I agree completely: I'm playing right into their hands! The goofiness was
just too hard to resist: ("Tall buildings, High interest rates": in this
sequel to Bright Lights, Big City we get the bratpack's investment
philosophy). Actually the larger causes of the OC thing are interesting:
what Citron was buying was what the industry calls the "toxic waste"
thrown off of mortgage-baked securities--or so I remember reading
somewhere recently. The risk was all taken out and concentrated and
shipped off to Texas to be sold to unsophisticated investors by the
"tin-men" of
the industry, so Wall Street could peddle a nice risk-free instrument
with a clear conscience. --Thanks for the warning!
On Thu, 19 Jan 1995, John E. Parsons wrote:
> On Thursday, Jan 19, Kevin Quinn wrote...
>
> > Speaking of rationality, did people catch the WSJ article on Robert
> > Citron, Orange County's erstwhile Treasurer? Apparently he was
> > loony-tunes and had been for some time. When his huge bet that interest
> > rates would fall became questionable as rates rose last Fall, he
> > explained to the oversight board why this would be reversed:
> >
> > "We do not have the large inflationary wage increases, runaway building
> > both in homes, commercial and those tall glass-office buildings. Few, if
> > any, tall office buildings are being built.."
> >
> > The reporter asked the source whether this sort of pretzel logic didn't
> > worry the Board---no, because he'd always "reasoned" this way, and they'd
> > been raking it in earlier!
> >
>
> Careful Kevin. The WSJ and a large part of the investment
> management community feel a need to scapegoat Citron in
> order to protect the investment advisor industry. He may
> have been off in a variety of ways, and certainly he did
> something plain wrong, but he was a perfect match, a
> perfect component, for an industry that needs to be
> criticized.
>
> There is an old saying in business that "You can't cheat an
> honest man." It's the ones who want a deal that really is
> too good to be true that can be made into suckers.
> Unfortunately some people in the industry forget that that
> still leaves them cheating whoever or however one might
> describe their prey.
>
>
>
>
>
>
> John Parsons
> Graduate School of Business
> Columbia University
> 116th St. & Broadway
> New York, NY 10027
> (212) 854-3783
> (617) 288-4367
>
