Friday, July 18, 2008

You want the truth? You can't handle the truth!

The Wall Street Journal blogs about a recent CNBC segment in which anchors debated the "truthiness" of what CEOs say on their very programs. Whether CEOs lie, spin or flat out don't know what they are talking about is beside the point. The fact is that CEOs take the long view and make the argument that, in the long run, they are running value-creating enterprises.

Investors have the right to hear the flip side of the argument. That's where the opinions of equity and debt analysts, bond raters, and, now, short-sellers come into the picture. Each of these parties serve an important function (in varying degrees of competence). The question for the investor is, whom do I believe most?

Mike Maiello in Forbes asks do we really want to know the truth from CEOs? It's a nuanced and important question. Hedge funds say that they need gates and other mechanisms to limit withdrawals by investors. Don't CEOs need the ability to stall for time to manage through a crisis, when the "truth" might cause the proverbial run on the bank?

Yes, they do. In a competitive market of ideas the truth is out there, and everyone, longs and shorts might be varying degrees of right at the same time.

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