Saturday, March 24, 2012

Etch-a-Sketch: The stupid continues

I've said before, many times, that the stock market is NOT logical. There are whole networks, websites, blogs (like this one) and every other kind of social media devoted to explaining, predicting an "understanding" the stock market. And just when everyone starts believing they got it nailed down, stupid rears it's ugly head.

This past week, one of the officials for one of the presidential candidates mentioned "Etch-a-Sketch" during an interview on TV. I can't say that was the total cause, but on Thursday Ohio Arts (OART.PK), the company that owns the Etch-a-Sketch, went from $4/share to $9/share. And they hadn't made any announcements.  And the volume that day was about 800 shares traded. That's not a typo. What about the PE ratio? What's Ohio Arts' beta?  Did the sector see a boost? None of that mattered. As it never has.  The stock went up over 100% because it's product was mentioned. Period.  Nobody necessarily bought any more Etch-a-Sketch's, the company didn't announce record earnings. Their product got mentioned. And somebody with 800 shares sold them and made about $4,000.

Today the stock is back around $4. Stupid went back to sleep.

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