The US Stock Market
The US stock market continues to decline, sometimes by steep declines. The US President speaks to the business community and the markets decline. Allan Greenspan speaks before congress and again the markets decline. What is going on here.
This is not a normal stock market. Good employment news, good earnings reports from the major companies has little effect. This is the first bear market caused by a real crisis in confidence by the investor community in the stock market. Earnings reports can't be trusted. Annual reports can't be trusted. Investors have nothing they can believe in when making investment decisions. The Arthur Anderson's on whom the investor community placed their trust have broken that trust. Trust must be earned over time and can be lost with one serious miss-step. With the major accounting firms, there have been many miss-steps over the last few years and they are now being uncovered. No presidential speech or soothing word from Greenspan can restore this mistrust.
Until the stamp of approval for an earnings report or an annual report can be trusted, there will be little trust on the part of the investor. How long it will take for that trust to be earned and investor confidence restored is anybody's guess. Clearly transparency in the auditing of corporate America has a long way to go.
07/16/02 ( 529 )
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