Hot Air on Wall Street

Much of the Internet stock boom was a fiction, "written to script by Wall Street fixers who stood to collect, and did collect, buckets of money by duping the investing public," says Gregg Wirth, a freelance writer who has covered Wall Street for most of the past decade. "Americans were deluged with media sound bites and commercials portraying stock market trading as a virtual free ride on the gravy train. High priests in the Church of Adam Smith were offering their free-market mantra as a solution to every social and economic ill (works great on rheumatism, too)." Now that the party's over, Wirth notes, investment banks have announced a few superficial reforms which "smack of PR-consultant 'crisis management' -- just enough mea culpa and 'voluntary action' to sooth public opinion and cool the ire of regulators." According to Philip Mattera of the Corporate Research Project, glaring conflicts of interest on the part of stock analysts. The dot-com bubble was created by "transforming analysts into salesmen, whose main job was to tout stocks of companies with which their firm already had an investment banking relationship. Analysts once advised investors to buy certain stocks and sell others. By the end of the 1990s 'sell' recommendations were virtually extinct." Mattera's report also provides a useful list of information resources that you can use to find out who Wall Street analysts are really representing.