Lewis: In Defense of the Boom

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: "John F. McMullen" <observer () westnet com>


> From yjr New York Times Magazine --
http://www.nytimes.com/2002/10/27/magazine/27DEFENSE.html

I. Wall Street Didn't Do It
A few weeks ago, on ''Moneyline,'' a guest who didn't fully understand
just how much times have changed invoked some corporation's ability to
beat Wall Street's forecasts for its quarterly earnings. Before you could
say ''market manipulation,'' the program's host, Lou Dobbs, said, ''Do you
really think anybody's paying attention to that silly expectation stuff
anymore?'' He dismissed forecasts as ''the game of the late 90's.'' And he
had a point. For many years, Wall Street analysts have low-balled their
earnings estimates so that their corporate customers could announce to the
press that they had ''beaten'' those estimates. This particular game was
exposed beginning in the late 1990's by fledgling Web sites, which
routinely published more accurate earnings forecasts than the Wall Street
pros. By the middle of 1998 the stock market began to trade off the Web
estimates rather than the Street estimates -- which tells you how fully
understood this quarterly forecast game had become even before the boom
reached its turn-of-the-century heights.

But so long as the stock market rose, Lou Dobbs was happy to listen to
Wall Street and corporate big shots blather on about how they had beaten
their earnings forecasts. He didn't scorn them; like every other serious
reporter, he treated them as useful informants (when he wasn't distracted
by his bid to make his Internet fortune in a doomed start-up called
Space.com). And yet now, somehow, Lou Dobbs, like every other serious
reporter, knows enough to raise his eyebrows and harshen his tone when
anyone mentions earnings estimates. As wide-eyed as he was three years
ago, he is narrow-eyed now. You can't put one over Lou Dobbs!

And that, in a way, is the point. If you can't put one over on Lou Dobbs,
whom can you put one over on?

<snip -- very long but worthwhile if this subject is of interest djf>

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