The stock market and financial world is a funny/crazy place.
I enjoyed reading Henry Blodget’s piece about Mark Zuckerberg in the NY Mag. Yes, I read the whole thing and didn’t read the skimmed down version Henry posted on Business Insider. That’s funny in itself, Blodget aggregating or pulling out the most interesting details of his own piece. I wonder what the negotiation was like for this with NY Mag. How much would the NY Mag let him pull from the article he wrote and or if and when he could? I guess he could.
Anyway, it’s good piece because Henry knows the tech entrepreneur world inside and out. He’s right about internet related companies having a long term view and not trying to make money to satisfy investors/shareholders immediate concerns about making money, he’s right they change from year to year (Apple going from iPod to iPad), he’s right about Zuckerberg becoming a great CEO, he’s right about Facebook being in the right place at the right time, he’s right about Instagram being a smart purchase, and so on.
It’s a very enjoyable read. Despite all of this though, what jumps out is his half joking about his “overexuberace” during the dot com boom. He was publicly saying stocks were good while privately saying they were terrible. Blodget was permanently banned from the securities industry and had to pay a $2 million fine plus a $2 million disgorgement fee.
Here’s the section of the NY Mag article:
Many promising tech companies place too much emphasis too soon on the business rather than the product. They worry too much about “making money.” This sounds nuts—aren’t companies supposed to make money?—and it sounds especially nuts in the wake of the dot-com bust. But that crash was a product of investors’ and analysts’ overexuberance (sorry!), not evidence of a fundamental flaw in the tech industry’s start-up ecosystem. In a market where speed is critical, venture-capital funding allows young companies to move faster than they could if they had to rely only on revenues to fund product development. Entrepreneurs who understand that tend to stick around to make plenty of money later. (NY Mag)
BetaBeat digs out some more interesting details about what Blodget thinks about Facebook – as he tweeted it was “enormous Muppet bait”.
Perhaps enough time has passed to joke about this, doubt it. But the funny thing about writing or saying things about stocks, especially if you’re an analyst, is that people go out and buy stock based upon your words and comments. I’m sure a lot of people lost a lot of money based on the analysts reports Henry made ten years ago at Merril Lynch. Can they laugh now at his overexuberance? Don’t think so. Cause it was more than just exuberance.
Yet maybe it’s time to give Henry Blodget a break or a pass. You can tell he loves the industry. He loves start ups and the struggle to build a company. Now he has his own company/website with Business Insider. He paid his fine to the SEC. He’s suffered. He’s out of the industry – to an extent.
Just a word to the wise: be careful out their when you’re buying stocks based on something you read on the Internet, and that includes this site. Have a plan and stick to it. Know what risks you can take.