) to dress up. On the contrary, a client might think that you were a stuffy stick-in-the-mud if he saw you in a dark suit and a quiet tie. Dress became wilder and wilder—hand in hand with the market. You had to be “with it.”

After the 1974 crash, however, a great many firms were wiped out. I remember Warren Buffett going over a “tombstone” of brokers of that era with me, and pointing out how few had survived, and that more than half the holdings of the most famous – or infamous – funds of that era had either lost 90% of their value or gone bankrupt.

When the hotshots reappeared a year later seeking employment, they did not dress in the style that bespoke the discredited philosophy that had ruined them and many of their clients. Quite the contrary! They were turned out like J.P. Morgan: sober, serious, respectable.

In a professional firm, everything that is done should inspire confidence. If you see a rich doctor who’s in blue jeans and sandals, you will never be as confident as with one who clearly looks like the devoted servant of his profession. The same for priests and ministers. The clergy have a prescribed uniform and making it less formal usually makes them less sacramental.

I wonder if some undertakers ever swap their black suits for jazzier attire. I expect not.

On “dress-down Friday” you’re really telling the client that you don’t care what he thinks. It puts you out on a limb. If the results tell the client that underneath it all you are serious, able and honest, so be it. Usually, though, some confidence will be whittled away.

I remember a curious episode of the past. My mother, then well into her eighties, asked me to summon her lawyer so that she could make a small change in her will. So I called the law firm and asked them to send along someone who would understand what she wanted and embody it in appropriate language for signature. A few weeks later I asked her if things had gone off satisfactorily. “Yes,” she said, “I signed the codicil. But why didn’t you send me a lawyer?”

“Of course I sent you a lawyer,” said I, “What do you mean?”

“Well, he certainly didn’t look like a lawyer,” my mother answered. “He looked like a salesman, or something.”

I realized that it must have been a young associate who had gone to see her, who didn’t correspond to her concept of the sober professionalism of the lawyers she had always known (including my father and grandfather, as it happens).

Anyway in boom times professionals forget that inspiring client confidence by dress and everything else should be one of their primary concerns. Then they remember the rule, sometimes bitterly, during the inevitable aftermath.

Now, the dress-down phenomenon is starting to fade. Handling other people’s savings is a serious matter, and those who do it should try to look their part.