1679 Some Bets Are Off

I worry that we are glorifying a human vice in our everyday culture. I bet you don't know what vice I'm talking about. Bingo—you got it—betting. And I'm not talking about cardrooms and the casinos. Prissbudgets like to look down their noses at those honest folks. No, I'm talking about the bettors everyone seem to think are gods of the economy, the Wall Street clan.
Consider how removed from reality they are. Recently Google took a hit on the stock market. Their stock price tumbled 9%. Huh? They reported revenues of $10.6 billion. The number of clicks on Google's ads rose an impressive 34%. It was Google's best quarter ever.
But their stock dropped 9%. Why? Because Wall Street had expected even better. That's right. Traders who had made their bets on even higher expectations came up short, so Google's price per share and the value of the company as a whole dropped.
Sorry folks, but that's just plain crazy. Valuing a company based on what crazed traders are misguidedly betting on it is way removed from rational.
But apparently it works. Or at least betting on the bettors does. Hedge fund managers who bet on market swings and make money on it either way, up or down, can make a ton of money betting on other stockmarketer's expectations.
The richest 25 hedge-fund investors earned more that $25 billion in 2009, six times as much as the chief executives of the 500 largest publicly held companies altogether.
Good betting? Perhaps. Another article reports seven hedge fund managers were charged with insider trading last week. I see. Betting's fine, but it helps if you stack the cards... And a stolen ace in the hole don't hurt neither.
It's even better not to gamble when you have a chance.
America, ya gotta love it.