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5 Stocks Plagued By Stupidity - Weiss

True Stupidity is hard to achieve, but there will always be a few intrepid souls willing to sink to the challenge.
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Recently we've been seeing some fine examples of a time-honored corporate tradition. There was Mark "I never laid a finger on that lady" Hurd, proving yet again that HP (HPQ) - Get HP Inc. Report systematically rips the word "ethics" from its dictionaries. There was the unraveling and foreclosure of the largest real estate deal in U.S. history, the purchase of the Stuyvesant Town residential complex in Manhattan by Tishman Speyer and BlackRock (BLK) - Get BlackRock, Inc. Report You know, the one that was predicated on wholesale evictions in the tenants' rights capital of the world.

Both of these corporate crises may seem unrelated, but they are actually tightly bound in a variety of corporate conduct that has been with us since the dawn of time: they were both examples of Corporate Stupid. These weren't miscalculations, misjudgments, mistakes or any of the other frailties to which corporate flesh is prone. The Stupid are truly special.

What distinguishes Corporate Stupid from lesser forms of incompetence can be summed up by the word "senseless." This is exacting criteria. Take one of history's most famous miscalculations: the Edsel. Yes, I know, it was ugly, it guzzled gas like a Sherman tank, and the 1958 Edsel has a firm spot on

Time magazine's 50 Worst Cars of All Time.

But even Time admits that this icon of bad decision-making was more a victim of its own hype than anything else, and "wasn't that bad a car." Sorry, it just doesn't cut the Stupid mustard. Laughingstock? Yes. Stupid? No.

The

BP

(BP) - Get BP Plc Report

disaster in the Gulf of Mexico is many things ("malicious," "criminal," and "reckless" come to mind), but at bottom it was an oil company reacting in a very natural, rational way to a warm and cuddly regulatory environment Yes, I know, Tony Hayward is not winning any "manager of the year" awards, and he may not be the brightest bulb in the package. Yet somehow the word "stupid" just doesn't seem apt in describing this wretched company and its detestable execs.

I'd similarly exonerate my longtime alma mater,

McGraw-Hill

(MHP)

, from the Stupid label for its role in the Clifford Irving-Howard Hughes scandal back in the early 1970s. Sure, they swallowed a massive line of malarkey from Irving, who sold the publisher a totally bogus biography of the reclusive aviator. But Irving was a reputable author before the Hughes fiasco. Careless, yes. I'd even say "inept." But it just doesn't quite work its way into the rarefied ranks of Stupid. Irving was just too good a con man, too convincing.

Stupid, you see, implies a total deficit of common sense. "Mit out brains!" as my Uncle Irving would shout at motorists who cut in front of him. So when Henry Ford said that the Model T could be found in "any color, as long as it's black," and made few changes in the old jalopy -- opening up the field to competitors like General Motors -- it wasn't a miscalculation. It was a deficiency of grey matter -- Henry Ford being too arrogant to realize that his competitors might draw market share from

(F) - Get Ford Motor Company Report

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, which they did throughout the 1920s. To assume otherwise was just plain Stupid.

New Coke has a honored place in the ranks of the Stupid. The mid-1980s beverage was more than just a marketing fiasco, or a

"good idea at the time."

It was a dunderheaded

Coca-Cola

(KO) - Get Coca-Cola Company Report

neglecting to ask itself a simple question, "Is the old Coke, the one that built our business, the one that millions of people were weaned on, so awful that we, uh, have to take it off the market?"

Investment decisions, no matter how badly they turn out, are rarely dumb enough to fall into the Stupid category. To reach the pinnacle of senselessness, one has to totally ignore something blindingly obvious. For example, putting money with Bernie Madoff before he was caught would have been a failure of due diligence, perhaps, but not Stupid. Giving Bernie your money after he was arrested--now that's Stupid. It's a bit like.... uh....oh, I know.... it's a bit like buying a massive New York City housing complex occupied by long-term, middle-aged, well-educated tenants living in below-market-rent apartments, and expecting to evict them en masse even though they are protected by the stringent tenant protection laws in the U.S. Now that's Stupid!

I've just described the acquisition of a sprawling housing complex on the east side of Manhattan, Stuyvesant Town-Peter Cooper Village, by Tishman Speyer and BlackRock, a respected real estate and a respected money management firm, respectively. But all that respect ain't worth a plug nickel when you're mit out brains. At $6.3 billion, it was the largest real estate deal in history. But as the

New York Observer pointed out

at the time the deal unraveled, it was predicated on the huge apartment complex being "unshackled" from rent regulations that covered three-quarters of its thousands of apartments. Anyone with even a casual familiarity with landlord-tenant relations in New York could tell you that "unshackling" tenants from rent protections is akin to prying a python off a puppy. The tenants fought back ferociously--and won. The deal collapsed. At last look, the banks were the ones behaving like pythons, as a fundamentally Stupid deal unraveled.

Mark Hurd inflating his expense account to hide his dinners with a comely marketing consultant--well, "how could he do something so stupid?"

asked The Atlantic.

My response would be: How could he not do something so stupid, when the forces of history are quite so strong?

True Stupidity is hard to achieve, but there will always be a few intrepid souls willing to sink to the challenge.

Gary Weiss has covered Wall Street wrongdoing for almost a quarter century. His coverage of stock fraud at BusinessWeek won many awards, and included a cover story, "The Mob on Wall Street," which exposed mob infiltration of brokerages. He uncovered the Salomon Brothers bond-trading scandal, and wrote extensively on the dangers posed by hedge funds, Internet fraud and out-of-control leverage. He was a contributing editor at Conde Nast Porfolio, writing about the people most intimately involved in the financial crisis, from Timothy Geithner to Bernard Madoff. His book "Born to Steal" (Warner Books: 2003), described the Mafia's takeover of brokerage houses in the 1990s. "Wall Street Versus America" (Portfolio: 2006) was an account of investor rip-offs. He blogs at garyweiss.blogspot.com.