Loans and cash

Oliver North, who lied to Congress and was rewarded with the Republican nomination for senator from Virginia and then with a nationally syndicated talk show, refused to criticize Jerry Falwell for selling videotapes accusing President Clinton of murder, and responds to a question on Larry King Liveby calling the tapes “alleged tapes,” which apparently means that North could not even bring himself to acknowledge that such tapes even exist. If he had acknowledged their existence, after all, it would have reflected badly on Falwell, a philosophical and political ally.
Everybody, it seems, has an agenda. Cigarette company executives testify to Congress, under oath, that they do not believe nicotine is addictive. Even the sports world is not immune. In 1994 umpires confiscated the bat of Cleveland Indians slugger Albert Belle after the Chicago White Sox accused Belle of using a corked bat. American League officials X-rayed the bat, cut it in half, and then announced that the bat was illegally corked and suspended Belle for 10 days. When the media confronted Belle’s agent, the agent borrowed a page from the O.J. Simpson defense playbook and claimed the incident was “concocted by the Chicago White Sox.”
So, given the surging supply of “experts” and the heightened probability that any given expert you may be listening to is promoting an agenda, don’t be terribly concerned if you seem to have uncovered an exciting stock or two that is totally bereft of analytical “sponsorship.” Even Federal Reserve Chairman Alan Greenspan is a “spinner” with an agenda. In his book The Agenda—an appropriate title for this discussion—author Bob Woodward says that Greenspan managed to convince then–Treasury Secretary Lloyd Bentsen, early in President Clinton’s first term, that the bond market would respond favorably if the Federal Reserve were to begin raising interest rates. Bentsen, impressed with Greenspan’s reasoning, performed the spin on Clinton, who bought it hook, line, and sinker. Greenspan, Bentsen, and Clinton then performed their spin for the financial community, and everyone involved began to believe their own baloney to such an extent that they were all genuinely surprised when the bond market and the stock market headed lower following the Federal Reserve’s interest rate hike. So, one reason why an “expert” may be off the mark is that he or she is selling you a bill of goods, i.e., promoting an agenda, rather than trying to get at the truth.
Another reason experts don’t always hit the mark is that they are not really tryingto deliver the goods for a different reason, and that reason is that they’re not always rewarded for telling the truth— especially when the truth is something their superiors do not want to hear. Sometimes they are even punishedfor telling the truth. In his book 1929 Again, author Terry R. Rudd points out that “one of the underlying problems making it virtually impossible for knowledgeable people to tell us the truth is that we can’t accept it without reacting unfavorably.”
“When the recipient doesn’t receive news in a manner beneficial to the giver, “ Rudd writes, “there is no incentive for the giver to do so.” It is a well-known fact among Wall Street professionals, for example, that there is little mileage in taking a negative attitude toward the stock market or the economy. Optimism sells, and if you want to do business, you are almost always better off taking the rosy view of just about everything on the investment scene.
Perhaps the classic example of this fundamental truth took place on September 5, 1929, just a few weeks before the Great Stock Market Crash. Economist Roger Babson, speaking at a major business conference, made the following statement: “Sooner or later a crash is coming, and it may be terrific. Factories will be shut down . . . men will be thrown out of work . . . the vicious cycle will be in full reversal and the recession will be a serious business depression.”
Now that is about as accurate as you can get in terms of predicting the stock market and the economy. Babson’s reward was that he was ridiculed and criticized as a fearmonger. Rudd says that one major brokerage firm actually took out an ad in The Wall Street Journal raking Babson over the coals and stating that “we will not be stampeded into selling stocks because of the gratuitous forecasts of a well-known statistician.”
The stock market actually began declining on the very day Babson made his historical forecast, and that particular drop became known as the “Babson Break.” By late October the crash that Babson had predicted was under way, culminating on “Black Tuesday,” October 29, 1929, the worst day in stock market history.
And what was Babson’s reward for being so accurate? Some people had the temerity to criticize Babson for being early in his bearish prediction, and others actually went so far as to blame the stock market crash and the ensuing depression on Babson’s “fearmongering.” This is a lesson that has been learned and relearned in varying degrees over the years by anyone who has had the misfortune of turning prematurely bearish on the stock market or the economy or having the nerve to issue a “sell” signal on a big-name company with a popular stock and a penchant for doing investment banking business. Therefore, you should not expect much help from the “experts” when it comes to predicting bear markets, recessions, earnings disappointments at large, well-known companies that do a lot of investment banking business on Wall Street, or in other areas where the forecast of bad news might be met with, shall we say, a bad attitude. One of the all-time great examples of an “expert” receiving an icy attitude toward his honest point of view is the Russian economist Nikolai D. Kondratieff, who was exiled to a labor facility in Siberia and died there after he wrote a 1925 treatise in which he suggested that capitalism was a perfectly legitimate economic system that would always recover from depressions if left to its own devices. This point of view was not something the Communists particularly wanted to hear, since Moscow had taken the position that capitalism was a flawed system that contained the seeds of its own destruction. And so, the father of the “Kondratieff Wave,” which turned out to be one of the more enduring theories of economics, was handed a pickax, or whatever they gave you when they shipped you off to Siberia, and is most likely preserved in ice for future inhabitants to thaw and scratch their heads at.
Not all experts receive such harsh treatment for trying to report the truth as they perceive it. Some of them, like the brokerage firm analyst who issued a negative report on one of Donald Trump’s companies several years ago, merely got fired. Others meet with a more subtle form of resistance.