Friday, November 15, 2002

Tidbits from the Times today include an amusing dissection of how the new house leadership is too stupid to count, or was somehow unaware that the crazed anti-abortion terrorists (i.e., their confrères) were going to kill their dickensian bankruptcy bill; the latest installment in the venal saga of Jack Grubman; and a good point about stock "analysts":
Occasionally an analyst gives the bankers and their clients the higher ratings they want � often with a tepidly positive rating like "outperform." But in the candid conversations between analysts and institutional investors, the nuances of an investment are discussed. Official ratings almost never come up....

But someone forgot to tell small investors how all this worked. When analysts, more out of laziness than corruption, allowed reports or ratings to persist that didn't reflect their latest views, they misled investors who didn't have access to the financial world's cozy candor. For this, analysts deserve part of the blame for the losses amateur investors incurred.

More blame, however, should go to those who never explained to small investors how even the best Wall Street research is conditional, fluid and fallible. In their celebration of the limitless possibilities of stock ownership, online brokers, traditional brokers and the press created a culture of reckless, ill-informed investing. They were aided in this by a particularly unconscionable group of blow-dried analysts and fund managers -- mostly in the technology and telecommunications sectors -- who went out of their way to reduce the complex, hazardous investing process into breezy sound bites. They were partly aided by the bubble itself, which seemed to make everyone from about 1994 on forget that stocks could actually go down.

Update: The douchebags managed to get their act together, scrap the key abortion amendment, and pass the bankruptcy bill well after midnight. It will die in the Senate, only to be reborn in more virulent form next year.


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