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The Honolulu Advertiser
Posted on: Sunday, July 29, 2001

Lost money? Blame the advisers

By Michael Lewis
Bloomberg News Service

NEW YORK — You rarely hear anyone explain how or why they did what they did with their money from 1996 until early 2000.

Me, I hung around for three and a half years and watched a lot of other people, all of whom were clearly inferior to me, get rich in the stock market while I stared mutely at my relatively inert shares in American Home Products. No matter how I poked and prodded my old economy portfolio it refused to act young. My shares were like a kennel full of flatulent old dogs waiting for their stomach pains to pass.

By late 1999, I had had enough of the quiet life. I longed for action — and soon got it. As it happened I'd just come from a Merrill Lynch conference, where I had listened to Henry Blodget speak about the future of the Internet. Henry Blodget and Merrill Lynch were bullish on America, more bullish on the Internet, and more bullish still on a company called Exodus Communications Inc. At that very moment Merrill was proving how deeply bullish it felt by purchasing millions of shares in Exodus.

I didn't much care what Exodus did because I didn't think it mattered. I hurled a chunk of my retirement account into the company. I paid $160 a share. I assumed that the army of stock brokers seated around me would go out and whip up a frenzy of interest in Exodus, thus sending my shares higher. I would reap massive short-term capital gains.

Of course it didn't work out that way. Exodus ran up to around $170, then split two for one. Whereupon it crashed. Last I checked it was trading at $2.03.

My first reaction was to feel very, very stupid. I had no one to blame for my sudden misfortune but my greedy little self. For the better part of four years I had laughed at the TOTAL IDIOTS who bought shares in companies with no profits, and no clear idea of when they would have profits. Now I was one of them. No, I was WORSE. Most of those fools had made money on their investments.

But in the past few months I've begun to feel noticeably better. All around me important people — Richard Walker at the SEC, the members of the House subcommittee on finance, television pundits — are making it clear to me that I am not to blame for the money I lost. After all, Exodus was not my idea. I hadn't been greedy: I was duped! The man who stumbled into the Merrill Lynch conference hadn't been a lazy, calculating jerk looking to make a quick killing from other people's folly. He'd been a simple, trusting man. A straightforward no-nonsense guy, who had taken Henry Blodget at face value.

Put that way, it may well bring tears to your eyes. It does to mine.

All I now ask is that the people who abused my trust be punished to the full extent of the law. If the law fails to extend itself, change the law. For if these stock market manipulators go free, or enjoy even one more moment of happiness in their future lives, I will never again be able to enter the stock market in the spirit of innocence for which I am justly known.

Michael Lewis, author of "Liar's Poker" and "The New New Thing," is a columnist for Bloomberg News. His new book, "Next," will be published this month. The opinions expressed are his own.