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5 Dumbest Things on Wall Street This Week

2. Gravity Grips Intercept

Heads up Intercept Pharmaceuticals (ICPT) investors! The shares -- now around $280 -- are coming down as quickly as they went up.

Be honest Dumbest fans. Did you really think the Intercept story ended last week when the stock skyrocketed from $70 to $500?

Of course not! We all know "gravity" is not merely a movie where Sandra Bullock does space. It's also the Newtonian law -- and market maxim -- that says what goes up like gangbusters must come down and clock some unwitting fool in the cranium.

Shares of the New York-based biotech outfit blasted off last Thursday on news that a trial of its liver disease drug went so swimmingly that the test was halted. The market capitalization of the money-losing company eclipsed $9 billion at one point last Friday, helped along by Wall Street's analyst community which was tripping over itself to upgrade the heretofore untested stock. Most notably, Bank of America Merrill Lynch analyst Rachel McMinn boosted her price target from $81 to $872, predicting peak sales of $4 billion for the still untested drug.

Not to minimize McMinn's enthusiasm, but maybe she got a bit too excited. Had she waited a few hours before hitting send, she would have been able to factor into her forecast a National Institute of Health warning that users of Intercept's drug experienced higher than usual cholesterol levels.

The NIH news threw cold water on the overheated stock this week. Also dragging down Intercept's equity was a Bloomberg article in which the company's Chief Executive Officer Mark Pruzanski admitted he will likely need the help of a larger drugmaker to bring the company's experimental liver-disease treatment to market.

Oh, and all those supercharged short-sellers didn't help either. Those guys stamped on Intercept stock like they were putting out a fire with their feet once the tide turned against the company.

You know how those Bears love giving gravity a hand.

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