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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: chaz who wrote (52240)	7/20/2002 12:10:01 AM
From: paul_philp	Read Replies (2) \| Respond to of 54805

Chaz, I am not tracking you. The relationship between analysts and management seems to me a very different issue than the accounting treatment of stock options. As far as I remember I have made no comment on 'earnings management' or analysts. However, it think the issue is an important one and should be addressed. I actually have a suggestion but I don't think the world is ready yet. So Paul, just how trivial is it when a few dozen corporate executives walk away with 24,000 square foot houses and tens of millions in dumped stock value, while tens of thousands of employees are sent away with ruined retirement plans? Since it may well be a zero sum, perhaps it too makes no economic difference. The accounting treatment of stock options would have had absolutely no effect on this outcome. All that would have happened is that another way would have been found. During bubbles executives are rock stars and they get overpaid. After bubbles industries restructure, people loose jobs and investors loose their money. The hard thing is understanding that it is nobodies fault. It is not Clinton's fault. It is not Bush's fault. It is not Greenspan's fault. Their policy decisions have some impact on the size of the bubble but not the fact of the bubble. The people at Enron and WorldCom had months to diversify some of their 401K holdings. Very few did. This is also part of the bubble. The dynamics of mania and greed are what keeps the thing from collapsing. Near the end of a bubble almost nobody is making sound economic judgements because everybody else is making some much damn money! The witch hunt for the criminals that are to blame simply ignores the fact that most of us were quite happy with the whole situation when we were making money off it. It wasn't our greed that caused all this mess. It must have been their greed. I think we are moving from denial to anger in the stages of mourning. All of this is well and good except for one thing. The post-bubble periods that become long term economic depression ALWAYS happen because of reactionary populist government interventions. So far, most of the regulation changes are economically benign. However, John McCain put forth a set of reforms I am convinced would have greatly increased the risk of depression. He was defeated but the fact that he tried at all tells me where popular sentiment is right now. So, I get annoyed at the pundits, from whatever political school, who over simplify complex issues for the sake of increase the public rage. With elections in November, I am now quite concerned that something as dangerous as McCain's proposal might pass in the fall. I see very little reasoned thought in the public debate today and politicians will do whatever they have to do in order to win the next election. The next four months will be the most important of the entire bubble/crash period. It sure would be nice to have a President that seemed to have some sort of economic agenda. Paul [Edit] Please see this post from the NPI board to understand what I mean about the public mood. boards.fool.com