Sweet Justice
"What goes around comes around. Prediction: The layoffs that give manufacturing, technology and telecom CEOs and controllers a bittersweet satisfaction will come from the investment banking units of the Wall Street banks. Silk-suited scum, some would say. Sweet justice, if ever there was any."
– Thom Calandra
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As we see Nasdaq beat such a hasty retreat to 1998 levels, it is difficult to resist the notion that there has been an enormous amount of wilful manipulation by investment bankers, brokerage houses, institutional investors and mutual funds as they pile up cash along the sidelines through such tools as tardy analyst downgrades, spasms of selling, tape painting, buyers strikes, and a myriad of other techniques. But I rather think the seemingly concerted action one sees from them is due more to group same-think than conscious agreement. It is likely many are as clueless about what's going on as the individual investor. (In fact, in speaking with a broker's assistant at a medium sized retail agency yesterday I was told, "All the brokers here are walking around shell-shocked. They just don't know what's going on."
I have alluded to this illustration before: A national magazine editor once said to me, "Have you ever wondered why competitors like Time and Newsweek or House Beautiful and Good Housekeeping always seem to feature the same cover stories, issue after issue? It's not because they consciously agree to do so. It's because they are based in New York. Their editors all tend to eat at the same restaurants, read the same newspapers, see the same shows, attend the same cocktail parties, etc. They live mostly identical lives and are exposed to mostly the same stimulae. So their ideas tend to be forged in the same daily mill of experience."
Lately, Greenspan and others have fingered "consumer sentiment" as the key to a turn-around. I think more to the point is "institutional sentiment." When Fidelity, Morgan-Stanley, and Goldman Sachs finally eat lunch at the right bistro, see the right show, and end up the evening in the arms of the right lover, the market will turn. I can find no reason to suppose that group same-think on the way down will be any more independent on the way back up. |
