Deal Sense by Robert Teitelman
The Daily Deal
15 May 2002
"Try as I may, I can't stir up significant sympathy for the stockpicking victims of
the tech stock bubble...Perhaps as endlessly fascinating as Analystgate has been, I still have
trouble getting my mind around certain facts. Why, for example, would anyone
listen to Blodget to the exclusion of other voices? From e-mail evidence
alone, Blodget seems to have been - the euphemistic word of the day -
conflicted over companies he covered. Bud did investors who managed to lose
so much on tech stocks not consult anyone else, pull a filing, peruse an
annual report, ponder the wisdom of Lou Rukeyser and his party guests, flip
through the pages of Money, Smart Money, Smartest Money? Did they consult a
single research report? Did Blodget hypnotize them?"
"Part of my crankiness about all this is the sense that we're missing
something. In all the commentary on the scandal, certain questions are not
asked. DEspite what we know about market uncertainy, we continue to be
perfectly contented to have most of our net worth exposed to the market.
More seriously, given what we know of the difficulties of investing, should
we encourage non-professionals to speculate? And given what we know of human
psychology, do we run the risk of creating a moral hazard as we attempt to
right the wrongs of the bubble era?
Ah, moral hazard...The term was last bandied about when certain voices in
the U.S. lamented attempts by the International Monetary Fund to bail out
certain countries in Asia. Moral hazard was something that bleating, global
do-gooders succumbed to. The nonbleaters feared that those crony-ridden
countries would respond to bailouts by figuring they had nothing to lose the
next time and go for broke...[B]ut, of course, it's different at home, where
retail investors vote, and where widespread sentiment has washed over bubble
victims, including the TV technician who lost $455,000 on [publicly-traded
company], apparently on trace-inducing advice from [analyst's name].
Plaintiff's lawyers have been busy filing suits. And Spitzer has been
cajoling Merrill into setting up a restitution fund for any investor who can
prove that he was hypnotized by Blodget, or otherwise induced to make
terrible decisions." |
