Wall Street redux

Even though I suggested folks shouldn’t just go out and buy stock in my last posting, it turns out that those who did will have done pretty well. The market rallied Monday by 11 percent across the board — its largest one-day gain since 1933. IBM was up 5 percent, Yahoo 9 percent, Apple 13 percent, Google 14 percent, Microsoft 18 percent, Sun 19 percent. That doesn’t put these stocks back to where they were a few months ago, but at least it offsets some of last week’s declines.

But it takes more than one day of stock gains to suggest the market has hit bottom or will stabilize. And if you think you can out-time the market and pick the absolute low point, fuggedaboutit. But if your goal is to be an investor, you should try to assess the value of investments then buy when they are below their value. Or at least, that’s what Warren Buffett does.

Here are two other good articles on Wall Street and investing:

• “Why You Shouldn’t Bail on Stocks Now” from BusinessWeek, October 13

Of course, bargain-hunting always sounds great in theory. But people have shown time and again a predilection to sell low — just as they tend to buy high. Princeton economics professor Burton Malkiel, author of the best-seller “A Random Walk Down Wall Street,” notes how much hot money piled into equity funds in early 2000, just as the market was about to peak. Then, as stocks were nearing the bottom in the third quarter of 2002, that money fled in droves. The timing couldn’t have been worse. “One of the things we know about individual decisions in markets is that people generally do the wrong thing,” he says. “I know money is coming out now. I don’t know whether this is the bottom. But taking money out now, when things look horrible, is almost always the wrong thing to do.”

• “Maybe all this misery is just payback” a jaded look at Wall Street’s “masters of the universe” by Stanley Bing at Fortune

When I think of the just plain dumb stuff that Wall Street and its assorted salesmen, analysts, enabling bankers and callow spin-meisters have visited upon working companies over the years, it makes me want to choke. The arrogance. The willingness to see hundreds, thousands, lose their jobs as a result of their pronouncements and manipulations. Masters of Business all, they have been taught to see corporations not as places that employ people and provide a product or service, but as numbers on a balance sheet, a balance sheet that serves only one group: Investors.

Well, now the investors are taking it on the chin. A bunch of companies are feeling it too. And of course all those poor Street people are now reaping the payback from what their entire economic world-view has wrought.

Hey, don’t blame me if the market goes down on Tuesday.