IF THE OLD saying 'what you don't know won't hurt you' were true, thousands of investors and employees hit by Enron's collapse would not be squealing in pain.
As investigations into the energy-trader's scandal have revealed and as inquiries into the more recent corporate crashes are making obvious now, there were warning signs long ago of impending doom.
If you cared to look, there were news reports in 1999 questioning Enron's accounting irregularities. Meanwhile, doubts about WorldCom's share price were expressed in 2000, and short-selling the previous year in Tyco hinted as much about its problems, too. All these warnings proved prescient, but all were ignored.
'At the end of the day, the public was willing to believe anything to get rich,' says Bill Fleckenstein, a veteran short-seller for Fleckenstein Capital, based in Seattle, Washington. 'Nobody cared that there were these improprieties and discrepancies. People just looked the other way.'
Once vilified as the scourge of Wall Street, short-sellers like Mr Fleckenstein and James Chanos, president of the world's largest short-selling fund manager Kynikos Associates, are enjoying unprecedented acclaim for predicting the downfall of the one-time darlings of the stock market.
Mr Chanos spotted irregularities with Enron in 2000. He and Dallas shorter David Tice were issuing warnings on Tyco as early as 1999. And Mr Fleckenstein and Mr Chanos were grumbling about WorldCom long before its share price tanked 90 per cent earlier this year.