Etch A Sketch Company's Stock Tripled Yesterday

More

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.

Jump to comments
Presented by

Matthew O'Brien

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

Get Today's Top Stories in Your Inbox (preview)

The Time JFK Called the Air Force to Complain About a 'Silly Bastard'

51 years ago, President John F. Kennedy made a very angry phone call.


Elsewhere on the web

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

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In