The following was an article I wrote in March of 2001… This past month the New York State Attorney General has finally started to take some action against many of the large brokerage firms and the conduct of their analysts. Both are implicated in causing much of the carnage in the equities markets over the past five years. This article was about an analyst that was one of the worst offenders.
A year ago on March 9th 2000 the NASDAQ index peaked at 5,049 on Friday March 2001 it closed at 2117 down 58%. The reasons for the demise are plentiful. However one of the most obvious and overlooked are the people driving the markets themselves, the analysts.
Henry Blodget the top analyst at Merrill Lynch, man who made over 20 million dollars last year, has pulled the wool over the worlds eyes. This man set a target price on Amazon.com at $400 a share when the stock was trading at $243. Stock market prices for companies with little to no value were bid up to levels that were not just irresponsible but CRIMINAL.
Henry Blodget made 20 million dollars last year. This is a man whose recommendations are down over 90% in one year. Many stocks that he “pumped” are currently trading for less than $1 a share. I pondered about those facts for a long period of time. I thought, “Well wait, average professional athletes make millions, and Adam Sandler made $20 million dollars for the garbage movie Little Nicky, I guess it’s not that big of a deal.” Then I said to myself, “Wait a minute, million dollar overpaid athletes do not hurt the general public and the most Adam Sandler hurt the public was $8 and an hour and a half of time”. However the lead analyst for the nations largest brokerage firm, he has injured many people. His job, his sole function is to guide investors in the right direction. Help and advise people. He has done so poorly that it borders on the ridiculous. Henry Blodget wasn’t an unbiased analyst, guardian of capitalism. He was a cheap used-car salesman hocking dreams that everyone wanted. The lure of easy money, limitless wealth, riskfree transactions all of these temptations were sold to America as reality and bought hook, line and sinker..
This is the contradiction of Wall Street, the real rip-off. Henry Blodget made 20 million last year because he served his company well. Blodget’s predictions lured minions of high tech companies to Merrill Lynch for investment banking deals, which is one of Merrill’s most lucrative enterprises. I spy a conflict of interest!
Question: March 3, 2001 E-COMPANY MAGAZINE
If you knew when you started out what you know now about e-commerce stocks, what would you have done differently?
HENRY BLODGET: I think I would have done a lot of things the same way.
Of course you would, you stupid green devil!!! You made 20 million dollars why wouldn’t you. Maybe your stocks in 2001 will be down 95% and you will reap 30 million. Through 1999 and well into 2000, the recommendations by Henry Blodget ranged from accumulate to strong buy. Of the companies that Mr. Blodget helped to back and take public, the most successful is Internet Capital Group. Currently that company is trading at $3.25 off from its highs of $193. Blodget was just quoted in the New York Times explaining his position he states…“Demand from individuals was so strong, we didn’t have to sell these, this is what the people wanted.”
Devils are crafty, aren’t they?