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Former Salomon CEO Agrees with Annex: Watch Out At...

Wall Street Casino

 Gutfreund Says Laws Need to Be Changed Before Investor Confidence Can Return

PHOENIX, June 21 - Mark this day... summer solstice 2002. Just a few moments ago, we were stunned (and pleased) to hear what John Gutfreund had to say, speaking "live" on CNBC (at about 2:16 EDT).  The former Salomon CEO, who was forced to resign in 1991 amid another corporate scandal, had this message for the investing public:

(Realize that) you're in a (Wall Street) casino, and the odds are against you... the laws have to be changed.

Well, we said the same thing in a 1997 letter to the SEC and to a number of U.S. Senators (see "Some IBM Insiders Cashed In...").  But no one was listening five years ago, when we called for a change in Wall Street rules.

We are also "pleased" because we have been saying at least since 1997 that Wall Street has become a casino, and that corporate fundamentals have little to do anymore with stock values.  

Now that several corporate scandals break out almost every day, it may be useful also to remind our clients and the investing public of what we said four years ago in "Corporate 'Cabbage Patch' Dolls of the 1990s" (Annex Bulletin 98-39, Oct. 1998).  That it's their own fault if they allowed themselves to be played for suckers:

As in any casino, it takes a sucker to enrich the "house" through the gambler's greed or gullibility... the Wall Street casino is for suckers...

"The Great American Hoover," this writer's Washington Times column (1997):

Can't you hear that great sucking sound of the Wall Street Hoover which was revved up in the aftermath of the crash of Oct. (1997)...

"When Will Wall Street's Bubble Burst?", this writer's Washington Times column (1998):

Wall Street Hoover runs on a mixture of hogwash and Main Street's greed....

"Where Armonk Meets Wall Street, Greed Breeds Incest", an Annex Bulletin, Nov. 1998:

If the latter day Armonk connotes "Greed Inc." (and most indicators point that way), then the latter day Wall Street stands for "Incest Inc." (as most signals also suggest). And where Armonk meets Wall Street, greed evidently breeds incest. While the Big Blue was buying back its stock by the tens of billions of dollars, IBM insiders were selling their shares by the tens of millions of dollars. Talk about self-dealing. And NOT putting their money where their mouths were.

"Wall Street Boom, Main Street Doom," this writer's Chronicles magazine column (1998):

Today's stock exchanges have become almost totally decoupled from the economic reality of the companies whose shares they trade. Instead, they are Casinos at which the Big Business elite do what "Joe 6-pack" does when and if he can afford a trip to Las Vegas. Both play the odds on whim and emotion; the former wearing pin-striped suits; the latter in jeans and T-shirts.

Modern Wall Street is a game of cashflows, not that of GDPs (Gross Domestic Products)...They are a part of a ruse; a brainwashing effort to help the Wall Street Hoover to suck the savings out of the Main Street suckers' mattresses.

"From a Nation of Producers, to a Nation of Gamblers ", a 1999 Annex Bulletin:

The 'get rich quick' life's philosophy, is transforming America from a nation of producers to a nation of gamblers.

And so on... click on the following links to read our other stories on the same theme:

"Wall St.'s Conquest of America"
... The "Wall Street Hoover". Such a "socialization of America" enabled the Big Business elite to install a direct line into our wallets, sucking out our money ...

"Small Caps Sinking First"
... activities. Like a gambling casino, it is largely driven by investment cashflows, not profits or losses of the companies it trades. ...

"A Slam-Dunk of Bunk" - (Jan. 20, 2000)
... Yes. Why? Because any sane analyst would have left the crazed Wall Street casino long ago. ... The sin at the Wall Street casino these days is to be found out. ...

Analysis of IBM First Quarter Results (Apr 17, 2002)
... We used to refer to Wall Street of the 1990s as a casino. Strike that. ... Or a casino with a bordello on the side, if you prefer. “Independent” Analysts? ...

Analysis of Stock Market Reaction to 911/WTC (Sep 26, 2001)
... A cashflow-driven market, which is what we’ve been saying for years the Wall Street casino has become, simply shifted its assets away from some US equities ...

Armonk's Fudge Factory (Apr. 9, 1999)
... Nor were the casino players concerned about the fact that it is now nearly impossible to reconcile IBM's 1998 business segment information with prior years ...

"Wag the Big Blue Dog"
... So the Wall Street Casino, which trades on perceptions, not facts, is "the ultimate measure" of a company's performance, according to the Big Blue's chairman? ...

"Gerstner: Best Years Are Behind" (Aug. 10, 1999)
... Further proving the point that the market has become little more than a glorified casino with minimal relationship to business issues of the companies it trades ...

Annex Bulletin - 98-16 ("the new blue")
... It is factually unsupportable because less than one-third of Americans play at the Wall Street Casino despite its long "bull run" and decades of financial hype ...

King, Prince of "Fluff" Spin More "Fluff" into Market...
... deal. And the gullible "investors," read gamblers at the Wall Street
Casino, lapped it up as if the "fluff" were real gold. Which ...

Analysis of Accenture's 2001/1Q02 Results (Jan 11, 2002)
... Plus its stock is traded at the Paris bourse, not at the Wall Street casino. So which was the IT services company whose stock topped all competitors since Sep. ...

"Dell: Easy Come; Easy Go"
... have been dealing in dill pickles, indelible ink or snake oil, rather than in PCs - for all the difference that would have made to the Wall Street's casino ...

"A Flash-in-a-Pan Perot" (Aug. 20, 1999)
... results and its stock performance is yet another example of a disconnect between reality and perceptions which rule the cashflow-driven Wall Street casino. ...

Death of The City, Too? NYT's Faux Pas (Dec. 30, 1999)
... with the Free Market." Each article is written by the suckers for the suckers among the Wall Street La-La Land gamblers, to which this downtown New York casino ...

"Two Faces of Globalism; Yin and Yang; Princes and Paupers"
... executives are collecting. It's just that the Casino has so far managed to contain the stench. For the most part, anyway. Instead, the ...


 Happy bargain hunting!

Bob Djurdjevic

[Also check outBig Blue Salami (June 19),  Sam's Dull Scalpel (June 4), Looming IBM Write-offs (May 23), "No New News at IBM" (May 15),  "Looming IBM Layoffs" (May 14),  "Sam Is No 'Change Agent'," (May 6), Additional Stock Buybacks Authorized (Apr. 30, 2002),  "IBM 5-Yr Forecast: From Here to Eternity?" (Apr. 2002),  “Tough Times, Soft Deals,” (Apr. 25, 2002), "A Disastrous Quarter," (Apr. 17),  Industry Stratification Trend (Mar. 30, 1990),  “Gerstner’s Legacy: Good Manager, Poor Entrepreneur” (Jan. 2002),  "Big Blue Starting to Unravel," (Apr. 8, 2002), SEC Launches Formal Probe of Wall Street Research (Apr. 25, 2002),  “SEC to Tighten Stock Option Rules” (Apr. 5, 2002), "Sir Lou OutLayed Lay!" (Apr. 1, 2002), "IBM Pension Fund Vapors," (Mar. 23, 2002), Is IBM Cheating on Taxes, Annex Bulletin 99-17 (May 1999),  IBM 5-year Forecast 2001: An Unenviable Legacy (June 2001) "Break Up IBM!" (Mar. 1996), Fortune on IBM (June 15, 2000), “Smoke and Mirrors Galore,” July 2000), Annex Bulletin 98-14 ("Wag the Big Blue Dog"), Armonk's Fudge Factory (Apr. 9, 1999)Where Armonk Meets Wall Street, Greed Breeds Incest (November 1998)Stock Buybacks Questioned: Is IBM Mortgaging Its Future Again?, 97-18 (4/29/97),  "Some Insiders Cashed In On IBM Stock's Rise, Buybacks" 97-22, 7/27/97,  Djurdjevic’s Forbes column, "Is Big Blue Back?," 6/10/97;  “Executive Suite: How Sweet!,” (July 1997), "Gerstner: Best Years Are Behind", Aug. 10, 1999), "IBM's Best Years Are 3-4 Decades Behind Us" (July 1999), "Lou's Lair vs. Bill's Loft" (June 1999),  "Corporate Cabbage Patch Dolls," 98-39, 10/31/98; Djurdjevic’s Chronicles magazine October 1998 column, "Wall Street Boom; Main Street Doom", “Louis XIX of Armonk,” (Aug. 1996), "Mountain Shook, Mouse Was Born" (Mar. 25, 1994) etc.]

Or just click on and use "financial engineering" or similar  keywords.


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Volume XVIII, Annex Newsflash No. 2002-12
June 21, 2002

Editor: Bob Djurdjevic
Published by Annex Research

P.O. Box 97100, Phoenix, Arizona 85060-7100
TEL/FAX: (602) 824-8111

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