Etch A Sketch Company's Stock Tripled Yesterday

Everybody knows that nothing sells toys like marginal presidential candidates using them as campaign props. That's just Business 101.

That explains why Etch A Sketch's parent company Ohio Art is the hottest stock out there right now. Check out its price going vertical.

EtchASketch.pngThere it is, quietly moving between $4.00 per share and $4.25 per share for the past two months and then bam! Romney adviser Eric Fehrnstrom makes the gaffe of the month: "I think you hit a reset button for the fall campaign. Everything changes. It's almost like an Etch A Sketch. You can kind of shake it up and restart."

In the 12 hours after that comment, Ohio Art's price tripled to just above $12.00 a share. To give you an idea of how insane that is, consider that over the past three years, the stock has strictly traded in a band between $2.50 and $4.00 a share.

2_image.png

We can conservatively say that efficient markets have seen finer moments, yes? Unless you think Newt Gingrich's Super PAC is going to pour all of its Sheldon Adelson money into buying up old-fashioned toys, there's no reason to think the stock price should move at all. Does anybody really think that Ohio Art's long-term prospects are now three times better they were yesterday, all because of a one-day (okay, two-day) political meme?

This is just a particularly absurd reminder of what the financial crisis showed us: Markets have short memories. Day-to-day, they feast on new news. We get caught up in the mania of the crowd. We overvalue bits of news and undervalue actual fundamental analysis. Maybe Goldman was right. There really are muppets out there. And they're pouring their money into Etch A Sketch.

Presented by

Matthew O'Brien

Matthew O'Brien is a former senior associate editor at The Atlantic.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In