Back in the day, the mighty Aesop toiled in obscurity, creating stories that not only fascinate the kids but also teach a valuable lesson. That's a lot to ask, even when you get to make the stuff up -- what are the odds that such a story drops from the heavens?
Well, one did today, right along with the other shoe in the Martha Stewart-ImClone Systems
Now for the irony, and it gets thick. The nightmare began back in Dec. 2001, when, on hearing from her broker that then CEO Sam Waksal was selling stock (Waksal himself had heard that bad tidings were a-brewing at the FDA over cancer drug candidate Erbitux), Stewart dumped some middling number of ImClone shares. The price? Somewhere in mid-$50s. The irony? After a harrowing ride to the single-digits, ImClone closed today at around $47.50, within a hair of its 52-week highs.
The lesson? Well, there's the obvious "don't break the law if you don't want to go to jail" (and for heaven's sake, don't tick people off by lying about it afterwards). Then, there's the infinitely more subtle, "don't buy or sell stocks on rumors." See, for Wall Street at least, the irony is just getting started.
If you recall, just last month, shares of ImClone plunged more than 25% one afternoon before the stock was halted on news pending. The halt related, not to the sudden sell-off, but to the FDA's decision on the resubmitted application for our old friend, cancer drug Erbitux. Bad news, right? Wrong. Unbelievably, given the market "pre" action, the drug was okayed. When the stock reopened for after-hours trading, it promptly recouped all the lost ground and then some. Ouch.
We bring this up now, because today, shares of Martha Stewart Living Omnimedia
Don't buy or sell stocks on rumors. After all, if you're trading on reliable, material inside information -- well, you don't want to do that. If you're trading on rumors of dubious origins and accuracy -- well you don't want to do that either. We'd all prefer that nobody have to go to jail, but talk about a great parable. Thanks, Martha.