My intention in writing this blog is to share my thoughts on the continuing evolution of the capital markets. For much of the 20th Century capitalism’s primary residence was the floor of the New York Stock Exchange. That, of course, is no longer true, forever changed by globalization and technology. That change is not without profound effect.
I took over a class in Law and Economics from a colleague who was about to start a lengthy trial in 1991. I never gave it back. I taught the very bright students in the business school at Golden Gate University in San Francisco for nine years. I learned a great deal from them and I had a lot of fun, as well.
The course originally focused on torts, contracts, real estate and criminal law. The textbook was full of case law demonstrating how courts had approached disputes in these areas. It focused on the markets’ influence on the courts and the courts’ influence on the markets.
As I taught it in later years, I focused the course on commercial transactions: what the parties to the transactions had expected and what had caused the transactions to fall apart. Eventually I added cases on intellectual property, which always led to interesting discussions about valuation. I also assigned Posner’s Sex and Reason for extra credit.
I have spent 40 years working as an attorney in and around the capital markets. Economics teaches that markets are governed by rational decision makers. Experience tells us that they are ruled by mathematics. Investors all over the world look at much the same information when making investment decisions.
At the same time, I have been constantly amazed by the vast amount of patently foolish investment advice given out by so-called market professionals and taken as gospel by so-called sophisticated investors and even some regulators. I expect to call out this foolishness whenever I see it.
The law should be put to use to make the markets more efficient. A lot of investors, lawyers and regulators seem to not really understand the markets, where the markets have been and how they are continuing to evolve.
Unless otherwise noted, all the articles on this blog will be my own. Your thoughts and comments will always be welcome.
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