James Surowiecki explores the phenomenon of investor amnesia: Despite numerous examples of dishonesty and untrustworthiness, investors continue to trust Wall Street firms with their money. “It’s like what Hegel supposedly said: The only thing we learn from history is that we learn nothing from history,” says Barry Ritholtz, who’s quoted in the piece. Surowiecki thinks factors like simple greed and cognitive dissonance are to blame. [%comments]
Wall Street Amnesia
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. You can also watch it on 
I have to agree with the sentiment that we have no other choice as investors…The key word there is “investors.”
The problem is that we “investors”, who have long-term consistent strategies, are stuck in the game with gamblers/speculators who are looking to rig/manipulate the game to their advantage. The question is, how can investors be protected from gamblers.
Wall Street can’t print money, they have to take it from all of us. Even if we try to avoid risky investments and protect our nest eggs, our pension/401k plan, our insurance company and our bank/credit union/savings and loans won’t. With the myopic tactics you eschew, American business is doomed to forever play the sucker’s game. PT Barnham was an optimist.
Ever been to Vegas twice? We all lose, but hopefully I win.
Thanks for the blog, BTW.
Most people think they’ll beat the odds. Otherwise they wouldn’t invest in anything more risky than an index fund.
Maybe because investing is very hard and as much as Wall Street firms lose money, many people are scared they would do worse on their own.
Even people that “invest their own money” largely depend on Walls Street for the products they buy (Index ETFs, futures, etc.)
The latest scandal reminds me of Michael Lewis’ book Liars Poker. As a Wall Street salesman, his job was to convince customers to buy the lousy bonds that the firm didn’t want. They kept the good stuff for themselves. They called it ripping the customer’s face off. ‘Born to be a customer’ was what they called a sucker.
My advice: If someone calls you on the phone and tries to convince you to buy an investment security – short it. That investment is going to crash hard or they wouldn’t be selling it.
So, does James Surowiecki actually invest in anything other than his personal checking or savings account?
And what of the role of GOVERNMENT in this mess?
Every time a stock is bought, there must be a seller and vice versa. It’s like betting on a race that you don’t know is fixed. Some bettors will pick the right horse, without that knowledge