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Jewish World Review June 1, 1999 /17 Sivan 5759

Bob Greene

Bob Greene
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Putting your money where their mouths are

(JWR) ---- (
A FELLOW WHO USED TO shoot baskets -- a guy who was criticized because he reportedly liked to gamble from time to time -- once said something to me that was hard to dispute.

"I still really don't understand the stock market," Michael Jordan said. "I can read the stock tables in the newspaper, but I don't understand why there is a stock market.

"I was talking to a guy from the Board of Trade, and he was explaining what he did every day, and he might as well be in Las Vegas.

"He told me that in a day he might make a million dollars, or lose a couple of million dollars. I told him, 'What you're doing, basically, is gambling with other people's money.' That's why I still don't understand the stock market -- it just seems to be gambling on which way the market will go. I don't know how you do that. I have a lot of confidence in what I do -- but if I had to handle someone's stock portfolio, I don't think I could handle it."

A simplistic view of how Wall Street works? Maybe not. Because last month -- when Robert E. Rubin, secretary of the U.S. Treasury, announced his resignation -- the response among financial experts was enough to make you want to take all your money and hide it in a shoe box underneath the bed.

Rubin -- who has been Treasury secretary during a period of dramatic economic gains -- resigned on a Wednesday, and right away the stock market plummeted. This is how one news report described that day:

"The stock market, which took an immediate 200-point plunge on news of Rubin's resignation, recovered most of those losses within several hours and finished down just 25.78 points on the day, closing at 11,000.37, as investors realized that there will be little change in economic policy."

Now, the people who run Wall Street are supposed to be astute, sophisticated, knowledgeable about the historic trends of the market, cool under pressure. They are supposed to have a long view of the market.

So what are the rest of us supposed to think? Some guy -- by all accounts a very capable guy -- decides it's time to quit his job at the Treasury Department, and the market dives 200 points? Does this mean that we're heading for big trouble?

But then -- within a couple of hours -- the market gains virtually all of the loss back? They couldn't have figured this out the moment Rubin quit -- that within a few hours everything was going to seem all right again? What are we amateurs supposed to think of Wall Street when it panics over a bit of management news -- and then decides by the time lunch is digested that the panic was ill-advised?

In a news analysis of what happened that day, an executive of a futures-trading firm gave this studied explanation:

"It was crazy."

Which, while perhaps accurate, does not give us reason to sleep soundly at night. If there's anything you don't want to be crazy, it's the system that's in charge of the money. If there are any people you don't want to act crazily, it's the supposedly calm experts who, we are told, know all about what makes the money safe or unsafe.

And how's this: On that same day, the resignation of Robert Rubin was analyzed in the following ways:

-- "Timing of departure may be sign of strong economy, analysts say" -- front-page headline
-- "To a casual observer, the market's fleeting reaction might indicate that Rubin was less important than everyone seemed to believe." -- business page analysis

All right -- which is it? Wall Street experts undoubtedly will say that the kinds of questions raised here would be asked only by the most unsophisticated of citizens -- that all of this is perfectly logical, if only we were smart enough to truly understand it. But what would you think of a person who heard some news, immediately jumped out a window -- then, after he had fallen 200 feet, decided that maybe he shouldn't have jumped at all, and made plans to try to get back up to the window?

You would think that the person -- to borrow a phrase from the futures trader -- was "crazy." But when the market does the same thing, we are supposed to accept it as being not only sane -- but brilliant.

"It just seems to be gambling," the blue-chip basketball player said. "I don't understand why there is a stock market."

Nothing but net. So to speak.

JWR contributor Bob Greene is a novelist and columnist. Send your comments to him by clicking here.


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