MB, TipTop:
I suggested to one of MB's favourite reporters that an article that examined the similarities and differences between today's market environment and that which precluded the crash of '29, might be an interesting read. I think it may now be in the works.
When asked what I thought might represent major differences, I cited CNBC first, accounting second, analysts third, and "the net" fourth. In order:
- an historic percentage of the public is involved with the market. A corollary of this is that an historic percentage of involved investors are both inexperienced and easily influenced. Never before in history has a situation existed wherein investors have been inundated, day in and day out, with positively slanted 'investment advice". Goebels would be proud of the brain-washed results.
- Given the level of inexperience, few investors are suspicious of "audited results", hence fewer still would think to question the integrity of same. With every management team in the country under enormous pressure to produce "better-than-forecast" results, and with their incentive linked to stock options, small wonder that reported results are riddled with chicanery.
Analysts used to cover fewer stocks and spent most of their time doing research. Today, each typically follows dozens of stocks and is forced to spend at least 50% of his/her time selling/presenting his ideas to clients. No wonder analysts rely on their "computer modelling" (GIGO still holds) and upon management relationships.
As a result, the public is fed the "company line", thinly revised by a positively biased computer program. Few analysts feel (or are) secure enough to issue anything other than "buy" or "hold recommendations.
The net is a potent new market influence, currently in considerable flux. In its early days, it tended towards cheerleading, but has quickly become a remarkable source of both factual data and intense debate, something that has never before been available to the average investor. Unfortunately, many investors haven't or cannot gain access, and a certain amount of tenacity is required by those that do, to filter the torrential informational flow.
Factors such as these extend the lifespan of this remarkable bubble.
Best, Earlie |
