The Five Dumbest Things on Wall Street This Week
The Year in Dumbness: A Quiz
George Mannes
12/27/02 - 07:23 AM EST
1. E for Egregious
On Sept. 25, 2002, salesman Jimmy Luu of Houston's Microcache Computers bid $44,000 of his boss' money for a stainless steel tilted "E" sculpture at an Enron (ENRNQ - Cramer's Take - Stockpickr) bankruptcy auction. Upon being named the winning bidder, Luu explained to reporters, "He said, 'Just do anything to get it.'" Two months later, what was Luu doing?-
Collecting unemployment. Microcache's president, furious that Luu had gone more than $30,000 over the predicted selling price for the "E," fired Luu a day after the auction.
Getting dunned. Luu -- who once won $16,000 on Who Wants to Be a Millionaire -- had fabricated the tale of his boss and his job. Enron's bankruptcy trustee hired a collection agency to go after Luu when his check for the "E" bounced.
Writing a book. Luu's experience, and notoriety, won him a contract to write a guide to stock bubble collectibles.
Spending more money. He bid on a second "E" at a second auction, but dropped out once the bidding went over $10,000.
2. You Know, a Lot Can Change in Five Years
Who, in 1997, told The Wall Street Journal, "I like to avoid costs wherever I can in the company," adding that his company "would never pay $90 million to an outrageously successful executive -- never mind a failed one"?| Just a Loan |
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Jack Welch, General Electric (GE - Cramer's Take - Stockpickr)
Dennis Kozlowski, Tyco International (TYC - Cramer's Take - Stockpickr)
John J. Rigas, Adelphia Communications (ADELQ - Cramer's Take - Stockpickr)
Jeffrey Skilling, Enron
3. How High the Dow?
| Eyeing the Dow |
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Up 26%
Up 13%
Break-even
Down 32%
4. I Pitt the Fool
Well, 2002 was certainly the year of Harvey Pitt's discontent. Appointed chairman of the Securities and Exchange Commission last year, Wall Street's top cop quickly slid from hero to zero. It's hard to pinpoint a single reason why. Maybe it was his suggestion that his post be promoted to a cabinet-level position. Maybe it was his reluctance to share information with his fellow commissioners about Public Accounting Oversight Board nominee William Webster. Or maybe it was an inexplicable lapse in the loyalty for which Washington, D.C., is so renowned. To illustrate: Which of the following statements did Senate Banking Committee member Charles Schumer (D., N.Y.) not make about Pitt?-
"The SEC desperately needs someone who both has a deep knowledge of how the markets function and at the same time possesses a rock-ribbed integrity. [Harvey Pitt] is such a man."
"He is well-described as a Zeus in his field."
"Like [Winston] Churchill, he is a man for his times."
"He, unfortunately, was the wrong man at the wrong time."
5. Try to Remember What Went On in September
What happened at 9 a.m. Eastern time on Tuesday, Sept. 3, 2002?-
Victimized by a hoaxster, PR Newswire issued a fake press release announcing Barbra Streisand was joining the board of Martha Stewart Living Omnimedia (MSO - Cramer's Take - Stockpickr).
The usually public-relations-savvy and image-conscious Martha Stewart appeared on CBS' The Early Show, hacking away at a head of cabbage with a large knife while fending off questions about her sale of stock in ImClone Systems (IMCL - Cramer's Take - Stockpickr).
Scott Sullivan, WorldCom's (WCOEQ - Cramer's Take - Stockpickr) former chief financial officer, pleaded innocent to charges of securities fraud.
The 92nd St. Y Nursery School -- the object of desire for Salomon Smith Barney analyst Jack Grubman -- launched its application process for the 2003-04 school year.
6. CEO Speedwagon
| Chalet Wendt |
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Wendt donated $8 million to New Jersey's Seton Hall University, which will name an under-construction student center in his name. Seton Hall already boasts buildings named after Wall Street luminaries as ex-Tyco CEO Dennis Kozlowski -- who has pleaded innocent to Tyco-related larceny charges -- and ex-Tyco director Frank Walsh, who has pleaded guilty to securities fraud. The university only recently removed the name of imprisoned financier Robert Brennan from a recreation center.
Wendt donated $8 million to an animal rights group known as the Mammal Liberation Front.
Wendt received an additional $8 million cash bonus.
Wendt agreed to forgo his $1 million 2002 salary, opting instead for a double-wide mobile home recently repossessed by Conseco's lending unit. He said at the time he planned to relocate it to a hunting retreat he owned in Michigan.
7. Where's Quasimodo When You Really Need Him?
We all know that stocks won't recover until individual investors regain their confidence, right? And they won't overcome their jitters as long as they believe that the markets are a scheme by the rich to separate the poor from their money? As long as it looks like some sort of game? So, you might ask, what steps might the financial pashas take to restore trust and respectability to the markets? Well, starting with the New York Stock Exchange, they might put the kibosh on some of the characters they have participating in the opening and closing bell-ringing ceremonies each day. |
| Source: NYSE |
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Tonya Harding
January 1996 Playboy Playmate Victoria Fuller
The dog from Men in Black II
Asimo, billed as "the world's most advanced humanoid robot"
8. Get the AOL Out of Here
Media and entertainment conglomerate AOL Time Warner(AOL - Cramer's Take - Stockpickr) has spent most of the year contending with the blowback from the 2001 merger of America Online and Time Warner. There were the departures of CEO Jerry Levin and co-COO Bob Pittman. The stock decline. The Securities and Exchange Commission investigation. And the $50 billion-plus impairment of goodwill. So America Online may have been acquired by Time Warner at a market top. But it's still a crown jewel, right? Here's the proof. According to a recent survey of 1,000 AOL subscribers by J.P. Morgan, which of the following is seen as the most compelling reason to pay a premium for AOL's online service?-
Keeping one's email address
AOL's Instant Messenger service
Parental controls
Sessions@AOL (live music performances)
9. Fifteen Minutes of Fame Times Four
Who are Bill Hillison, Joyce C. Lambert, Russell J. Lundholm and Margaret Hicks?-
Some of the 125 beneficiaries of the nonprofit group known as the ex-WorldCom Employee Assistance Fund.
Named plaintiffs in a class-action suit seeking damages from McDonald's (MCD - Cramer's Take - Stockpickr) for making children morbidly obese.
Four of the 23 state attorneys general who filed suit in October to block the merger of EchoStar Communications (DISH - Cramer's Take - Stockpickr) and Hughes Electronics (GMH - Cramer's Take - Stockpickr).
Arthur Andersen Professors in Accounting at four different U.S. universities.
10. $25 Million Here, $25 Million There, It All Adds Up
Gary Winnick, ex-chairman of bankrupt telecom company Global Crossing (GBLXQ - Cramer's Take - Stockpickr), surprised lawmakers at an Oct. 1 congressional hearing by vowing to donate $25 million to Global Crossing's 401(k) retirement fund. The announcement, however, only briefly took the heat off of Winnick for his May 2001 sale of $123 million of Global Crossing's stock -- a sale that came one month before the company blindsided Wall Street with reduced revenue forecasts. Later that day, Rep. Diana DeGette (D., Colo.) asked Joe Nacchio, ex-CEO of Qwest Communications International (Q - Cramer's Take - Stockpickr), if he would make a similar donation. According to CNN's transcript, how did Nacchio -- who sold more than $200 million in since-tumbled Qwest stock -- respond?-
"Mr. Winnick ... may have a guilty conscience. I don't."
"Respectfully, Congresswoman DeGette, I have already helped pay for Qwest's employees' retirement. ... I have paid millions of dollars in taxes on my income and capital gains. I also worked 24 hours a day, seven days a week, to increase Qwest's value."
"I have not heard about it. I have no reflection on it. .... Mr. Winnick's company also went bankrupt. Qwest is not a bankrupt company."
"If I say yes, can we call the rest of the hearing off?"