David D. Kirkpatrick and Jamie Heller
New and Old Media Sinners
By Jamie Heller
Posted Monday, May 22, 2000, at 3:22 PM ETDavid,
I was quietly trying to avoid the market mechanics topic. But put on the spot, I have to fess up that I know too little about it to subject anyone to my views.
As for misleading information, I agree there's no excuse, on the Internet or anywhere. That's plain wrong, and illegal.
However, Wall Street pros are on TV all day talking up stocks and often not revealing their positions, or the fact that the banks that employ them get tremendous underwriting business from the stocks they're chatting up. That's not to take online comfort in offline mediocrity. Rather, there are good and bad practices both on and off the Web. The pros just seem less inimical than Net characters because they have the status to get into the mainstream media.
I'll kick off tomorrow. If possible, pick up the New York Post. Always good fodder, and well worth the 50 cents.
Jamie
New and Old Media Sinners
By Jamie Heller
Posted Monday, May 22, 2000, at 3:22 PM ETDavid D. Kirkpatrick is a contributing editor at New York magazine who writes frequently about business and finance. Jamie Heller is editor for strategic ventures at TheStreet.com, where she's worked since its 1996 founding. Reader Response from The Fray--to be read after the most recent entry:
I still don't understand how the stock market can be efficient in the long term and not the short run. And I'm not relying merely on Keynes' famous sentiments about the long run; my point is even simpler: when is the long run? Was Microsoft's long run value from 1990 to early 2000 or to today? Short run volatility must have consequences for people who claim long run efficiency. To my mind, and for many other reasons, believing in efficient markets is like believing in Santa Claus--there are correlations between expected results and reality, but people really ought to grow up and accept that no-one on Wall Street knows anything.
--Jeff
(To reply, click
here.)
(5/22)
To Jeff: Various natural processes are long-term efficient without being short-term efficient, for example the downhill flow of water or the process of natural selection (aka evolution). Complex human processes seem to have similar behavior. Perhaps efficient is being confused with "optimal". The problem with most strategies that attempt to be optimal is that they often have truly horrendous failure cases, which wipe out all their interim or theoretical gains. Democracy has been called "the worst form of government, except for all the rest." It is hardly optimal, and in many cases very inefficient. A dictator could get the graffiti cleaned up and the trains running on time; democracy seems to have a hard time doing such things. But what about the failure case of a less-than-benign dictator or a dictator whose benign intentions diverge from many or most of the desires of the population? An example of short-term efficiency vs. long-term, in terms of human happiness.
That's not to say short-term efficiency is bad, or that we can't improve on raw systems. But it is possible for a strategy to be the best long-term one without exhibiting short-term efficiency.
--Paul Canniff
(To reply, click here.)
(5/23)
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Reader Response from The Fray--to be read after the most recent entry:
I still don't understand how the stock market can be efficient in the long term and not the short run. And I'm not relying merely on Keynes' famous sentiments about the long run; my point is even simpler: when is the long run? Was Microsoft's long run value from 1990 to early 2000 or to today? Short run volatility must have consequences for people who claim long run efficiency. To my mind, and for many other reasons, believing in efficient markets is like believing in Santa Claus--there are correlations between expected results and reality, but people really ought to grow up and accept that no-one on Wall Street knows anything.
--Jeff
(To reply, click here.)
(5/22)
To Jeff: Various natural processes are long-term efficient without being short-term efficient, for example the downhill flow of water or the process of natural selection (aka evolution). Complex human processes seem to have similar behavior. Perhaps efficient is being confused with "optimal". The problem with most strategies that attempt to be optimal is that they often have truly horrendous failure cases, which wipe out all their interim or theoretical gains. Democracy has been called "the worst form of government, except for all the rest." It is hardly optimal, and in many cases very inefficient. A dictator could get the graffiti cleaned up and the trains running on time; democracy seems to have a hard time doing such things. But what about the failure case of a less-than-benign dictator or a dictator whose benign intentions diverge from many or most of the desires of the population? An example of short-term efficiency vs. long-term, in terms of human happiness.
That's not to say short-term efficiency is bad, or that we can't improve on raw systems. But it is possible for a strategy to be the best long-term one without exhibiting short-term efficiency.
--Paul Canniff
(To reply, click here.)
(5/23)