The Five Dumbest Things on Wall Street This Week

1. Third-Degree Byrne

Overstock.com (OSTK Quote) chief Patrick Byrne is building himself quite a case.

The founder of the Salt Lake City-based online retailer claims short-sellers and many, many others are conspiring to drive down the price of Overstock shares. This despite the fact that Overstock shares traded this week at 170 times 2006 earnings estimates.

On last Friday's conference call describing his pending lawsuit against short-sellers, Byrne warned listeners that he wanted to "get something off my chest." He went on to describe a wide-ranging plot involving hedge fund Rocker Partners. Rocker -- which owns 8% of TheStreet.com (TSCM Quote), the publisher of this Web site -- denies Overstock's claims and vows to countersue. Others named in Byrne's massive scheme range from TheStreet.com and The Wall Street Journal to Eliot Spitzer and private equity investor Leon Black.

The conspiracy evidently reaches even into Washington, where certain unnamed people apparently are trying to get Byrne jailed. As Byrne said in a particularly lucid moment last Friday:

DOJ, my understanding is, and I don't know this for a fact, my understanding is that was tried in May about me and that some people tried -- it turned out that I do travel to strange parts of the world, Saudi Arabia and Iran and places like that. And somebody just, you know, it's very easy to get people's credit card records. And I'm open about it anyway. And they turned that into a white paper that said Byrne is tied up Al-Qaeda and terrorism and money laundering and you ought to look at this guy. And it was essentially laughed, to my understanding, that that was just laughed out of the office at the Department of Justice. So ... and I think there are a much more independent command than I think for example the SEC -- is much more independent and immune from political pressure. So I don't mean to criticize anyone there.

No offense taken. When you've got this many enemies, no one can blame you for getting a little worked up. Take another Byrne comment Friday:

As this went on I started realizing that there was actually some more orchestration here being provided, by what I'm calling here is the Sith Lord or the mastermind. Now, can I tell you who that designated bottom feeder was who was supposed to end up with our company? Can I tell you? I can. But I'm not going to today. The Sith Lord is, can I tell you who that is? Well, I could tell you it's a name that everybody on the phone, every single person on the phone would recognize this person's name. He's one of the master criminals from the 1980s, and he's back in business. But I'm not going to. I'll just call him the master mind today.

If you didn't know any better you might think Byrne himself had "lined his hat with tinfoil," as he said of an ally in his fight against so-called naked shorts. But despite the endless tirades and the lawsuit, Byrne fashions himself a "value guy."

I also want to say I'm a value guy to my toes and I could not be more indifferent to my stock price. I agree that CEOs who spend time worrying about shorts or obsessing about shorts are fools. And that most of the CEOs who tangle with shorts are crooks. I think shorting plays a healthy role in a normal market. But I'm going to describe a set of events and I think that the reasonable listener is going to say, "You know, if that's really what's going on, you're right to do something about it."

Yes, the more we hear of Patrick Byrne, the more we're reminded of Warren Buffett.

Dumb-o-Meter score: 95. Overstock.com: Our prices aren't the only thing that's insane!