tag:blogger.com,1999:blog-8152901575140311047.post1432043425934970762..comments2024-03-28T08:16:22.230-04:00Comments on Musings on Markets: Hard wired to deceive?Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-8152901575140311047.post-21413391746420683852008-12-28T08:56:00.000-05:002008-12-28T08:56:00.000-05:00I like the 4 th point. Investors want to believe t...I like the 4 th point. Investors want to believe they can get double-digit returns with no risk involved.Krasen Yotovhttps://www.blogger.com/profile/05840414786226067425noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-62428604115566059662008-12-27T01:51:00.000-05:002008-12-27T01:51:00.000-05:00Smart...I specifically liked the fact that when yo...Smart...<BR/>I specifically liked the fact that when you are cheated, it means you let that happen to you.<BR/>Tali kabhi ek haath se nahi bajati.. True in every walk of life.Sharvani Pingehttps://www.blogger.com/profile/03258310394310398486noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-85388716514876260392008-12-26T17:44:00.000-05:002008-12-26T17:44:00.000-05:00I believe government, and any authorities as well,...I believe government, and any authorities as well, are only supposed to complement functions of the market where the latter meets the failure. There was no failure of the market in the situation we talk about – just the investors who haven't asked "right" questions. <BR/>Anyway try to remember Gödel's incompleteness theorem. In general it says that there is no perfect formal description of the system - every time the understanding is more important. - I don't try to be mathematically correct here, but still the understanding which comes through additional questions and personal talk (not prescribed by the authorities!) are the only things the investor can rely on.Unknownhttps://www.blogger.com/profile/14623485286308700926noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-11617530646109838842008-12-25T22:28:00.000-05:002008-12-25T22:28:00.000-05:00I wish that this would help, but I don't think it ...I wish that this would help, but I don't think it will make a dent. In these instances of fraud, it is amazing how many of the victims are sophisticated investors... And the perpetrators of these frauds are not necessarily more informed, just more adept at bending the truth.. After all, what Madoff knew about stocks, options and investing would have fit on the head of a pin.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-8049656337387346212008-12-25T18:47:00.000-05:002008-12-25T18:47:00.000-05:00Can't agree more... All your points from socia...Can't agree more... All your points from social sciences theory are very apt in this case<BR/><BR/>Another key point why such fraud happens (...more of economic theory) is due to information asymmetry - which occurs when the seller knows more about a product than the buyer - This is esp true in case of retail investors (& charity funds in this case)..Often garbed in financial service industry especially hedge funds under fancy terms (like split conversion strategy by madoff)<BR/><BR/>i believe regulators, and audit authorities, can play a big role by <BR/>a) making information readily available (read more disclosure norms for hedge funds) <BR/><BR/>b) Drive to reduce gobbledygook language from financial disclosure reports,products prospectus etc so that investors can comprehend it. even financial media can help here.<BR/><BR/>this might help a bit ?arnavhttps://www.blogger.com/profile/08650629777163250255noreply@blogger.com