Want Some Financial Advice from a "Guru" ?

Isn't this tittle compelling : "the Wall Street Self Defense Manual. A Consumer's Guide to Intelligent Investing" !

Any good investor knows this long time famous book from Ben Graham, "the Intelligent Investor", the one that young Buffet read eagerly.

But the issue here is that this book has been written by someone who surely doesn't have the same ethical standards as Graham, let alone his solid value-oriented approach.

That guy is Henry Blodget ! The very guy who has been barred from the securities industry for life. The guy who is not allowed to sell financial advice any more for the rest of his life !
 

Let's have a little rewind on history. Late 1998, as an analyst at Oppenheimer, he raised its price target for Amazon to $400 a share while it was then around $240. 2 weeks later, the stock did surge past $400, which of course made him a worldwide celebrity and an Internet guru. With such a track record he could be hired by Marrill Lynch for a modest $3M a year salary, which became $12M by 2002 !

But the issue is that while he was promoting Internet stocks to help his employer in the investment banking business, he was privately sending emails calling those very same stocks "junk" !

Sure, the guy is now barred from the security market, sure he was fined ($4M while he earned north of $18M during his 3 years at Merrill), but what an hypocrosy and how indecent that is to reap profit from his past actions.

However, those who have read the book found it very interesting and informative...

Ironically enough, Blodget now emphasizes the Buffet approach, with those "passive" investors who hold stocks for the long term will do much better than the short-termers. Good for him !

Just for the fun and the sake of it, enjoy the stock price curve below ! AMZN is roughly at a third of the peak it hit 7 years ago after Mr Henry made his raise ! The company was then valued $45bn while it was hardly making a billion dollars in revenues. How amazing as it could be, there were then many bright people believing trees would climb to the sky, and rapidly at that. Beware, this hasn't tottaly disapeared these days.

Comments

[Steve "The Credit Card Debt Man" B]

Great read there. some good advice