We could write a long book about false prophets on Wall Street. What is interesting is how easily people are enchanted by charismatic personalities — some who peddle advice, some who run companies. A decade ago, for example, Yahoo tried to save itself by paying almost $1 billion to five charismatic CEOs (Terry Semel, Jerry Yang, Carol Bartz, Scott Thompson, and Marissa Mayer), four of them outsiders, who were hired over a five-year period and arguably did more harm than good.Jeffrey Lee Funk and Gary N. Smith, “Sensible stock investors put their money on a company’s real profits — not Wall Street’s false prophets” at MarketWatch (August 11, 2022)
They provide a number of colorful but sobering examples of famous fake money gurus. And just when, in a precarious economy like the present one, we need sound bases for decisions, the media seem to go out of their way to lead us astray:
Venture capitalists, investors and the media are obsessed with the outsize personalities, peculiar eating habits, and other fluff — metrics far-removed from market share, revenue, costs, profits and the technological details that come from hard-working scientists and unglamorous engineers.Jeffrey Lee Funk and Gary N. Smith, “Sensible stock investors put their money on a company’s real profits — not Wall Street’s false prophets” at MarketWatch (August 11, 2022)
As Funk and Smith point out, Tim Cook has been very good for the Apple brand. But how often do we hear about Cook, relative to, say, Elon Musk? For investors, that Private Lives of Tech Entrepreneurs show could turn out to be pretty expensive entertainment because investing in a Musk company might be a far bigger risk.
Funk and Smith insist, there’s no substitute for “homework” when it comes to investment: “Dividends, earnings, free cash flow, return on assets, return on equity, economic value added” give us the look behind the scenes that protects our investments. We can all watch the show for free anyway.
You may also wish to read: At Salon, Funk and Smith take on “stealth AI research.” All we know for sure about the claims about Google AI’s LaMDA showing human-like understanding is that, since 2020, three researchers who expressed doubt/concerns were fired. It’s easy for Alphabet to make astounding intelligence claims for a large language model (LLM) like Google’s LaMDA when no outsider may see the data.