" The SEC chairman also warned investors to be wary of recommendations from Wall Street analysts, who increasingly have financial incentives to make positive comments about companies.
Many of the analysts' firms have, or are seeking, investment-banking relationships with the companies under review, Levitt said.
'You can imagine how unpopular an analyst would be who
downgrades his firm's best client,' Levitt said.
investor who asked if selling short was bad.
'No, absolutely not,' said Levitt. 'It's a stability
factor. It adds liquidity.'
The chairman's old-fashioned investment advice was echoed
recently by Princeton University economics professor Burton G.
Malkiel in an article that examined stock-market history.
'Occasionally, groups of stocks associated with new
technologies get caught in a speculative bubble, and it appears
that the sky is the limit,' Malkiel, author of the book 'A
Random Walk Down Wall Street,' wrote in the New York Times. 'But
in each case, the laws of financial gravity prevail and market
prices eventually correct.' |
