Friday, March 24, 2000

End of the Week

As Irrational Exuberance reached no. 31 and climbing on the Amazon hot 100, the market ended the week with the S&P 500 up for the year, and with our five bubble stocks all up smartly.

Another reason I think that MicroStrategy is dead, in spite of the resurgence of their stock, is that I don't think they will be able to use their stock as currency to buy other companies or to invest internally.
posted by Arnold Kling 3/24/00 2:02:55 PM

Thursday, March 23, 2000

Exuberance on Amazon

As of 5:45 EST today, Shiller's book was No. 75 on Amazon's hot 100 list. Must be the power of my review. :)
posted by Arnold Kling 3/23/00 2:50:04 PM

Shiller's Book

I got Shiller's book, and I posted a review on Amazon. Clearly, it is recommended reading for anyone who comes to this page.

The www.blogger.com site is working again, so we are using it to log our posts. I was posting manually for a couple of days.

Anyway, MicroStrategy soared today. I figure that has to be a short squeeze. Fundamentally, the company is dead. You can draw a cartoon of a MicroStrategy sales pitch with a thought bubble over the head of the Fortune 500 executive being pitched that reads, "Tell it to the judge."
posted by Arnold Kling 3/23/00 1:39:38 PM

Posted Wednesday, March 22

The following was posted Wednesday. We reposted it after blogger was fixed. See below.

More on MSTR

James Cramer has an article on MSTR. He muses about the thin primary offering and how it artificially raises the price. He concludes by saying that you should stay away from stocks with accounting problems. I agree. Whereas I might have been willing to concede that MSTR was worth one or two hundred million dollars before this week, I now believe it is worth zero. Still, today, its market cap is over $6.5 billion and climbing. As far as I'm concerned, anyone who buys that stock today has forfeited any right to a shareholder lawsuit for any reason. No matter what the officers of the company do from this point, the shareholders ought to live with the consequences. At some point, you have to say caveat idiot.
posted by Arnold Kling 3/23/00 1:34:02 PM

Posted Tuesday, March 21

The tool we were using, blogger, messed up, so we had to rebuild the log. The following posts originally were put up on Tuesday.

Animal Farm

As of the market close today, the bubble investors seems to be saying "Profits good, losses bad." Yahoo and Proxicom, which are profitable, went up, while the other three stocks that we monitor hit the skids. Unfortunately, neither YHOO nor PXCM have a whole lot of growth potential, in my opinion. Yahoo's market is relatively mature. PXCM is in a hard-to-scale service business. My guess is that neither company's profits will grow by the factor of 10 necessary to begin to justify their valuations.

posted 4:55 PM EST

Two More Click-throughs

Two more click-throughs on the metaphorical button for lawyers:

Wolf Haldenstein Announces Class Action Against MicroStrategy Incorporated (wire story 1:35 PM)

Class Action Lawsuit Commenced Against MicroStrategy Incorporated (MSTR) by Bernstein Liebhard & Lifshitz, LLP (wire story 10:21 AM EST)

posted 2:20 PM EST

Already Getting Traffic

Already, somebody pushed the "click here to sue" button. This story came across the wire at 11:14 eastern time:

"Milberg Weiss Announces Class Action Against MicroStrategy Incorporated"

posted 11:40 AM EST

What--me worry?

While Michael Saylor did not cite Alfred E. Neumann directly, his comments as reported in today's Washington Post seemed to owe a lot to the sage of Mad Magazine. At one point, he is quoted as saying something like, "It goes up. It goes down. It means nothing."

The people who bought two weeks ago may think differently. I mean, it's a bad sign when a company deadens the link to "information for shareholders" on its web site and replaces it with a button that says, "Click here to sue!"

Actually, if someone does try to take MicroStrategy to court, I will be happy to testify as an expert witness on behalf of the company. I can bolster the tobacco company defense: we can't be faulted for putting out misleading information--no one in their right mind would have believed us!

posted 10:15 AM EST
posted by Arnold Kling 3/23/00 1:32:17 PM

Monday, March 20, 2000

Still not Vindicated

To be fair, I have to admit that even after MicroStrategy's stock fell by $140 a share today, it remains above where it was when I wrote my "data mining" screed and above where it was when I began the Bubble Monitor. Therefore, I still cannot say that I have been vindicated--yet.

Barron's found a way to make operating losses sound uncool. They divided cash on hand by loss rates to calculate how long some bubble companies have to survive. One of the weakest companies by that measure was our old friend Koop, now trading a hair over 7.

Yahoo, which has positive profits, eked out a small gain today. Somebody needs to find a way to explain "rate of return" as clearly as Barron's explained "burn rate."

I've been saying that when investors start to focus on profits, the Bubble stocks will be able to produce, using fancy accounting. But that option may look a lot less attractive after today's MicroStrategy episode.
posted by Arnold Kling 3/20/00 1:51:02 PM

Who Knew?

It's interesting that MicroStrategy lost so much ground last week, before this morning's announcement that its earnings and revenues will be restated downward. Who knew?
posted by Arnold Kling 3/20/00 1:44:23 PM

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