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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (5279)12/14/2001 8:51:54 AM
From: Henry Volquardsen  Read Replies (2) of 33421
 
Hi John,

Agree with that being the likely scenario with Lay. But he was still chairman so he can't shirk responsibility.

Enron is a fascinating story for both what they did right and where their hubris brought them down. I absolutely agree that they were brilliant innovators in energy trading. And their innovations will survive long after them. But then hubris hit the same way its hit so many who succeed, hence my comment about thinking they were brilliant instead of just clever. They were able to innovate in energy because they had a wealth of experience and history in that field. They knew where all the pitfalls were. But when their innovations spread through the market and started narrowing profitability. They responded this by wishing to spread their innovations to other markets, such as broadband and water. The problem is they had innovations and cleverness but no experience or institutional knowledge of these segments. So they wind up getting in at cycle peaks and overpaying for assets. In the water business they appeared to have gotten into international political situations they had no clue about. They thought they were brilliant because they HAD revolutionized energy trading and that blinded them to the fact that they were clueless in these other fields. Hubris. Or as I like to call it 'farting above your asshole'.

I agree about risk. Risk is not bad its good. You don't grow without risk. One of the senior guys at are former shop used to say 'if you never lose money you're not taking enough risk'.
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