NEW YORK (TheStreet) -- The hysteria over Twitter (TWTR) euphoria underscores the mindlessness of the media as well as the pointlessness of Wall Street "analysis" and their garbage-in, garbage-out quantitative models.
Over the last week we have seen the financial media drone on about TWTR's run and its subsequent valuation. Everybody's looking for answers, but only to the extent scribes, pundits and talking heads can keep pumping the inane Why did Twitter take off question, making it appear even more mysterious and confusing by the second.
Because mystery and confusion equals, at least as the fading theory goes, page views and ratings.
Part of the problem is that so many folks who pay attention to the stock market can't let go of traditional notions of valuation. As humans, we tend to hang on to what we know. We like the comfort of the status quo, what we learned in school, whatever.
It's easier to spew "AMZN is overvalued," rather than try to wrap your head around why that tag no longer matters or even applies.
It's even easier to look at stocks that have a high price per share (but not necessarily a high price), such Google (GOOG), and call them "expensive" or argue they can't possibly go higher.
Other than me!, there's only one guy I have seen lay it out in some of flavor of how it is. TheStreet's Jim Cramer said it best in a Real Money article I have bookmarked, The Case for Amazon:
Welcome to the world of bull-market discipline -- the discipline to buy stocks that aren't cheap but are right. It's the rigor to recognize what the market wants, and not what you want. It's the dichotomy that says you would rather have your portfolio be hated by the intelligentsia and make money than be bound by concerns that simply aren't working right now.
That's one way of saying throw the rule book -- and what comforts you -- out the window.
I'll take it a step further.
This is the type of correspondence I receive everyday, almost all day via the myriad forms of communication our society employs.
From the comments section of last week's article where I called Google a $2,000 stock in 2014:
As usual. you throw a vague number up into the air, without even remotely saying what metrics you might have ued (sic) to get there! Isn't it all emotional then?
I guess this guy wanted something that reads more like this:
Our $35 PT is based on our DCF model through 2020, which assumes a 12% cost of capital, 4% terminal growth rate and a 13.0x terminal EBITDA multiple. Key Drivers of our DCF projection include 2012-2020 CAGRs of 37% and 114% for Revenue and EBITDA. Our PT is also equates to ~7x FY2015E revenue of $958M.