Ray et al,
I think the previous article makes some good points, although it goes over the top with some of its purple prose accusations.
The key points to me are:
1.Banks and brokerages often cannot tell the truth to retail customers, depositors or investors without potentially injuring the corporate clients that provide huge commissions and profits from investment deals.
(we little guys have known this all along, anyone who buys on analyst's upgrades or a CNBC appearance by some money manager is asking to be the Big Boys' exit act from a stock reaching its highs (or simply in need of exit))
2.The corruption of customary auditing -- and the fact that an industry-sponsored board sets the arcane accounting tricks for determining whether profits are real or fictitious -- is driven partly by the Big Five's dual role as consultants and auditors.
(the proposed solution is worse than the problem--more government employees in the form of government auditors. the best solution is to simply restrict those who practice accounting to, er, practicing accounting. no more consulting gravy, or unauthorized practice of law, no more investment banking fairness opinions, or the other things accountants like to do)
So, what's a little guy to do, where's his advantage? First of all, size matters. Small size that is, little guys who 1~5,000 share positions are much more fluid, able to surf in and out where 50,000 share minimum big boys get beached on the sand. Smarts helps, too. You can make money buying momentum, things that go up, but you have to remember how it is you're making your money. Nobody knew how they were making $$ by owning ENE, only that they were. Once things soured just a little, it should have been the ringing of the bell.
Kb |
