Gautam Mukunda wrote:
>
> Julia:
> What we're finding interesting here is that Dan's father had stock in
> Enron, which he unloaded over the summer. He gave as his reason that
> there wasn't anything *to* the company to justify the stock price any
> longer, that it was just a shell. If some Joe E. Engineer could see
> that, why didn't the people who are paid to evaluate stocks and run
> mutual funds see that?
>
> Julia
>
> Me:
> And this is the fascinating question, isn't it? There are a few reasons, I
> think. Here's the one that's occurred to me because of my worm's eye view
> of many of these investment houses. The people who do the real work on
> stock analysis for the investment firms - they're basically me. I
> interviewed for jobs at places like Goldman Sachs that were precisely that,
> and many of my friends are working at them right now. They don't really
> have that much training and they _certainly_ don't have that much
> experience. The Enron people had a great idea. They created an aura where
> if you thought there was something weird about the company it wasn't that
> there was something weird about the company, it was that _you weren't smart
> enough to understand what they were doing_. If you're a 22 year old English
> major just hired out of Harvard I think if there's one thing you never, ever
> want to admit, to yourself or to anyone else, it's that you aren't smart
> enough to understand something, even if you don't really have the experience
> or training to really understand it. I have a feeling that that bit of
> psychology played a critical role in this whole thing.
Whereas if you'd been investing in individual stocks, carefully
researching all the ones you bought for the past 40 years, you'd have a
better BS detector, I guess. Thanks for the insight, Gautam.
Julia
