If generality is the enemy of art, it certainly poses the same threat to financial newspaper cover stories. When an article's headline is grand and enticing but the underlying conclusions are as general and non-specific as a horoscope, readers are left wanting, having effectively been tricked into thinking they would be presented with a story of substance.
The cover story title in this weekend's issue of
" -- seems to promise the world. But the story itself fails to touch upon the pair of items most important in understanding the future of firms like
. What's missing? The deep past -- specifically, the way each Wall Street era unravels in a flurry of discredited, overly complicated financial instruments -- and human nature -- namely that deadliest of sins: greed.
They Just Don't Get Wall Street!
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With a headline like "Future of the Street,"
was promising readers that the entire future of Wall Street would unfold before their eyes. In fact, a good deal of it unfolds in the sub-headline:
"Wall Street is likely to reinvent itself in coming years -- and emerge stronger than before the current crisis hit. One big change: compensation."
Talk about a firm grasp of the obvious. Apparently this whole subprime, make-up-the-valuation-of-illiquid-securities-as-you-go-along thing hasn't been working out too well. They'll need to find another con. Let's see ... Internet IPOs, leveraged buyouts and conglomerates have all been taken in previous generations, but The Business Press Maven has no doubt that where there is a will, there is a potential dodge. That is hardly the stuff of revelations.
The idea, however, that Wall Street salaries will stay meaningfully lower ignores all of this history and implies that what is coming on Wall Street will be meaningfully different than the past.
Wall Street starts every era chastised by the last. Salaries are more modest. Then comes the latest, greatest financial innovation (say, earningless Internet companies, totally safe mortgage derivatives or conglomerates that will change the world), greed kicks in and salaries are off and running.
In making the case that Wall Street will eventually make a comeback,
does reference the Internet fiasco. But it does not set the mortgage fiasco and the Internet fiasco in the context of Wall Street's larger history and the way fiascos -- and all the attendant bells and whistles, regulatory trouble and high salaries -- are as regular as clockwork.
The article goes on to posit that transparency will play a big roll in the future of Wall Street, but, well, keep that long-term trend in mind. Will it really? Check out this thesis line:
"The other big story could be a reminder of proven truths, once forgotten. For instance, successful firms will better balance the riskier and the more stable business lines."
Like compensation, won't this be true for 15 minutes? But once big profits can be had from the next best thing, will anyone really follow a more conservative, lighter-risk approach than they have in the past? Has the list of deadly sins been revised downward?
Even when you can't disagree with a premise in the article, it is only because of its rank obviousness:
"Technology will continue to displace people in low-value-added trade-execution areas as large firms try to automate the to-and-fro of stock and bond trading among clients."
The article even sums up with a line drawn as general and wide as a horoscope:
"...the industry will have to fully own up to the errors of its past and then keep its eyes firmly on the road."
Uh, you don't say. Didn't The Business Press Maven get that in a fortune cookie once? Sometimes the best action to take when you read something written about the future of an industry is no action. That's the way to go here, generally speaking.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
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