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The Value/Price of research -- an update

Soooo

I had a very pleasant dinner with a very good friend -- a big cheese in one of Canada premier investment bank -- that has Canada's largest research budget...by far.  I mentioned, en passant, that Nomura had set an annual price of $120,000 for its gold plated research, and that I was thinking that few would pay that kind of money.  He disagreed fundamentally.

In his view, research is not about paper but about access, access to special conference where every American tech CEO is present (you never hear about those conferences -- private and no journalists) they give "prime" investors the CEO's thinking -- that's privileged information (but legal).  Usually these conferences (Goldman has the best) are limited to 50/100 investors -- their top clients which is where the problem arises, in a sense, there are a lot more than 50/100 real investors, and for them this information simply doesn't exist!

My very good friend only though of his 50 best clients - those who, by the way, represent the vast majority of his trading income.  But here is the problem, this represents a massive breakdown in the objective of the market to have the players pay for research., and a level playing field.  Lets not forget that the objective here is to democratize information.

The paying for research is doing the exact opposite; those who don't have the top premium package just get the standard drivel -- for a paltry $200,000 per anum you get research, you get to speak to analysts the usual stuff.  If on the other hand you are a "Black Card Owner"  then you get full access. Because access is all that matters to my friend.  When he thinks of research he only thinks of those 50 client, the others simply don't exist.

In conclusion:  Its interesting that for banks they don't care if anyone wants their research they are welcome to get it, but they don't count anyway.  A different perspective that the regulator has not addressed -- which in fact it cannot address!

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