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J. Richard Nelson's avatar

Re Van Halen, not a stupid concern. The fatal Radiohead stage collapse in Toronto, a few miles from where I live, was the fault not of the band but of the promoters, or more precisely their designers and contractors.

Wikipedia article: https://en.wikipedia.org/wiki/Radiohead_stage_collapse

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J. Richard Nelson's avatar

Once again, thanks for writing and posting! I look forward to reading them!

Incidental, I think, to your main point, I think Enron's failure was more of the broader Wall Street culture than of a particular system. (Though the pressures on audit partners, which led to the extinction of Arthur Anderson, was barely addressed. But that's a rant for a different time. :-)

One of the most interesting things about Enron's collapse was smart money didn't invest in Enron. Basic analysis of their mandatory financial statements, a non-exotic skill I was taught in business school, showed that their financials were the stuff of shadows. Enron's stock price had been drifting downward for some time, largely because IIRC their cashflow statement didn't stand up to much scrutiny. The failure here was a kind of madness-of-crowds thing, where Enron had such an awesome story, and such awesome promoters of that story, that enough folks in the stock market and related markets continued to buoy up the company.

The "unexpected" collapse of W. R. Grace (perhaps before your time) was a case in point. It was before my time, too, but an analysis of its financials--which showed it was doomed--was a case study for my B-school days in the late '80s.

Another rant I'll avoid, it's why I think shortsellers are the heroes of the stock market.

Again, thanks so much for taking the time to write these posts.

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