TVB Pearl is running a series Dinotopia in which dinosaurs with brains the size of peas run libraries and muse about philosophy; in that spirit let's wander into our own market's fantasy land. The year is 1999 and the Internet frenzy is in full swing - but Wall Street is not buying it. Investment banks only take a few online retailers public and warn that for most the business models look fluffy at best. Meanwhile, Wall Street's top strategists were earning their huge salaries by making prudent calls, saying institutions and the public should reduce exposure to overvalued stocks. They recommended taking profits on stocks and gradually lifting holdings in bonds. It did not take a rocket scientist to work out that the economy had to slow down. A decade of growth was climaxing in an unsustainable expansion rate touching 6 per cent, the strategists said. The United States Federal Reserve had been pro-active and had started raising interest rates in 1998. There was a recession in 2000, the stock market sold off ahead of it and there was plenty of pain. Some of the blow was cushioned because investors had followed Wall Street's consensus view to go heavily overweight on bonds, which went on to perform well and helped preserve capital. With valuations and earnings troughing out late last year, analysts told investors to cautiously buy stocks. Investors kept the faith, resulting in the start of a sustainable bull market this year. Dream on. Exactly the opposite has happened with the common denominators greed and short-termism. Looking back at what really happened, Wall Street's motto would seem to be: 'Why build a solid, trusting relationship with a client which will stand you in good stead tomorrow when you can mislead and rip him off today.' The result is that faith in the millionaire gods of investment lies in tatters - and that means a longer, deeper global recession and more wealth destruction for everyone. The consensus has always been too bullish and wrong in the past two years as the Wall Street spin machine tries, for its own selfish reasons, to keep the stocks bubble inflated. At the start of last year, with the rate-cutting campaign under way, we were told 'Don't fight the Fed' and buy more stocks. An economic recovery would be under way in the second half. Note how the story is always a recovery later so better buy now, or at least do not sell. We heard the same story this year of a slow start followed by a second-half recovery. Only a few brave independent commentators defied the consensus and correctly called a roaring start to the year for the global economy followed by a second-half slump. And they are still too bullish. For example, a Bloomberg survey of 53 economists recently found not one expected even a single quarter of negative growth in the US over the next four quarters. 'Everyone is talking about a double-dip but no one is forecasting it,' ABN Amro strategist Gerard Minack said. In Hong Kong, the vast weight of commentators have either persistently or at least occasionally called an end to deflation and a revival in the property market. In the US alone, a staggering US$7 trillion has been lost by stock market investors poorly served by the analyst community. In Hong Kong, about US$387 billion has been lost by equity investors since the market peaked in 2000. Remember those buy calls on PCCW above HK$20 and on China Mobile above $50 that year? Even today out of 32 recommendations on Hutchison Whampoa, 22 are strong buys, five are buys, with five holds and no sells, according to DBS Vickers Securities - despite grave doubts over its US$16.7 billion mobile-phone strategy and the consensus expecting declining earnings for the next two years. The effect of the markets and cheerleading analysts should not be underestimated in the investment excesses of the late 1990s into 2000. Chief executives who lashed out on technology ranging from a Web site selling motorcycle parts to a third-generation mobile-phone licence were rewarded with praise from analysts. A similar thing happened in the 1920s and it took decades for the investing public to rebuild its confidence in Wall Street. The investment community will no doubt seek to share some of the blame with investors who also got swept up in the madness. But it is the pros who often talk about 'educating the public'. Despite some superficial changes forced by regulators so far, the assessment for analysts in this bear market must be C-minus and 'must try harder'.