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Wall Street Is Tough Game When Tycoons Rig Table
July 31, 2002
by Dennis Horgan, Connecticut Courant
One day the market's down 350 points. The next day it's up 400. Then it's down again. And up again. It soars because the sun came up in the east. It plummets because a left-handed pigeon flew by. It rises on good economic news; it sinks on good economic news. Why? Who knows?
The market can be irrational, irregular, chaotic, out of control. People's behavior can be irrational, irregular, chaotic, out of control. Who in his right mind could imagine putting the savings into such a zoo? Anyone who would dabble in such a madhouse as the stock market has to have a screw loose.
Or, maybe, a gambling problem.
"When you are putting something at risk in order to gain something else of value when the outcome's uncertain, that's gambling," says Dr. Marvin Steinberg, executive director of the Connecticut Council on Problem Gambling.
"Gambling. Investing. There's no difference, they're the same things," he says. "Where it becomes a major consideration is when it gets out of control. When people gamble excessively, and their behavior negatively affects other areas of their lives, gambling has become a problem."
Steinberg says he's worked with people with "traditional" gambling problems who also have had problems gambling in the market. "They say there's simply no difference in the compulsion or the impact. There's a racing of the mind, a preoccupation with investing/gambling and its losses, an inability to stop. This is not a good thing."
People are lambasted in society for badly investing at cards or slot machines, but accepted as financial lions for gambling in markets where they've mastered far fewer of the details than they would at poker or the ponies. Some carry investing to extremes indistinguishable from problem gambling.
"This is not a small thing or a word game," says Steinberg. "All investments include risk of some kind. But there are people who carry it too far, who go beyond their risk tolerance. We've had conferences on the subject. It can be very, very serious."
Steinberg has developed a 20-question survey that could be helpful in one's assessing how the major characteristics of compulsive gambling might parallel investing practices (available on the council's website, www.ccpg.org). What it can't measure is how smart it might be to be investing at all in a mad market like we've seen of late - and one which might seem a lot less honest than most traditional gambling opportunities.
For all the critical things we hear about casinos, for example, we don't much hear that the major games are ridden with rigged information, manipulated investor/gambler access and outright dishonesty. Maybe they're just better regulated.
There's been plenty of attention paid to how much the slippery bosses have gained from bogus accounting scams; there hasn't been near enough attention to how the shareholders were fleeced in the process.
You can have bad luck at the roulette wheel, but the expectation is that it is honest. Can anyone say that that's the expectation when you buy a share of stock that may have had its value artificially pumped up by CEO steroids - profits inflated by accounting gimmicks to puff up the stock while the boards of directors sleep soundly, or share in the windfalls?
You could lose your paycheck at the blackjack table and feel you lost it fair and square. But if you bought WorldCom, Xerox, Halliburton, Enron, Qwest or so many other stocks after they were artificially juiced, you could genuinely say you'd been robbed. It's as if the Mashantuckets had jiggered the roulette wheel. The corporate crooks fattened up that stock as surely as any bait-and-switch con game, or as when a mine is salted to inflate its value to the disadvantage of the suckers. If the Mohegans tried that with the slots, there'd be a revolution.
Crooked CEOs, flatline boards of directors and accounting moguls like Arthur Andersen ultimately watered down the stock soup and made millions for themselves and their companies, knowing full well that the sap who bought those Hamburger Helpered shares was being totally, royally screwed.
If the Indians tried that there would be a tremendous outcry.
But they don't. They're not that greedy.
July 31, 2002
by Dennis Horgan, Connecticut Courant
One day the market's down 350 points. The next day it's up 400. Then it's down again. And up again. It soars because the sun came up in the east. It plummets because a left-handed pigeon flew by. It rises on good economic news; it sinks on good economic news. Why? Who knows?
The market can be irrational, irregular, chaotic, out of control. People's behavior can be irrational, irregular, chaotic, out of control. Who in his right mind could imagine putting the savings into such a zoo? Anyone who would dabble in such a madhouse as the stock market has to have a screw loose.
Or, maybe, a gambling problem.
"When you are putting something at risk in order to gain something else of value when the outcome's uncertain, that's gambling," says Dr. Marvin Steinberg, executive director of the Connecticut Council on Problem Gambling.
"Gambling. Investing. There's no difference, they're the same things," he says. "Where it becomes a major consideration is when it gets out of control. When people gamble excessively, and their behavior negatively affects other areas of their lives, gambling has become a problem."
Steinberg says he's worked with people with "traditional" gambling problems who also have had problems gambling in the market. "They say there's simply no difference in the compulsion or the impact. There's a racing of the mind, a preoccupation with investing/gambling and its losses, an inability to stop. This is not a good thing."
People are lambasted in society for badly investing at cards or slot machines, but accepted as financial lions for gambling in markets where they've mastered far fewer of the details than they would at poker or the ponies. Some carry investing to extremes indistinguishable from problem gambling.
"This is not a small thing or a word game," says Steinberg. "All investments include risk of some kind. But there are people who carry it too far, who go beyond their risk tolerance. We've had conferences on the subject. It can be very, very serious."
Steinberg has developed a 20-question survey that could be helpful in one's assessing how the major characteristics of compulsive gambling might parallel investing practices (available on the council's website, www.ccpg.org). What it can't measure is how smart it might be to be investing at all in a mad market like we've seen of late - and one which might seem a lot less honest than most traditional gambling opportunities.
For all the critical things we hear about casinos, for example, we don't much hear that the major games are ridden with rigged information, manipulated investor/gambler access and outright dishonesty. Maybe they're just better regulated.
There's been plenty of attention paid to how much the slippery bosses have gained from bogus accounting scams; there hasn't been near enough attention to how the shareholders were fleeced in the process.
You can have bad luck at the roulette wheel, but the expectation is that it is honest. Can anyone say that that's the expectation when you buy a share of stock that may have had its value artificially pumped up by CEO steroids - profits inflated by accounting gimmicks to puff up the stock while the boards of directors sleep soundly, or share in the windfalls?
You could lose your paycheck at the blackjack table and feel you lost it fair and square. But if you bought WorldCom, Xerox, Halliburton, Enron, Qwest or so many other stocks after they were artificially juiced, you could genuinely say you'd been robbed. It's as if the Mashantuckets had jiggered the roulette wheel. The corporate crooks fattened up that stock as surely as any bait-and-switch con game, or as when a mine is salted to inflate its value to the disadvantage of the suckers. If the Mohegans tried that with the slots, there'd be a revolution.
Crooked CEOs, flatline boards of directors and accounting moguls like Arthur Andersen ultimately watered down the stock soup and made millions for themselves and their companies, knowing full well that the sap who bought those Hamburger Helpered shares was being totally, royally screwed.
If the Indians tried that there would be a tremendous outcry.
But they don't. They're not that greedy.