New era calculation - stock + short interest = growth
Fishing expedition... In the overnight news we had some mergers and a couple of research calls. The supremely dead fish at Morgan Stanley Dean Witter who follows the chip stocks, came out this morning and offered a quintessential example of what passes for research. He cut his numbers on Rambus and recommended the stock, and the number-one bullet point for recommending the stock was the big short interest. And I quote, "Due to the large short interest in Rambus, and our belief that the risk factors associated with the initial Rambus DRAM transition has declined, we are increasing our 12-month stock price target to $150 from $110."
My observation is, so now we have learned that a large short interest mitigates business risk. This is another case in point of what has become an all-too-familiar refrain these days - that the only thing completely irrelevant to stock prices these days are the underlying fundamentals. What is important are conferences, stock splits, spin, stock charts, momentum, stochastics, etc., etc. In the last couple of years, the fundamentals have gone from being very important to completely irrelevant. So there you go - that's what passes for research at the end of the century on Wall Street.
From the rap |
