Sunday 2012-12-16

Bull! A History of the Boom and Bust, 1982-2004 by Maggie Mahar

As an update to Mahar's original Bull which only covered up to 1999, it far exceeds her original work as covering the bust allows many threads to be wrapped up, and the tragic arc to be completed.

My friends, there is good news and bad news. The good news is that the full faith and credit of the FDIC and the US government stands behind your money at the bank. But the bad news is that you, my fellow taxpayers, stand behind the US government.
-- Bill Seidman, The Gurus
The truly scary group are the 45- to 65-year-olds who have never touched a stock or a bond before in their lives. We try to get these people to split their CD money between money markets and short-term government bond funds, but when they look at the menu of funds tht we offer, their eyes gravitate to the double digits. They think bonds have a yield just like their CD. They think the Magellan Fund has a fixed rate of return. Many have no idea their principal is at risk. These people represent half of the people coming into mutual funds.
-- Neal Litvak (head of Fidelity's product marketing), The Individual Investor
In the early nineties, two events paved the way for Enron -- and they both took place in Washington. First, in 1993, corporate lobbyists buried a proposal tht would have forced companies to reveal the cost of the stock options that they were issuing to their top executives. Then, in 1995, Congress passed legislation that protected corporations -- and their accountants -- against being sued if they misled investors with overly optimistic projections.

After that, the whole system could be gamed.

-- Jim Chanos, Behind the Scenes
there is more and more emphasis on selling the product -- which means telling people what they want to hear. Why did CNBC and The Wall Street Journal focus on information that has no statistical significance? The answer is that they can't afford to focus on things that have statistical significance. Those things don't change. But in order to get advertising, they need to send the message that this is a publication you need to read every day.
-- Mark Hulbert, The Media
WE wrote about these people. And now we say they're guilty; it's their fault. I mean, come on, we're responsible.

Instead, it's let's-find-a-villain. And now, supposedly, people like Mary Meeker and Henry Blodget are the villians; they're the people who sowed the madness in America; they're the ones who cost people billions of dollars.

Now, forgive me. I don't rememer reading about Mary Meeker invading a newsroom with a gun saying, 'Write about me or die.' I don't remember Henry Blodget saying 'I've got your children hostage and unless you write about my idiotic prediction that Amazon is going to $400 a share, you'll be getting pieces of the kids back in envelopes.' Nobody did any of that.

-- Allan Sloan; Winners, Losers, and Scapegoats
it would have taken some guts, and might even have done some good, to call attention to the conflicts of interest and intellectual dishonesty in Wall Street research. Now it has no effect on anything important. The time for regulatory courage has long since passed.
-- Michael Lewis excoriating Eliot Spitzer; Winners, Losers, and Scapegoats
In recent years, US investors have felt that they must be playing the market -- even when the risks are high. They learned to think that they should invest like George Soros -- but the average investor is not George Soros. When I play tennis, I don't try to play like Agassi, I have to play a different game. Agassi can play to win. I have to play a game where I don't make any mistakes.
-- Marc Faber, Looking Ahead