Just Another Manic Market

Editor's Note: This column marks the debut of The Signal and The Noise, an attempt to direct investors to meaningful information in tech stocks amid all forms of noise -- whether it be public relations ploys, shaky accounting, bad management or silly conventional wisdom.

There was a quiet but telling moment earlier this month when two of the investment banks that had led the underwriting of Baidu.com's explosive IPO initiated coverage on the Chinese search company with underperform ratings.

That's right. This is a stock that has lost half its value since going public not even two months ago. Even at such a hefty discount, Goldman Sachs and Piper Jaffray were warning investors to stay clear.

Neither worried about Baidu's future. It was a question of valuation: Both felt the stock price -- currently around $77 -- would begin to approach reality around $45. Goldman analyst Anthony Noto pegged Baidu's implied value at or below the $27 offering price. ...