Or, for that matter, jumping into the water with financial sharks under any circumstances. The NY Times has an article about the ongoing legal trials of David H. Brooks, the chief executive and chairman of a body-armor company. The article primarily focuses on what a loathsome piece of shit Brooks is: not only did he rip off investors and the U.S. government, but his body armor doesn’t work as advertised in hot weather. Which would be fine if we were engaged with Al-Queda…in Iceland.
But this section at the end caught my attention (italics mine):
One of the many former shareholders who have been tracking the trial is Michael Adair, an accountant in his 60s who says he lost most of his retirement savings, $525,000, when the stock plummeted.
He felt patriotic investing in a company providing life-saving equipment to the troops, Mr. Adair said, but first he had read the financial statements, had listened to the conference calls and had toured the company headquarters.
“I did due diligence and it turned out it was all a lie,” he said in a recent interview. “This is a trial of greed. I’m hoping to get some justice.”
Here we have an accountant who did just about all of the due diligence I could possibly think of, short of having your own private intelligence agency, and yet he was still conned.
Like Vegas, the house almost always wins. And Brooks was just unsophisticated and sloppy, unlike Goldman-Sachs. Wallace C. Turbeville, the former CEO of VMAC LLC, and a former Vice President of Goldman, Sachs recently wrote:
Kenneth Feinberg issued his report identifying outrageous Wall Street compensation of executives despite their role in the financial disaster and bail out. He proposed that the banks voluntarily adopt “brake provisions” that permit boards of directors to nullify bonuses in the event of a new financial crisis.
He might have more success asking the lions of the Serengeti to give the wildebeests a sporting chance of making an escape….
These young traders are simply doing what America has told them to do. They are allowed to earn obscene amounts of money using the advantageous information, technology and capital of their employers. Making money from less powerful counterparties is like shooting fish in a barrel.
Mind as you go….