When Rooting for Wall Street is Painful
Is there anything more frustrating than when the guys you want to root for seem hell bent on making it hard on you?
This might seem like another Yankees blog report, but this time I’m talking about Wall Street. And yes, I am rooting for the guys everyone loves to hate these days – i.e., the bankers. Sure, they’re not helping me build a case in favor of them. The last several weeks prove that much. Consider the blundered execution surrounding the Facebook IPO, JPMorgan’s massive trading losses, and most recently, the LIBOR rigging scandal – which would have probably generated even more press if it weren’t so mind-numbingly boring to everyone who’s not in banking.
So, why bother rooting for the bad guys? Because once you remove them, there’s plenty of good.
First, you don’t have to look for too long to see the importance of the financial industry. It starts at home, in our local economies and we need our capital markets to function properly for everyone’s benefit, from the Main streets of small town America to the emerging markets. Crisis has taught us that much. The past decade or more has seen a combination of scandal and poor performance – which, incidentally, a jaded public is all too eager to lump into the “scandal” category without too much thought.
But, for an investor with an eye toward retirement, there are few attractive alternatives to the investment opportunities Wall Street has to offer. A bank savings account? Not really. Real estate? No thanks. Precious metals? Not for me.
That brings us back to square one. The fact is, for a long-term investor, many of the products and services offered by the large banks and asset managers are the products that we need to help build our financial futures. Yes, from that perspective, I am a fan of Wall Street. I have to be. And, most likely, you do as well.
There is no question that finance is a competitive business. But I also have no doubt that the scandals, malfeasance, and incompetence that came with every bubble (from tech to real estate) and with every white-collar crook (from those at Enron/Worldcom to Bernard Madoff, to Raj Rajaratnam) have taken a toll on market performance and investor confidence. Still, you and I need financial businesses to do well.
And that probably means they’ll do some good too.
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