Shills to Sensationalists

On Thursday analyst Mark Stahlman raised the stakes for absurd price targets by setting a hedged $2,000 target for Google. This more than tripled the next best estimate of $600, by Safa Rashtchy of Piper Jaffray. Even Bloomberg got into the act with the headline saying that Stalman had, "TRUMPED" the other analysts. And that was just for raising the price target. If Stahlman is right GOOG's market cap, at the current P/E, will be larger than CitiGroup and Bank of America combined. What is going on here?

In my mind, the start of this trend was Goldmans $100 barrel of crude prediction which grabbed plenty of headlines, and marked a turn from shill analysts to sensationalists. Unsupported by fundamentals, and only achievable by generous extrapolation of singular events as sustainable trends, the prediction dominated the financial news for several days. Instead of analysts publishing PR pieces for the covered firms, they are using the coverage as publicity stunts. Of course throw enough of them against the wall and one will eventually come true, which won't justify the proliferation of these types of estimates in the first place.

Gordon Gekko's comments that they don't know, "preferred stock from live stock" is too harsh. As a group their numerical estimates are not nearly as useful as their analysis of firm and industry trends. What should the price be? This stock had made more fools out of the shorts than AutoZone. I'm holding no position right now; flat and nervous.