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To: Frank Pembleton who wrote (93345)	8/9/2001 9:57:57 AM
From: Jane4IceCream	Respond to of 95453

Another bombing in Israel this morn..... Yay Gold! Jane

To: Frank Pembleton who wrote (93345)	8/9/2001 10:08:43 AM
From: Frank Pembleton	Read Replies (1) \| Respond to of 95453

Investment analysts By John Sartz On July 2, I found myself in a large, nearly full church in Tallinn, Estonia, listening to a performance of Verdi's Requiem. Leafing through the program, I read that the concert was held in memory of Ilmar Martens, an Estonian-born Canadian who, after Estonian independence, became an adviser to the minister of finance. As I was reading his biography, the irony struck me that although I had never been to Estonia before and was completely devoid of Estonian background, I was one of the few people attending the concert who actually knew Ilmar Martens. As the concert proceeded I found myself becoming maudlin, not so much about Ilmar who passed away in 1999 at the age of 74. His life in all respects probably worked out far better than anyone would have dreamed when he was born in Tallinn in 1924 or as he fled to Sweden during World War II. The source of my nostalgia was Ilmar's occupation, and the progress we have seen over the past 30 to 40 years. You see Ilmar Martens was an investment analyst, and one of the pioneers of investment research in this country. He was extremely knowledgeable about the mining industry and if you wanted to know how much nickel capacity was scheduled to come on stream in the next five years, Ilmar was the guy you would phone. If I wanted to know how Inco shares were going to do as an investment I would not phone him, not only because that was not really Ilmar's strength, but more importantly because that was my job. Investment analysts were used as a source of industry and company expertise. They did fundamental research and became experts on their respective industries of specialization. Putting that knowledge into context with the overall market or with other industries was the job of a generalist, in other words, the function of a portfolio manager. When Ilmar Martens was a highly ranked mining analyst, these distinctions were relatively well understood. Today, unfortunately, they are not. For one thing, people like Ilmar Martens took considerable pride in their craft. Unfortunately, these days investment analysts are not really craftsmen; they are salesmen. Let's face it, a whole bunch of these guys don't have a clue how to do analysis. They are simply mouthpieces for management. In the 1970s and most of the '80s, company management was extremely reluctant to provide much information to analysts. I am not saying that was a good thing, but it did necessitate using secondary sources and doing your own thinking. Today analysts are far too prone to look for "guidance" from management. Quite often some investment analysts will say that following a corporate announcement he has to adjust his model before coming up with a new earnings estimate. Call me cynical, but mainly I think it means that he has to phone the VP of Finance for "guidance." Why else is it that 12 analysts would be within three per cent of each other when estimating a company's quarterly earnings, and all 12 turn out to be 60 per cent away from the actual result? If an analyst is looking for an impartial source of information, management ought to rank among the last people to approach. The mere fact that they work for the company is a guarantee of bias. If in addition someone has an option on two million shares, how likely do you think it is that the person will deliberately lead the analyst toward a negative opinion of the stock, even if it is overvalued? Welcome to the real world. Reading newspapers these days, one is led to believe that not sucking up to management is the end of the line for investment analysts. Well, it isn't. Learning the craft and developing alternative sources of information is as viable today as it was years ago. As the saying goes, "The truth will set you free." Ilmar Martens retired in the eighties. As I was listening to the performance of Requiem, I realized that I missed an era when our occupation was driven more by intellectual honesty and less by personal greed. Ilmar, I miss you. More importantly, I miss what you stood for. John Sartz is president and chief investment officer of Viking Capital Corp.