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Just because Markopolos will profit from his work doesn't mean his work is bogus. In fact, if his work proves to be bogus, he most likely won't profit, and his

Just because Markopolos will profit from his work doesn't mean his work is bogus. In fact, if his work proves to be bogus, he most likely won't profit, and his reputation will be damaged forever. When GE people go on CNBC and make all kinds of carefully lawyered statements that sound like denials but aren't actually categorical denials, they're also getting paid. The GE people get paid whether or not their statements hold up over time. Given that, I'd put more weight on Markopolos because he actually has skin in the game.

S_A_P 7y ago
Well put. My knee jerk reaction is to frame Markopolos as the villain here but he does stand to lose much more if he is wrong. That said it is a dangerous game to be playing that can/will have ripple effects on all the folks working at GE that aren’t complicit in the fraud.
Traster 7y ago
The hedge fund shorting GE will profit from the value of GE dropping due to the bad news, it will profit from the value of GE dropping if there's an investigation, and it will profit if the accusations turn out to be true. There's no reason to think Markopolos won't profit if the accusations are bogus, because he profits from the market reaction, not from the actual merits of the accusations. In fact, his experience in the past tells him that even if his accusations are true, they're unlikely to result in successful investigations, and if his accusations are untrue, he's unlikely to face consequences for it. Also, whilst the people who go on CNBC to defend GE are paid to go on, they're paid a fixed salary, they generally aren't particularly incentivized to boost the stock price.
- Excel_Wizard 7y ago
  >There's no reason to think Markopolos won't profit if the accusations are bogus, because he profits from the market reaction, not from the actual merits of the accusations. The strength of the market reaction is contingent upon the strength of his claims.
  - rando444 7y ago
    I'd like to recommend the book: The Myth of the Rational Market by Justin Fox

S_A_P 7y ago

Well put. My knee jerk reaction is to frame Markopolos as the villain here but he does stand to lose much more if he is wrong. That said it is a dangerous game to be playing that can/will have ripple effects on all the folks working at GE that aren’t complicit in the fraud.

Traster 7y ago

The hedge fund shorting GE will profit from the value of GE dropping due to the bad news, it will profit from the value of GE dropping if there's an investigation, and it will profit if the accusations turn out to be true. There's no reason to think Markopolos won't profit if the accusations are bogus, because he profits from the market reaction, not from the actual merits of the accusations. In fact, his experience in the past tells him that even if his accusations are true, they're unlikely to result in successful investigations, and if his accusations are untrue, he's unlikely to face consequences for it. Also, whilst the people who go on CNBC to defend GE are paid to go on, they're paid a fixed salary, they generally aren't particularly incentivized to boost the stock price.

Excel_Wizard 7y ago
>There's no reason to think Markopolos won't profit if the accusations are bogus, because he profits from the market reaction, not from the actual merits of the accusations. The strength of the market reaction is contingent upon the strength of his claims.
- rando444 7y ago
  I'd like to recommend the book: The Myth of the Rational Market by Justin Fox