Everything Old Is New Again With Dot Com Price Targets

from the here-we-go-again dept

It seems that everyone is talking about the silly "price targets" that various stock analysts are setting for Google. As soon as I heard about the "Google $600" call, followed quickly by the "Google $2000" target, I thought of Henry Blodget's infamous "Amazon $400" target in late 1998 (right after the dot com IPO market came back from its temporary slump). That call catapulted Blodget from a no name into "the name" in dot com stocks, got him a nice new job, but eventually fines, a bit of disgrace, and a general "not welcome here" on Wall Street. Of course, it turned out that Blodget's original Amazon $400 target wasn't just right, it was self-fulfilling -- and quickly. After he made that announcement, it didn't take long for the clueless stock buyers to say "well, if it's going to hit $400 in a year, I might as well buy it now while it's cheaper." Of course, it was really self-delusionally fulfilling. Even people who knew that analysts have no real insight into stock prices assume that everyone believes them anyway, so you might as well buy based on the news of the target, rather than any fundamental reason -- and that, of course, leads to new targets, and more buyers, which keeps Wall Street happy. So, I was curious what Blodget had to say about these new Blodget-like calls. He doesn't disappoint, with his blog post, basically saying that price targets are a fool's game -- which is amusing, since the only reason people care what he has to say is because he played that same game. Anyway, the whole thing is best summed up by Andy Kessler by pointing us back in history a bit to his own book, where he discusses why price targets are stupid (and why he made his up when he was in that business) and about Blodget's famous target. "The ducks didn't care about reputation – they simply wanted stocks that were going up, and analysts to pound the table to keep them going up." If you want some perspective on the whole thing, read the Kessler piece, and remember that it's not discussing this particular bubble, but the last one. Everything old is new again...
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team


Reader Comments

Subscribe: RSS

View by: Time | Thread


  1. identicon
    Steve, 9 Jan 2006 @ 4:44pm

    Google must fall

    I think good is getting way overvalued and will fall they have nowhere to go but down in terms of search. Especially once yahoo releases their adsense competitor our of beta.

    link to this | view in thread ]


Follow Techdirt
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Discord

The latest chatter on the Techdirt Insider Discord channel...

Loading...
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it
Close

Email This

This feature is only available to registered users. Register or sign in to use it.