Bear Stearns: Burn Out, Not Fade Away
The world moves faster today than it has ever before. And while that’s good in some cases, it can prove disastrous in others. Investment bank Bear Stearns recently learned a hard lesson when it comes to how quickly news travels. The rise of online media, the increasing interconnectedness of global financial markets, and healthy dose of fear all played a large part in nearly bankrupting that venerable institution — and scarring global markets in the process.
When a stock that had been trading at $160 less than a year ago is all-of-the-sudden valued at $2 — the fear spread faster than the facts, and quickly got a life of its own. No question that Mark Twain was right about rumor moving faster than the facts — he just couldn’t have fathomed how fast. The global marketplace offers virtually 24/7 buying opportunities and information travels as fast as the liveblogger can type.
In a world that offers a plethora of opportunities for ongoing anxiety, and with a volatile marketplace, we’re conditioned to believe the worst — and to take action on that instinct alone. The only difference is that now, we can take action the moment we hear the news, and we no longer have to wait for the news to be delivered.
And this is truly a self-fulfilling prophesy. If people believe a bank is shaky, they withdraw their money and — poof, the bank becomes shaky.
A reputation for being an honest broker of information, an investment in strong relationships, and a credible and easy-to-understand story can make the difference in swaying public opinion — especially when you only have nanoseconds to spare.
