Loose lips sink ships, scorched investors find
By Chris Stetkiewicz
LOS ANGELES, Sept 23 (Reuters) - Stock market investors on Thursday learned an old
lesson the hard way -- what goes up can come down with the slip of a lip.
You can spend hours poring over company financial statements, listening to market gurus, or even praying. But none will
protect you from a powerful man with an open mouth and a market that is all ears.
Microsoft Corp.(Nasdaq:MSFT - news) President Steve Ballmer, himself worth more than $20 billion thanks largely to
Microsoft stock and options, took a big chunk out of his own bottom line by saying technology stocks, including Microsoft's,
are absurdly overvalued.
The market shuddered, with the tech-heavy Nasdaq composite index ending the session down 108.33 points, or 3.79 percent,
at 2749.83. Microsoft shares fell $4.88, about five percent, to $91.19, trimming hundreds of millions of dollars from Ballmer's
own portfolio.
It was not the first time that a comment from a major financial figure sent markets reeling. The most famous recent example
was in December 1996 when Federal Reserve Chairman Alan Greenspan's warned of ``irrational exuberance' in the market
sending all sorts of markets all over the world on brief downward spirals.
Some say Thursday's slide was long overdue, noting market watchers, including Ballmer, have been lamenting high stock
prices for years, blaming Internet hysteria for inflating valuations beyond all reasonable expectations.
But until recently those voices have been drowned out by armies of investors reaping big stock payouts and laughing all the
way to the bank.
Some now predict that the tide may finally be about to turn.
``Given that traditional guideposts in this kind of market are difficult to understand, people are watching each other more than
they normally would,' said Ezra Zuckerman, assistant professor of strategic management at Stanford University Business
School.
``It's more of a social dynamic which can be very volatile. I think investors should be very cautious,' he added.
Greenspan continues to voice bewilderment at the powerful stock market rally, which had nearly doubled the Dow even after
Greenspan made his famous 1996 warning.
Another famous market mover of years past, Joseph Granville, who publishes the Granville Letter and is regarded a
world-class pessimist, sees the Dow sinking to 6,000 in the next six to 10 months, Granville told Reuters in an interview on
Thursday.
Granville once sent the Dow down 2.4 percent in January 1981 with a midnight telegram to clients proclaiming ``Sell
everything.' He later lost much of his cachet by failing to predict the massive 1987 stock market crash.
``I've been calling for a total crash since September. 'we know we're going into the eye of the storm," Granville said. |
