Friday, June 06, 2003

It seems that the stock market is growing more rational:

On the day in March 2000 that 3Com, then Palm's corporate parent, sold part of its Palm holdings in an initial public offering, investors crazily valued Palm at $53 billion. They valued 3Com as being worth $23 billion less than the value of its stake in Palm. Now Palm is valued at less than $500 million.

It took months for that irrationality to go away, so strong was the belief of investors that valuation measures meant nothing. So perhaps it is reassuring that [the more recent] misvaluation [of Handspring, for more than Palm was paying for it, after announcement of the merger] corrected itself in just one day. "This proves the market is efficient," said Donna L. Dubinsky, Handspring's chief executive and a founder of Palm. "It just took the market a day to absorb the information."

Aren't you reassured?


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