I must be in the minority in thinking that the term "sophisticated investor" implies a degree of self-reliance, confidence in nothing one hears and a percentage of what one sees that won't cross the threshold requiring a 13D filing. How else can one explain the increasingly common notion that relying with complete or near complete exclusivity on third party research when making investment decisions is not only appropriate, but what "sophisticated investors" do. Have things slipped so far in the United States that we need third party research as a crutch- and a scapegoat for everyone who invests? Seems so. Moreover, people who should know better have taken the bait. To wit:
Many of these investors have been so sophisticated that they created a demand for services which provide them with the underlying ratings of muni bonds regardless of bond insurance.
Wow, now that is sophisticated.
But then?
It may help to take a look at why muni investors require such granular credit analysis. The reason is relatively easy to understand: municipalities have far less and less consistent financial transparency than corporations, especially public corporations.
Oh, of course. Less available information, less individual research. Silly me, I thought the rule was "less available information, less investment." I have seen my error. Makes perfect sense now. If only we had better more detailed more exclusive, more inclusive, more granular, ratings, everyone would have the great American dream entitlement, low no risk, high return investments without any never-ending bubbles.
