7. Macho-macho: Regardless of the facts, Wall Street can't admit failure
Addicts cannot see their weaknesses. In his book, Confronting Reality, Larry Bossidy and Ram Charan warn: "The greatest consistent damage to businesses and their owners is the result not of poor management, but their failure, sometimes willful, to confront reality." Like Wall Street insiders, they simply cannot admit the gross mistakes, moral lapses, crimes, and catastrophic errors in judgment that triggered the 2008 crash. They're blind to their faults. They don't want to see them, and they won't. Until it's too late for it to do any good.
8. Unpredictable: Wall Street gamblers haven't a clue about the future
In his book, Stocks for the Long Run, Jeremy Siegel studied market history from 1801 to 2000, comparing the biggest up and down days. Bottom line: Markets are random. There were no obvious reasons for 75% of the moves that trigger either long-term gains or long-term losses. Wall Street cannot predict crashes. But they can create them. Finance professors Terrance Odean and Brad Barber did some long-term research on both American and China investors. Conclusion: The "more you trade, the less you earn." Yes, returns for buy-and-hold investors are a third higher than those for heavy traders.
9. Irrational: Wall Street gets rich off investor irrationality
Behavioral economics is the psychology of investment decisions. It's based on Nobel Economist Daniel Kahneman who essentially proved that investors are irrational. That was in 2002. And investors are still irrational. And yet we still assume we're making rational decisions! As behavioral finance guru Richard Thaler once admitted: Wall Street "needs investors who are irrational, woefully uninformed, endowed with strange preferences, or for some other reason willing to hold overpriced assets." And so it is that the naive irrationality of Main Street investors makes the Wall Street crowd very rich.
10. Myopic: Failure to think long-term guarantees another crash
Wall Street's addiction to short-term thinking guarantees another crash. But worse, Wall Street's shortsightedness is setting up an inevitable global catastrophe and even the self-destruction of their capitalist ideology. In his book, Collapse: How Societies Choose to Fail or Succeed, Jared Diamond warns that throughout history surviving cultures are always the ones that focus on long-term planning, far in advance of any possible crisis. Failed societies are the ones whose leaders "focus only on issues likely to blow up in a crisis within the next 90 days." And that fits Wall Street's blind obsession with quarterly earnings, annual bonuses, 1% rates, no Volker Rule, no reforms, ever, and the attitude that more is never enough.
So how did your "Addictive Personality Rating Score" for Wall Street add up? Chances are you diagnosed Wall Street with a perfect 10 out of 10. No wonder Wall Street's insiders need treatment for their gambling addiction, at a Betty Ford Center.
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