Accountability and the Old Guard
The Week in Review -- October 16, 1998
by Jerry Thomas (

Greetings, Fools.

The other day on one of the cable TV financial channels I saw a brief talking-head interview with a technical analyst from a major Wall Street firm. I'm afraid I don't recall her name or the name of the firm where she works, but it scarcely matters. Just turn on your television during trading hours and another will be along in a few minutes.

Naturally she spoke of her various market indicators and her volume surveys and so forth. Then she blithely predicted a Dow at 6800 before the end of the year. Of course, as we all know, Alan Greenspan and company stepped in on Thursday, lowering some key interest rates, and quickly rendered that 6800 point Dow target a much more dicey proposition.

Whoops. Talk about getting your chain yanked.

To be fair, the Big Ol' Dow may very well dip to the levels predicted by the aforementioned analyst before the end of the year, in spite of the late moves in the market. But I am left wondering -- would that analyst have made her prediction on Wednesday if she knew that on Thursday the economic landscape would be shifting so dramatically? When changes can happen so quickly that even Alan Greenspan is sprinting to catch up with himself, how much value is there, really, in this endless parade of predictions we see routinely on financial television? Even PBS's vaunted Louis Rukeyser plays this silly parlor game, with his panel of "elves" predicting the market's direction each week. To what avail?

Is our friend, the analyst, spending her weekend pouring over her charts, revising her forecast in light of the new numbers from Mr. Greenspan? And if her new prognostications prove more trustworthy, will she be so good as to remind the rest of us that her old forecast was so unceremoniously rendered moot? Will we ever hear those new prognostications, if they are made? And still another question: If she is willing to own up to her mistakes, will we know? Will television ever find the time to remind us of the error?

Let's face it -- accountability is just something the old media doesn't do very well. Last week's magazines are set on the curb on trash day. The television image blips into history when you throw the switch. A couple of letters to the editor, a few seconds of "let's dip into the mailbag" on television, and it's shuffled to the next desk. Who remembers to ask the questions? In what forum are those questions going to be asked?

Why not right here?

Louis Corrigan (TMF Seymor) has been searching through some of those old magazines this week. Specifically he targets Business Week's "Inside Wall Street" column. That column routinely moves markets, but does it provide any real service to the investor who reads it? If you read Louis's report, you will find that that is a difficult proposition to defend. And yet, those columns keep getting printed, however dubious their value might be to the people who read them.

Let me advance a proposition of my own: it is the nature of the old media -- its poor suitability for acting as an agent of accountability -- that has been the prop that has held up the Wise of Wall Street for so long. Once the true nature of the industry is understood -- its shocking underperformance, its shell game fee schedules, its fetish for the blithering arcana of technical analysis -- once these abuses are exposed in a forum where they can be plainly seen and understood by everyone, the power of the financial industry will shift away from the brokers and the institutions. The power will move to the place where it can do the most good: into the hands of the individual investor.

You will read David Gardner's Tuesday Fool Portfolio Report, which in a few poignant paragraphs explains the freedoms available to those who will only take the easy steps toward managing their own money. The financial establishment will blanch at the prospect, and cry that the rise of the individual investor is the mark of financial apocalypse, but Folly will prevail. "It is the increased presence of average people like you and me in the stock market that is making it more stable. And rational. And logical. And safer," says David, rebutting the Old Guard. "The more people we have taking responsibility for their money and their actions, the better off the world is."

Consider those thoughts carefully. They are revolutionary.

Fooldom has a great deal to offer beyond my little tantrums (of which the foregoing is a fine example). Let me make special mention of one of my favorite Fool writers, Rick Aristotle Munarriz (TMF Edible). I have lately been on call for jury duty, and Rick has been standing by these past two weeks, ready to write these Notes for me should the County of Los Angeles call upon me to serve the cause of justice. Fortunately for me, that call hasn't come. Instead, Rick writes this week's Daily Trouble feature on Toys R Us (NYSE: TOY), which, if you are interested in learning about the factors that can cut a stock in half, is a good place to look.

Often our best features are not produced by Motley Fool staff writers, but by our own customers. Such is the case with Wednesday's Post of the Day, from our Socially Responsible Investing message board. In it, Fool KellyFord pens a strong defense of Capitalism as the one economic system best suited to bringing the greatest good to humanity.

One feature you might want to check out, especially if you are a parent, is our new Investing for Your Kids area. It's a place where you can learn how to invest for your kids, and how you might teach your kids to get excited about managing their money well.

Finally, let me invite all my readers to visit me on the Cheeze-O-Rama message board. I've been, let's say, more emphatic than usual in this week's Notes, and I suspect that some among you might wish to express an opposing viewpoint. The wonder of this new medium is that it offers you just such a forum for that kind of call for... accountability. In this instance, Cheeze-O-Rama is the place.

See you there.

Until next week,
Fool on!



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