I want to touch on the Sino Forest situation this morning which I have been watching with interest the past week or so. For those of you out there who still believe that anything a Wall St. MBA utters is the gospel truth well then, you can skip this post and continue about your way. Best of luck to you by the way.
It appears that Sino Forest (ticker TRE on the Toronto Exchange) is perhaps the largest and surely one of the longest running ponzi schemes known. What teams of highly paid analysts were unable to uncover was discovered by the small, (what, 2 person outfit?), known as Muddy Waters. The same research that bought and paid for sell side analysts on Wall St. and Bay St. referred to as "a pile of crap".
Idea time! Let's get uber-expert on hack analysts and Wall St. bullshit Henry 'please don't read my emails' Blodgett in for a guest commentary. Ooops he busy resurrecting his career.
I just love that name! Muddy Waters ! Beautifully simplistic in its elegance. For the uninitiated I believe that there is an inverse correlation between the simplicity of your corporate name and the quality of the work you produce. Just scour all the Greek mythologically named hedge funds and trading outfits out there and you will be amazed. A 3 headed beast guarding the gates of hell comes to mind but I digress.
Back to the Sino Forest situation which looks to be unravelling before our eyes. The whole sad situation takes me back to the Bre-X days back when I was with Nesbitt Burns. You see Nesbitt had an analyst named Egizio Bianchini. Nice enough guy. Precious metals analyst who happened to be responsible for covering Bre-X, and all the assorted maggot companies around it. It was quite the affair and Egizio was a rock star.
I owned no Bre-X, I recommended no Bre-X and was ridiculed by many not. Suffice to say I remember well the institutional conference call that was set up ASAP after the chief geologist, De Guzman I believe, fell from a helicopter over at the jungle property in Borneo.
It was interesting to hear the smart money, and hear was all we could do as retail was listen only mode, whine, plead, gnash their teeth and basically cry for answers. Egizio kept repeating over and over again that the gold was there. The gold was there. The gold was there.
That is, until he didn't anymore because as it always does, the truth never came out. The gold never was there. It was the grandest hoax of the century.
Do you remember being in 7th grade? Nobody did their homework and that was the morning the word spread the teacher was collecting the homework as a surprise test? In a mad rush everyone copied the one kid in the class who happened to do the assignment. I guess everyone copied wrong huh?
In the age of computers it is now copy and paste.
There was not one sell issued on Bre-X the lone strong buy or buy exception came from one analyst at Oppenheimer who had downgraded the stock to neutral I believe based on price run up that's it. Poor Egizio, the one kid in the class who did the assignment and who everyone copied from. Too bad for everyone it was wrong.
Hey, how many Wall St. analysts had a sell on Enron before it mushroom clouded?
I often think of that curbside hot dog vendor outside Lehman's global headquarters in Manhattan. I think of the fact that while he may not be able to define 'due diligence' he sure as hell would know how to do it were it his charge. I bet he also knows what 'shit for brains' means.
Still wondering why I have more respect for the hot dog vendor and his contribution to society than the brilliant Ivy league MBA research analysts on Wall St. and their teflon coated MBA pimp masters on the investment banking side? If so Jim Cramer has a podcast coming up quick you may want to tune in for your retirement riches.
This said, I expect every single analyst with a buy recommendation on Sino Forest to be scooped up by every mythologically named hedge fund in short order. They are not qualified to work the loading dock at Wal Mart but advise millions and billions they will. Tis the way of Wall St.
Besides this my conclusion is that when you want something done right you hire the right people. I suggests that the ECB, the Fed, the IMF and the World Bank without any further hesitation immediately hire Bernie Madoff and the entire management team from Sino-Forest to take over global re-ponzification operations stat as the Dow is flirting with 12K