Lessons from the tech debacle
Many years ago, as a psychiatric resident, I attended a case presentation of a patient who had achieved great renown as an economist, market analyst, and stock picker. His predictions and choices were uncannily accurate. Yet he was destitute. For while others made fortunes following his sage advice, he invariably failed to act on it himself. Time and again he would be overcome by doubt, panic that his reasoning was faulty, and end up making exactly the wrong move. This demonstration of how emotion can overpower reason when it comes to stocks made a profound impression on me.
Readers of David Denby’s new book, American Sucker, will be similarly struck. An engaging account of the late 1990s market bubble, the book offers a comprehensive rundown of the era’s many market fads—the high-tech boom, fiber optics, biotechnology—and clear-eyed critiques of the various knaves and hustlers who promoted those fads for their own enrichment—Henry Blodget, Sam Waksal, Henry Nicholas III, et al.
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