It will be easy to react to the disappointing “coming out party” for Facebook on NASDAQ with Schadenfreude, particularly for those in the 99% for whom trading on Wall Street is little more than a spectator sport where most of the spectators do not know the rules (and most of the players get the most profit out of trying to change them). The problem is that, as long as the 1% in the financial sector is the tail that wags the dog of the rest of us, not only are their misfortunes our misfortunes; but also they suffer less than we do. If this is a spectator sport, it is one in which violence on the playing field harms the spectators more than the players.
Actually, violent sport is the
wrong metaphor. Trading on Wall Street is basically a shell game. The odds are
even worse than playing the slots in Vegas. When we think about buying a share
of stock, Morningstar can give us more information about the business behind
that stock than any racing form at the track. It then adds on its own
historical information about past performance of the stock and how that
performance compares against a couple of “normative models,” such as a stock
All of this is about as
informative as the ongoing spiel of the guy on the street moving the three
walnut shells around on his table. Only one thing matters to most of us: When
you need the money and want to sell that share, will the pea of value be underneath
it; or will it be empty? No one (not even the 1%) can answer that question with
confidence. The only reason the 1% are different is that they have
“instruments” (as they call them) to bump the odds in their favor (along with
the power to influence the Government when they need to be rescued from
fumbling the wrong way with those instruments).
Let’s just hope that the
failure of Facebook to gratify unrealistic expectations (and do so immediately)
does not trigger the next economic crisis when we have yet to recover from the
last one. We should also hope that the 99% will eventually get legal protection
against the 1% who play games that would get them arrested were they to operate
on the streets of Manhattan, rather than behind sophisticated workstations. Sadly,
however, that would probably be hoping for too much.