Sunday, January 18, 2009

By Rusty Goe

When I invested in Apple, I didn?t invest in a gay man with Aids (or whatever is wrong with Steve Jobs), I invested in a company with a proven track record of selling Macs, i-pods, i-phones, and i-tunes. I invested in a company with no debt and $25 billion in the bank. I invested in a company that I thought was on the cutting edge of digital technology.

If someone had warned me that everything in the company hinged on the health of one man, I would?ve looked for another company in which to invest.

There?s something fundamentally wrong with the realm of U.S. securities in which an investor is not necessarily investing in the tried-and-true course of capitalism, but is instead investing in smoke-and-mirror illusions.

Whether it?s the non-disclosure of Steve Jobs? health (and how big a role he plays in the success of the company), the false-bottom support of sub-prime mortgages, or the credit default swap chaos of corporations like AIG, it doesn?t provide a level playing field for investors.

Why isn?t there money to be made in traditional channels of capitalism; channels in which successful companies provide products and services to satisfy consumer wants and needs, and then in turn reward investors who've backed the companies with cash? Isn?t that the way it?s supposed to work?

In today?s economic environment, no company?s financial reports can be trusted. Even the mightiest are plagued with Achilles heels?in both feet.

Investing no longer appears to follow rules of engagement. Instead, it?s a big free-for-all; tantamount to gambling in casinos that employ marked cards, altered roulette wheels, and loaded dice. Moreover, there appears to be no governing body around to regulate it.

Investors will tolerate this travesty only so long before they?re compelled to revolt; and only the most noble among them will refrain from seeking revenge.

This revenge may culminate in the investors (justifiably in their minds) developing treacherous schemes to cheat other investors, government agencies, their neighbors, and in the most debauched situations, their friends.

No one appreciates another person messing with his or her bankroll, nest egg, or personal property. It?s human nature to retaliate when violated. How many WorldComs, Enrons, Lehman Brothers, Apples, or Madoffs will American investors stand for before they fire up torches and begin collectively to mob their way through the streets?

Before President Obama tackles one other key item on his agenda of priorities, he needs to restore American capitalism to the form in which it has been taught in our nation?s leading business schools for more than a century. Otherwise, these universities will need to revise their curriculums to the point where they reveal the truth of what now prevails on the corporate scene.

Instead of the Harvard School of Business, we?ll have the Harvard School for Scoundrels. This can?t possibly be what Obama meant when he coined the slogan ?Yes we can.?