However, the S&P 500's nearly 45% surge since the March lows (NASDAQ is up almost 55 percent and the Dow has risen about 39 percent) has caused Wall Street firms to gloss over the pain of the financial crisis and return to business as usual. That's just plain depressing.
Here are just some of the the lessons not learned on Wall Street–I encourage you to add to the list and I'll update it if enough of you help me out!
1. Compensation is totally out of whack: It's not just the sheer obscenity of money made that is critical, it's also the way that money is divvied up within the firms. Forget about
2. Wall Street is STILL rife with conflicts: This is how one insider explained it to me: "Everyone knows that these big banks, including one that just delivered amazing earnings, use client information to their advantage all the time. But clients live with this fact because they are making enough money to rationalize the injustice."
3. Banks chase returns: It was sad to hear Morgan Stanley CEO John Mack say that now, after the firm missed the 45% rebound, MS would assume more risk. Isn't this what got Mack into trouble in 2006–diving into real estate and credit after a massive run up occurred? Mack said that the company will be "increasing capital commitments in a disciplined way," which is code for: "someone start trading like Goldman so I can retire in peace next year!"
4. Institutional investors chase returns: One hedge fund guy recently said to another, "I'm going to buy Google!" When asked why, the soon-to-be Google owner actually said with a straight face, "I don't know anything about the company, but I need to be in on the action!"
5. Wall Street has no hubris: See my previous post, "Wall Street: Long Arrogance, Short Humility"
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