The Bubble and the Bear: How Nortel Burst the Canadian Dream

Robert W. Sexty is a professor of commerce and business administration
at Memorial University of Newfoundland and the author of Canadian
Business: Issues and Stakeholders.

How could so many people have been fooled for so long? Over the course
of Nortel’s spectacular rise and fall, countless Canadians had a
financial stake in the company, whether as shareholders, purchasers of
mutual funds, or participants in pension plans. Other players in the
Nortel saga (clueless and otherwise) included stockbrokers, financial
system regulators, pension and mutual fund managers, financial analysts,
professional accountants, financial media commentators, and Nortel’s
own corporate managers and board of directors.

Douglas Hunter sets out to explain the reasons for Nortel’s collapse.
In doing so, he provides several valuable lessons for investors (e.g.,
always question a company’s public message, and find out how the media
and financial professionals contribute to the spin). He also makes the
crucial point that the information that would later explain Nortel’s
downfall was already publicly available long before the
collapse—investors need only have read and understood it, rather than
ignore it as they did.

Hunter received the 2003 National Business Book Award for The Bubble
and the Bear, a book that will help investors—Nortel casualties
included—avoid financial catastrophes in the future.