Ted Oglove’s thoughts on the current mess…

September 16, 2008

Yesterday afternoon, I called Thornton “Ted” Oglove, who has been a mentor ever since I cold-called him six years ago when I started working on my book, Financial Fine Print. Though I was really only calling about my trip next week to San Francisco to speak to the CFA Society of SF, the conversation quickly turned to what was going on on Wall Street.

In addition to being incredibly knowledgeable about the markets, Ted’s an avid historian. Plus, he’s been around long enough to have lived through a few crises before. For those unfamiliar with Ted, he wrote the seminal book on earnings quality, Quality of Earnings, and was known for his ability to parse through lots of earnings-speak. Because the conversation was off the cuff, I didn’t record it, though it would have made for a great Podcast. Instead, here’s a few notes that I scribbled (with Ted’s permission) during our call yesterday:

“If I could ask Richard Fuld one question, it would be this: How did your stock have a book value of $27 a share all the way down? (A quick skim of Yahoo actually shows a book value of nearly $35). He’d probably say that the shorts, led by David Einhorn did me in. But I’d tell him that if there had been no short selling around, Lehman’s price would be the same. The shorts didn’t lead to Lehman’s write-offs.”

Ted also talked about the replacement of Glass-Steagall in 1999 with the Gramm-Leach-Bliley Act of 1999, which Ted said was “a terrible mistake. It was signed off on by Clinton, but it was created by the banking lobbyists and it turned the regulated into the regulators.”

And there was also this little pearl: “Earnings don’t mean anything anymore”.

Scary stuff from someone who’s been around the block a few times!

Leave a Reply

You must be logged in to post a comment.