A unit of Thomson Reuters broke word that the big bank will helm a team of other big banks for what in May could be the biggest IPO, raising perhaps $10 billion.

We don’t care who underwrites the deal. But thinking about Facebook and its banking soldiers of fortune, the giant and the mighty in massive conformity, we thought of the markets.

In the data we track, Morgan Stanley is king of index program-trading executions. For large clients of ours, its volumes surpass those of small exchanges. At the Nasdaq, Morgan Stanley is the top liquidity provider, trumping fraternal behemoths BofA Merrill and Barclays and high-frequency clearing maestro Wedbush. Last June, Global Custodian’s annual ranking of prime brokers – banks bundling securities services for the buyside – slotted Morgan Stanley a close second to Goldman Sachs.

We wrote in September how the same names show up everywhere. The ones running books of derivatives, making markets in Treasuries, trading bonds electronically and correlating seas of equity executions are the same.

Lost in the long shadows of the large was word that technology research boutique Kaufman Brothers closed its doors this week. Ticonderoga Securities shut down earlier is month. Formerly Reynders Gray & Co. on the floor of the NYSE, the firm offered differentiated research, direct-access trading and agency executions. WJB Capital, another boutique, shuttered around January 4 after failing to raise capital and seeing its financing costs rise as high as 25%.

Even mid-tiers are hitting headwinds. Memphis-based Morgan Keegan & Co owned by Regions Financial Bank will be acquired by Florida’s Raymond James.

Morgan Stanley and its monolithic kin by right win monumental deals. No argument. But it’s not underwriting we’re thinking about. It’s the way stocks trade. We know when dark-pool volume jumps at Morgan Stanley, or if behavior there departs from other program behaviors. But with ever fewer small brokers offering unique trade executions, markets lose vibrancy.

Many small brokers can’t meet trade-execution rules, so must route orders to big firms. Others receive payments for order flow, which mammoth brokers consolidate. Think of an elevator. People of different shapes, sizes, speeds and energy board it. Then all travel at the same speed – that of the elevator.

That’s what happens in markets. If investors want to buy your shares through a small broker providing research, and those orders route to Morgan Stanley for execution, they’re likely internalized or amalgamated into algorithmic schemes serving unintended ends. Thus, your price reflects program-trading rather than rational investment.

We’re glad Facebook and Morgan Stanley are around. But there’s irony that in a social world, markets are sterile machines. It’s curiously antisocial.

One of our technology geeks shared a link at TED, the place where nerds of a commonly self-aggrandized feather gather to bloviate about culture. In this one, Kevin Slavin, founder of a game-hatching thought shop bought by Zynga, discusses how algorithms run our world. The guy is a good speaker and knows his imagery. Of algorithms, he says: “We’re writing things that we can no longer read.”

Slavin sets up his piquant point this way. He was on a flight with a Hungarian physicist who’s on Wall Street writing algorithms. The Hungarian used to work for the Soviets using math and physics to find American Stealth aircraft. Apparently, technology dissolves the signature of Stealth planes into a million fragments so they won’t look like planes to radar. The Hungarian wrote equations to find electronic tidbits hiding planes.

Lo and behold, Wall Street is doing the same thing. Institutions are using algorithms to break down their stealth moves to buy and sell shares into a million pieces so they don’t show up on anyone’s screen. They’re hiding the aircraft, disguising the elephant. And a whole bunch of other algorithms are out winnowing signals to assemble patterns that show where elephants are pirouetting across putting greens.

I thought professionals in the IR chair could use this imagery. It’s not new to us. But it’s a way to explain trading to execs. Slavin notes how this activity comprises the great majority of volume, one part hiding what it does, the other trying to discover it. As he says, “This is your pension, your 401k, your mortgage.” And: “We’ve lost the sense of what’s actually happening in this world we’ve made.”

Something else struck me. Slavin relates a vignette from an auction at Amazon for a book out of print. The price goes from $1.7m to $23.7m. Nobody was buying or selling the book. No human said, “You know, $1.7m is enough really.” Machines were in combat, applying what Netflix calls pragmatic chaos. Choreographed machine rationale without common sense can imagine demand or recommend movies for you.

It can also assign prices to stocks. Algorithms assemble and fragment things. The things have no inherent value. Prices are zeroes and ones blended and dissolved at speeds many times faster than the click of a mouse. Numbers, grids, patterns, probing. It’s hide-and-seek. It’s Stealth warfare.

And here come earnings again. Everybody will look at the market for a sense of what investors think. We can’t even read what we wrote. Pragmatic chaos.

Regulators are trying to make a big Off Button to press on the inevitable day when pragmatic chaos picks incorrectly. Maybe we should just unplug it.

It was a rock tied with a leather strand to a wooden stand. The instructions said: “If rock is wet, it’s raining. If rock is dry and hot, it’s sunny. If rock is cold and covered with fluffy white layer, it’s snowing.”

Similarly, I saw this in a recent Bloomberg article: “The best way to keep pace with the S&P last year would have been a strategy that rotated between sectors based on the macro headlines,” said David Spika, fund manager at Westwood Holdings in Dallas.

That sounds a lot like “if rock is wet, it’s raining.” The elegance of simplicity notwithstanding, how do you distinguish the IR chair and your company’s shares in a market moving on whether the rock is wet or not?

One argument says you change your focus. Deemphasize the capital markets and instead get baptized in Dodd-Frank, proxy evolution, say-on-pay and myriad others rules and regulations oozing like molasses through public capital markets. Become a compliance concierge. Well and good. But you’ll be competing with internal and external legal counsel for thought leadership, and I find that the advantage lawyers have is they have law degrees.

Or you could change the world. Sure, that sounds hard and complying seems easy. But come on, who wants to just mark time on the IR hamster wheel?

Try this bold strategy. Ask your CFO to add three things to your job description: A responsibility to become the internal expert on trading markets. Point person for monitoring your exchange and the SEC for rules affecting how your stock trades. And “Chief Economist” for your company’s currency – your traded shares.

Which one sounds like more fun? Complying or changing the world?

You can’t change the world in eleven seconds. Only Tim Tebow can do that. But you can spend time each week educating yourself on how trading markets work. You can read rules your listing exchange proposes and advise management on whether to comment on ones harmful to your investors’ interests. One reason why markets are great for 5-second investment and lousy for 5-year investment is that those making the rules love 5-second investment.

And if you do those, and add in knowledge of macro factors, you’ll be an effective Chief Economist. A step at a time, instead of an 80-yard pass play to the end zone, you can help restore sanity and vitality to our profession. That’s good news, rewarding, and fun to boot.

And, go Broncos!

And with good reason. The lovely KQ and I winged southward with fellow wayfarers for time over the keel on the cayes and reefs of Belize. At Queens Cayes east off Placencia past the wildlife preserve at Laughing Bird Caye, we found what one friend called “your own Corona commercial.” As the sun faded toward dusk there, we caught this grand view of our boats on Dec 11. Our companions below the surface included this delightful fellow, a spotted eagle ray. The Eagle Ray Club is a good name for a rock band.

Inland on the far side of our trip we trekked the jungle and climbed this spectacular Mayan temple at Lamanai in the Orange Walk district. Lamanai, with some 32,000 structures hidden by the jungle, once was home to 60,000 Mayans. If the world ends next December (this comic strip offers an alternative view), we’ve redeemed the time between the best we could.

Speaking of speaking, the SEC in latter December told the Nasdaq no-way on its Market Quality Program proposal that would have authorized the exchange to charge small-cap stocks an additional $50,000-$100,000 annually to incentivize broker dealers to make markets. Read the proposal here (we say “read” loosely, as it’s composed in “marketstructureeze,” intelligible if you have a decryption tool akin to what the Allies in World War II used to debunk the German cipher machines called Enigmas).

The Nasdaq, NYSE, BATS and Direct Edge (as well as other exchange operators) file many rule-making proposals each year. These rules affect how your stock trades and often incentivize the very things making markets loathsome to real investors: statistical arbitrage and high-frequency trading. Why? These behaviors are essential to exchange profits. Thus, in 2011 alone, the Nasdaq, curator of the most codicil constipation, filed at least 171 rule proposals. The NYSE made 73 proposals, and BATS and Direct Edge 51 and 42, respectively.

SEC regulations require comment periods for each proposal. We weigh in when a rule strikes us as unhelpful to public companies. We cannot recall ever reading a single comment letter from a public company on any rule filing. Why? Good question. Public companies should be a key voice in the markets where their shares trade. Instead, listed companies have seemingly handed the hen house to the coyotes.

How about a New Year’s Resolution, IR pros? Resolve this year (this week?) to involve your General Counsel in watching the rule filings from your listing exchange.

Heck, do it yourself. Fast-trading is a by-product of exchange trading incentives. Nobody drives these more than statistical arbitragers and high-frequency traders from both sellside and buyside. As in any loyalty program, exchanges give their best customers the most attractive trading rates. But their best customers are often your worst enemies – in terms of setting real, natural prices.

It continues because thou protesteth too little. Read and comment on rule proposals from the NYSE, Nasdaq and BATS at the links below. You can view other comment letters to see the best way to opine, but it’s straightforward. Write a letter explaining your objection, emphasizing your standing as a publicly traded company listed by the exchange:

http://www.sec.gov/rules/sro/nasdaq.shtml

http://www.sec.gov/rules/sro/nyse.shtml

Exchanges’ sites:

http://www.nyse.com/nysenotices/nyse/rule-filings/list?year=2011

http://nasdaq.cchwallstreet.com/filings/

Let’s make 2012 The Year That Public Companies Spoke Up.

I don’t mean gambling, but real cards. You’re engaged with some seriousness. You’re watching how you bet and when, reading the players ahead and after you.

Then The House starts doling out stacks of chips. Would you play more or less cautiously if you had free chips?

Apply this thinking to equity markets, IR folks. In trading data, we saw European money sweeping into US equities Nov 28. Why did markets trembling Nov 25 decide by the following Monday to up the ante in risk-taking? Primary dealers implementing policy for global central banks also drive most program-trading strategies.

Thus, European money surmised that central banks would intervene, and their behavior reflected it. The rest caught on, and markets soared Nov 30 on free chips from central banks. It was short-lived. By Dec 2, we saw institutions market-wide assaying portfolio risk and locking in higher derivatives insurance. The chips were gone.

Money sat back expectantly. On Dec 8, The House delivered chips as the European Central Bank lowered interest rates. That’s devaluing the euro. At first, cheapening the euro increases the value of the dollar – which lowers US stocks (a la Dec 8). But if you’d hedged with derivatives as most of the globe did, you bluffed The House. Plus, the Fed will likely have to follow Europe’s bet up with a see-and-raise to devalue the dollar back into line with the euro (expect it next week, but before options expirations).

In poker, having “the nuts” is holding the best cards, and knowing it. Central banks have given arbitragers the nuts.

Arbitrage is a buy-low/sell-high strategy that depends on gaps. Say you’re in rush-hour traffic and all the cars are packed together and then a little gap forms and somebody shifts over from another lane. That driver has just arbitraged lanes of traffic. Now suppose suddenly a new empty lane materialized?

That lane is a stack of free chips in poker, or monetary intervention. A windfall. Global statistical arbitrage is money in planetary slosh after gaps. Remember, money can trade your equity, your options and Treasury futures in one fell swoop, in seconds or less. Or any random collection of electronically tradable securities from here to Stockholm.

Gritty rational money has bought growth issues, too. If inflation in equities is likely because The House may wander through with more free chips, that’s “growth,” not value (but is inflation growth? Hm.).

Generally, arbitrage makes life difficult for thoughtful investors. Investment certainty requires a fair and simple game. You buy in, you play your best, you win or lose. No free chips from The House.

So expect arbitrage. Expect volatility.

After breaking for a week as an act of giving thanks, we’re back. Karen and I joined 88,622 others in Aggieland at Kyle Field in College Station for the A&M football game last Thursday versus the Texas Longhorns. Disappointing outcome, great Thanksgiving.

There’s something special about Texas. People passing you on the street say hi and the kids say yes ma’am and yes sir. There’s a lot of what Kenny Chesney calls “the good stuff.” What may be the world’s greatest college bar, the Dixie Chicken, sits on the main College Station drag like an Old West saloon. Batwing doors, even.

Speaking of swinging doors, gyrations in markets make it awfully hard to use your stock price to measure investor sentiment (wasn’t that the idea behind exchanges?). In fact, there’s inherent contradiction between the way markets behave now and how the IR profession cultivates holders.

IR folks typically seek buy-and-hold money that does not trade. Yet executives frequently ask about the stock price. The news rushing at us round the clock tries to explain market behavior in rational terms. Yet stock prices are set by the latest fleeting bid or offer. Nine of ten times, those prices are not rational.

We advise clients to track Rational Price – our measure for the level at which thoughtful investment behavior jostles through the batwing doors of the market to compete with the din in there and stamp a price on your stock. It doesn’t happen often, frankly. About half the client base has had no new Rational Price since about Nov 4. The time between has mostly been about fear and greed vacillating around the euro.

One lesson: If you want rational money setting price, target investors with shorter horizons who’ll shoulder the batwing doors more frequently. If you’d like to hear more about rationally quantifying market behavior, send me an email and ask for our white paper on Measuring IR in Modern Markets.

Speaking of markets, we’ll wrap with a word on them. We warned clients that investors were shifting from equities to derivatives with options expirations Nov 16-18. We saw the biggest use of VIX S&P 500 volatility futures since August. The cause? The euro.

You remember a year ago we were talking about the potential demise of the euro? In a Wall Street Journal article Monday, ICAP Corporates, the biggest “wholesale counterparty” broker helping investors swap this for that globally, said it’s running tests for the return of the Greek drachma and maybe other national currencies.

The implication for IR? Trading is global. We track its impact on clients large and small. A euro-zone fracture would bring into question valuation mechanisms for entire global markets. Right now, it’s all relative. In 1999-2000, the euro’s creation coincided with a significant devaluation of the dollar and a huge bubble in stocks.

Because ETFs are miraculous.

The biblical story of creation is that something came from nothing. Same with the Christian concept of redemption – being bought for a price without rendering equal worth in kind.

Today, we’ll share with occupants of the IR chair the divine story of how ETFs work.

Before ETFs were closed-end mutual funds. Closed end funds (CEFs) are publicly traded securities that IPO to raise capital and pursue a business objective (like any business), in this case an investment thesis. Traded units have a price, and the net asset value rises and falls on the success of managers in achieving objectives. The rub with CEFs is that share value can depart from net asset value – just like stocks often separate from intrinsic business worth.

The investment industry, with support from regulators, devised ETFs to magically remedy through Creation and Redemption this fault of nature. ETF kingpin iShares, owned by Blackrock, illustrates here, with a clever floral analogy (thank you Joe Saluzzi at Themis Trading who alerted us to it). You don’t have to buy individual flowers and face market risks because iShares puts them in a bouquet for you. Great idea.

Now suppose instead of one bouquet you want a thousand? In the market, what happens if someone suddenly wants not a hundred but ten million shares of your stock? Supposing such a trade were even possible today, the impact on your market would be extraordinary. But what if you could instantly issue ten million shares – poof, out of thin air? Your stock price would stay the same, because supply would swell to absorb demand.

That’s what ETFs do. They create shares. They must specify the methodology in their prospectuses. For instance, the iShares Telecom ETF “IYZ” says “Creation Units” are blocks of 50,000 ETF shares that it will issue to certain “authorized participants.” Some are brokers, some institutional investors. In turn, these participants supply the ETF sponsor with the designated set of assets – the mix representing the ETF’s constitution. In the case of IYZ, it approximates the Dow Jones US Telecom Index.

Redemption is the reverse. The ETF sponsor “redeems” shares by taking back units and returning constituent shares. The elemental concepts of supply and demand are neutralized. Prices of components miraculously stay the same even as tens of billions of dollars flow to ETFs. It’s almost…perverse.

The ETF sponsor as God and creator of the ETF charges authorized participants a licensing fee and buyers of ETF shares a management fee. This seems a good business – charging fees both directions while you work your ETFs like bellows.

But there’s more. ETFs can only be created and redeemed in blocks – 50,000 shares in the instance we cited above. Beyond the obvious inclination for brokers and institutions to “manufacture” units of ETFs from discretionary liquidity as a way to offset portfolio risk without paying for it, the arbitrage opportunities around assembling and disassembling Creation Units stagger the imagination.

You can short ETFs. You can buy, sell and short options and futures on the underlying indexes. Buy, sell and short the components of indexes, and of ETFs, and the options on components. You can buy, sell and short ETF options. You could buy, sell and short closely related ETFs and all their components and related derivatives. You can swap them all, spread-trade them, buy, sell and short the volatility among them.

And how about trading ETFs long or short in small increments and then creating or redeeming units inversely in large chunks if you’re an authorized participant? Institutions and brokers are doing this with highly sophisticated algorithms. Software providers like Tethys Technology abound for maximizing outcomes.

The key to this kingdom, this arbitrage nirvana, is that one entity, through creation and redemption, is stable, while all the others vary.

No wonder ETFs are responsible for some 35-40% of daily market volume. No wonder everything is massively correlated. If ETFs drive demand for components, and ETF units expand and contract to stabilize prices, then price movements of individual securities become volatile intraday, yet major measures come rapidly back into correlation.

The problem is apparent: If the medium of exchange adjusts to fit supply and demand, how do you buy value, or growth? Prices revert to the mean, irrespective of value or growth prospects.

Yet value and growth are the pillars of capital-formation.

What’s more, ETFs are one-day life cycles for industries, sectors and groups. They are only truly effective as investment vehicles for a day. What existed yesterday has been redeemed and what will be tomorrow has not yet been created. From air ye came and to air ye shall return.

EDITOR’S NOTE: The same concept backs the “maker-taker” trading model, in which exchanges pay high-frequency traders to swell and fade around supply and demand fluctuations. Create and redeem liquidity to stabilize prices. It’s behind global central banks too: create and redeem currencies to stabilize prices. Eradicate market forces from outcomes. It’s…unnatural. No wonder everybody is looking for a miracle.

Speaking of scary, for those keeping record we note more currency-driven events to explain to your executives. First, the European Central Bank last week threw down the red carpet for Greek lenders, so the dollar dived and stocks soared on changes to perceived risk and anticipated further global currency-printing. On Halloween, Japan intervened to weaken the yen by buying other currencies, so the dollar strengthened (less supply, same demand) and markets plunged. On Nov 1, fear of setbacks on the Greece deal drove risk managers back to the dollar, pushing it up and stocks down more.

US markets should be proxies for fundamental value and forward multiples of collective corporate cash flows. Not meters for currency fluctuations. Happy Halloween.

Speaking of meters, there is Tom Peterffy, immigrant, billionaire, and architect of automated trading. Peterffy ranked 236th on Forbes’ list of the 400 richest in 2009, fruits of long labor revolutionizing how stocks trade. Peterffy, founder of Timber Hill and Interactive Brokers, pioneers in automated multi-asset-class electronic trading, believes automated trading goes too far.

Peterffy told Wall Street Journal reporter Scott Patterson in an October 20 story that automated trading has made markets less efficient and less safe. That’s akin to the inventor of a major heart medication pronouncing the compound dangerous to one’s heart.

Peterffy led the charge a decade ago to bring mathematics and machines to the process of matching trades. If investors needed to buy and sell shares, computers that picked and plucked from all over to fill orders for spreads at fractions of the old levels meant something was always on the other side of the trade. Liquid markets.

But they’re not liquid. They just have lots of volume. Liquidity suggests substance. And there’s the problem for the IR chair. Each market day now is a microcosm, an entire trading universe, the whole life cycle of industries boiled down to a single day’s activity. You make investments, hedge them, leverage them and trade the ramifications for currencies and bonds of growth and contraction. For a day. Start fresh the next day.

In this world, companies should hold four conference calls daily to update investors. Well, that’s absurd. It’s confusing busy with productive, exactly what low-spread markets do. The essence of human commercial interaction should not come down by regulatory edict to the spread on a trade.

See you Thursday at the NYSE for the IR Magazine Think Tank! Catch me at a table and we’ll kick this idea of one-day markets around.

This is how Pipeline Trading describes its predictive analytics for helping buyside customers identify large-block trading opportunities.

For those of you who missed the news that rocked The Street this week, Pipeline, a dark pool, was fined $1 million by the SEC for misleading clients about the nature of its liquidity.

Were you harmed? Check to see if your shares trade at Pipeli—

Oh. You can’t. It’s a dark pool. You don’t know if your shares trade there unless Pipeline’s orders route to your listing exchange.

Of Pipeline, SEC Enforcement Director Robert Khuzami said in a statement: “Investors are entitled to accurate information as to how their trades are executed.”

Pipeline offers a platform where institutional customers like mutual funds can find “natural liquidity,” or real orders from other buysiders. What’s more, Pipeline provides execution algorithms that mimic how high-frequency traders try to project price and volume in order to place profitable trades ahead of moves. If the buyside can beat HFT at its own game, then instead of being victimized, it can also generate alpha – market-beating returns on trades.

In a dark pool, you’ll recall, there are no displayed prices. You don’t walk in looking to see what lettuce sells for here. You come because you want to keep secret your interest in a truckload of lettuce. Maybe Pipeline with its predictive algorithms and natural lettuce liquidity can fill your truck at a price midway between Safeway’s and Kroger’s, whose prices will still set yours but without your walking into either store and creating a run on lettuce.

Turns out, Pipeline was filling nearly 80% of orders with its proprietary trading subsidiary, Milstream Strategy Group. Which was also using Pipeline OODA analytics to front-run orders at other markets.

Yup. That’s bad. By the way, Pipeline matches about seven million shares of about seven billion daily at present across all US equity venues. Drop in the bucket. But it earned a big fine.

Because accurate information matters.

Two takeaways for the IR chair. First, the line between what Pipeline did and what the big listing exchanges do is fine and gray, frankly.

Exchanges sell circuits and colocation services that give good customers fractionally better information, the same as predictive analytics. See our piece some weeks back about Burstream.

Further, exchanges present themselves to their public-company customers as impartial venues with displayed prices. But they pay around fifteen cents per hundred shares for DARK liquidity. Exchanges, which vilify dark pools for distorting price-discovery, incentivize dark orders with rebates and encourage it with order types.

In fact, liquidity often advertised to you as proof that your listing exchange is doing you service is paid to be there. Well, isn’t that what Pipeline was in form and function doing? Those brokers the Nasdaq lists as liquidity providers? Lots of that is incentivized order flow that earned thirty cents per hundred shares. Incentivized volume is not investment; it’s fleeting, artificial. It’s hoping to profit from the act of intermediation.

And why do exchanges pay for that? Because the act of intermediation generates data, the revenues from which are shared by exchanges under the SEC’s quote and tape plans. What drives data? High-speed trading. Who consumes data? High-speed traders. What is the majority of your volume? Do the math.

Do they tell you? You’re a customer entitled to accurate information about how your shares trade. I don’t mean to criticize our friends at the exchanges. But has the exchange ever explained to you precisely how they match trades in your shares?

Which brings us to Key IR Takeaway Number Two: If investors deserve accurate information about how trades are executed, on pain of fines, what about public companies?

In the past ten years, all the exchanges have become for-profit entities. Regulators have instituted a vast host of rules fragmenting markets and fundamentally restructuring how trades are intermediated, matched, monetized and compensated.

Do you know what changes have been made to data for public companies during that time? Exactly NONE.

This is why you know less about your trading activity than any generation of IROs. Permit me to be blunt: Regulators have not considered public companies worth the time to modernize data rules to reflect the market structure they fostered.

A year ago we thought it would take an act of Congress to redress this inequity. We now know that FINRA can fix it with a rule-filing.

All it takes is some of your CEOs asking FINRA: Why are investors entitled to accurate information, but public companies are not?

Editorial Note: Don’t miss the IR Magazine Think Tank next week in NYC.  Hope to see you there!

In fiction writing, authors will create portent by ending a chapter with something like: “She could never have imagined the consequences of her decision.” You can’t wait to turn the page to find out what she couldn’t imagine. The writer has subtly influenced your behavior.

The Fed is always trying to influence our behavior. Market performance October 4 (today) was mostly about Fed influence. Affirming commitment as lender of last resort – which sounds good but means “we will print endless piles of cash” – is the same as devaluing the dollar. So the dollar plunged in the last hour of trading, and stocks soared. (We all want stocks to rise but think about a teeter-totter. That’s stocks and dollars.)

In trading markets, exchanges continuously toy with behaviors by changing the spreads between fees for taking shares away and credits for bringing them to sell (this is the root cause of high-frequency trading). Exchanges are influencing behaviors.

Why does it matter? IR is about influencing behavior. In the past, we did it mostly with operating results, investment thesis and investor-targeting. Today, it must go further. Do you consider the impact of Fed policy and adapt your institutional outreach to match your investment thesis to impending changes in behavior? You should. If programs stall, don’t keep talking to growth money; shift to high-turn, deep-value money.

What about tracking your trading activity for action items? “Speculative behavior is up more than 30% in the past two weeks. That’s going to erode passive investment. We need to increase information flow and target money that can compete with speculators. Time to call on our best hedge-fund relationships.”

The IR program cannot live by story alone but by every evolving dynamic. Your equity marketplace – no matter your volume – is a particle accelerator slinging rational investment, speculation and risk-management. Trades are driven as much by other competing behaviors as by multiples of cash flow. You can’t reason with algorithms but you can alter their orbits.

It’s a chess game where you think three or four moves out. Say your stock has declined on big changes to strategy and financial returns. Your buy-and-hold folks are gone. How do you get back to GARP (growth and a reasonable price)? Execution is always a must, but you can’t simply target GARP money. You’re not a GARP investment. You’re a speculative high-turnover investment.

Fine. Don’t fight the tape. Target that money aggressively. Think about how that money behaves, and how it will change other behaviors in your market. If it buys, speculators will show up.

Who follows speculators? Right, momentum growth money. You’re thinking, “What do I say to high-growth money?” The facts. “We’re not a growth story now, but we know as we progress with our strategic plan that our stock will offer growth characteristics periodically. We want you to understand our story.”

Next, you’re moving on to the first wave of more conventional money: former value holders. At some point, the seeds you’ve planted will produce a pullback, and you want this wave ready to take up slack. Chess game.

Now some will say, “Nope, I do IR the old-fashioned way. I only target buy-and-hold money.” The old-fashioned way of fighting was to stand opposite each other in gentlemanly pose and fire volleys. Today we have satellite imagery and drones. Suit yourself.

But there’s no need to do IR the old-fashioned way in markets that don’t resemble yesterday’s any more than muskets and jets. For better or worse, this is the modern IR age. Make it your friend, IR pros (and join us Nov 3 at the IR Magazine Think Tank  in NYC to discuss crazy IR reality).