Jeff Cox, a staff writer for CNBC.com, has written an interesting piece titled "For Investors, Missing Rallies, Not Taking Losses, the Biggest Fear" (here). Cox is also the author, with Peter Tanous, of the apocalyptic book "Debts, Deficits and the Demise of the American Economy" trumpeted in the video above.
Cox's point about the stock market, which has been made by other authors describing the Subprime Mortgage Crisis (here), is that since no analyst can afford to miss their comparative profitability numbers (they are all being evaluated against their peers), everyone has to aggressively follow the next bubble up. When the bubble pops, everyone has the excuse that the market has crashed and "I can't be expected to perform any better than anyone else in this environment."
In my brief, six year experience with the private sector, I have found this to be the pervasive business dynamic. When the company wasn't performing well, there was no pressure on my groups (IT and statistics). Also, when I was short staff, less was expected of my group (keeping a few open positions helped reduce pressure and kept the accountants happy with my budget performance). There was never any idea of building for the future during slow periods. It was always the right now and the "what have you done for me this week".
Such is American business. Cue the apocalyptic trumpets, crash the symbols, preview the next crisis!
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