Harvard Business School: Higher Learning for B.S. Artists

“Speak with conviction. Even if you believe something only 55%, say it as if you believe it 100%.”

That’s the gist of an information session on how to be a good student at Harvard Business School, as described by Susan Cain in her book Quiet: The Power of Introverts in a World That Can’t Stop Talking.

Successful Harvard Business students “look like people who expect to be in charge… I have the feeling that if you asked one of them for driving directions, he’d greet you with a can-do smile and throw himself into the task of helping you to your destination — whether or not he knew the way.”

Harvard Business alumni include George W. Bush, former Treasury Secretary Hank Paulson, imprisoned Enron CEO Jeffrey Skilling and not-imprisoned JPMorgan CEO Jamie Dimon. Draw your own conclusions.

“Our society once routinely called people ‘bull**** artists,’” writes psychologist Bruce Levine, “if they spoke with total certainty without any basis for such certainty so as to persuade others and get attention for themselves. Nowadays, bull**** training is called ‘leadership training’ and unashamedly taught at ‘elite institutions’ and at expensive leadership seminars.”

And many products of such training end up as pundits on CNBC. Heh…

Our little ramble this morning is prologue to an earnest exploration of this question: What the hell’s going on with the stock market back at all-time highs again? (As we write, the S&P 500 is inching further into record territory, at 1,889.)

For insight, we draw on three gentlemen who have firm opinions but who also know their limits. All three would bristle at a CNBC anchor asking breathlessly, “Where will the market be a year from now?” (Quips one: “It will probably still be here.”) And none attended Harvard Business School…

“How many record highs does an investor need to see before he admits that the stock market’s not such a terrible place for his spare cash?” asks Greg Guenther in this morning’s Rude Awakening.

“During the first quarter, market pundits and the media have pummeled us with bubble talk, crash warnings and tales of market euphoria.” A New York Times headline on Sunday read, “In Some Ways, It’s Looking Like 1999 in the Stock Market.”

Really? Greg points us to a Gallup survey in January — shortly after the last all-time highs. “Half of Americans said that if they had $1,000 to spend, investing in the stock market would be a bad idea.”

Americans' Views on Investing in the Stock Market, 1990 - Present

At the market top in January 2000, 67% thought it was a good idea.

“The world today is nothing like it was then,” writes Ritholtz Wealth Management chief Barry Ritholtz, recalling those dizzy dot-com bubble days.

“The streets weren’t paved with gold, then trading at a pitiful $250 an ounce, but rather cocaine and $2,000-a-night escorts. No one obsessed about the top 1%, because the top 50% saw so much green coming its way. Profits, salary and bonuses flowed madly from Wall Street to much of the country. Bonuses migrated from traders to Ferrari dealers to the Hamptons. Imagine so much cash sloshing through the system that even the now-shrinking middle class enjoyed rising wages and improving standards of living.”

Now? Only 54% of Americans say they even own stocks — down from 67% at the peak of the dot-com bubble.

“When we think of important market tops,” Mr. Ritholtz writes, “we think of widespread euphoria and absurd valuations, [with] even the dumbest ideas having endless venture capital money thrown at them. There is little of that brand of euphoria today for the market, as the above survey makes clear. Valuations are only mildly elevated by historical standards.”

Regards,

Dave Gonigam
for The Daily Reckoning

Ed. Note: The more people pull back the curtain on these bull**** artists, the more honest the financial world will be. And that’s where readers of The 5 Min. Forecast have a leg-up. As a free bonus for paid subscribers to a variety of Agora Financial publications, The 5 Min. Forecast can go one step further than most free newsletters – and give readers exactly what they need to learn how to profit in any kind of market. See what it’s all about, right here.