Book Summary Preview : The Pied Pipers of Wall Street

The Big Idea
Stock traders and buyers beware. The talented talking heads of financial news gathering agencies may be part of today’s hyped up age of stocks where the talented talkers of the brokerage firms could be increasing their own money, not yours. Just like the children of those poor and unsuspecting folks in the fairy tale, your fortune and future could easily disappear, led away by charismatic pipers called stock analysts. Benjamin Mark Cole’s argument is brokerage houses have sold out the common investor in favor of bigger corporate interests. He provides us with heavyweight examples of analysts hyping stocks that later went bust.

Cole’s criticism of Wall Street salesmen is timely. Investors are looking for a villain in the overnight evaporation of billions of dollars in retirement funds. Analysts can’t take the blame entirely for the stock-market downturn, but their behavior during the run up deserves closer inspection.

The Age of Media Magic

• The days of the stock analyst as a retail investor are long gone.
• Analysts have become media savvy, using the Internet and TV to hype up stocks.
• Investment banks, which employ analysts, earn millions of dollars in fees from the companies analysts recommend. Because of this, analysts are clearly beholden to institutional interests.
• Many brokerages have equity in the companies they sell. The influence of financial news shows has only increased the analysts’ power. The media is the flute they play to lead us on. They are the fortune-tellers and oracles of our era.

Hiding behind the skirts of Oral Disclosure
Some financial news shows are required to have oral disclosure statements stating that analyst advice may not be objective. We may say that most of the time, analysts face no legal action from the SEC if they mislead the public and investors.

Bull market, or a market full of bull?

“It’s hard to be free when you’re bought and sold in the marketplace.”
-Jack Nicholson in Easy Rider

That statement applies to Wall Street securities analysts, who certainly are not free to voice their opinions about the companies that they follow because they are employed by firms that earn millions of dollars in fees from . . . . . . . . . . .

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