Monday, October 15, 2007

Touts, scum and Wall Street thieves.........

As an NASD and NYSE arbitrator for over a decade I was privy to many financial shenanigans. History repeats itself. Greed and fear haven’t changed in 10,000 years. Every day on the financial news there is a parade of money managers, analysts, CEO’s, economists and politicians touting their wares. My job as a money manager is to protect and grow the assets of our respected clients. You see, I have a theory that the public is always guided to do the wrong thing so that they will make a contribution to the market infrastructure and provide funds for the massive communication costs, buildings, salaries, brokerage house traders, dealers, hedge funds, mutual funds on down to the salesman stockbrokers that must survive in order for the whole ball of wax to continue There is a reason Wall Street needs to suck $50,000,000,000 out of the coffers of the general public every year, to pay everybody. It is my job to question the touts and not accept any of their “information” at face value. Nor do I accept anything at face value from an investor relations department or public relations department. Just can’t.

Unexamined acceptance is the greatest cause of investor losses in my book. Listening to conference calls is tricky. Listening for a change in breathing patterns, tonality changes and hurried answers when the tough questions are asked is a far better tip-off than reading the press releases. How management handles bad quarterly earnings, criticism, merger issues and revenue shortfalls can be telling and impact our invested capital

I can not trust those who manage the companies we own. It’s my job. Many are more concerned about the next golf outing on the corporate jet than the stock price. Always question. Few actually own shares they have purchased in the open market like we have. Few pony up real money to buy shares like investors do every day in the open market. I do my best to verify all I am told by corporate chieftains and public relations firms. I do my best to verify everything. Studying the financial reports, especially the footnotes and “risk factor” sections is important. In conference calls I listen for excuses, deflection and innuendo and run when the integrity of those of us asking the tough questions is questioned. These guys have huge ego’s, status, arrogance and usually a huge financial incentive to keep the status quo.

It’s a tough job. Somebody has to do it.

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