Thursday, July 16th, 2009
first name basis

It happened again this week.  The market moved because Meredith had spoken.

Correctly anticipating the strong earnings of Goldman (no last name needed there either), Meredith got the week’s move going with her attention-grabbing upgrade.  I have no idea whether it will in retrospect be seen as a good call or a bad one, but it does provide me with more fodder for another look at our fascination with market gurus.the research puzzle | Among other postings, I covered this in “i hired a guru.”

An important inflection in the guru curve seems to come when everyone calls them by their first name.  Of course, some market participants really do know these icons by their first names.  They talk to them on a regular basis as part of their jobs and it would be unnatural to use their last name when talking to colleagues.  It’s when the rest of us start doing it too that the inner “Danger! Danger!”That was what my father would say when he was teaching me to drive and I would approach a situation when caution was in order.  I still find myself hearing his voice. alert should go off.

Remember Elaine, who could move markets just as well?  And Abby, who rode the big bull that lumbered off into the sunset?  And Henry, too.

No, not the dot com Henry who, despite being banned from the securities industry has carved out a nice spot for himself commenting on it,And, among others, to whom I am grateful for providing the impetus for a wonderful, long consulting assignment. but the earlier Henry, the “Dr. Doom” of the 1980s.  He made the bond market move with every statement, and the stock market followed in suit.  That another Henry took over the spotlight a decade later with a radically different mindset and approach said much about the changing nature of the world and the markets.  He could make things jump too.

We don’t just love and follow our market gurus, but our business ones as well.  Jack was the man for many years — the earnings always came in, the stock always went up.  You still see him on the tube every now and again, but Jack isn’t as Jack was.  He was the best known of a whole crop of chief executives of large and famous firms who retired just before the music stopped at the turn of the century.  Timing is everything; most of us wish ours had been as good.

And then there was Bernie.  No, not that Bernie.  This one kept rolling up telecommunications companies as “his” stock kept skyrocketing.  It was amazing that everyone in the investment business just called him Bernie, and were all wide-eyed when they did.  I never understood it.  Little did I know that at the same time, another Bernie was building a cult of personality, more whispered than shouted, that would come crashing down many years later.  Both Bernies are now behind bars.

Careful analysis of investment and business opportunities requires a dispassionate look at situations and the weighing of opportunities and risks.  While there are a few people who are adept at riding the personality waves that ripple through the markets, most get sucked in without thinking about the consequences.

It is best to save the first names for true friends on whom you will always be able to rely.