RealTime IT News

Be Your Own Stocks Guru

Though possibly short-lived, Wednesday's rally by America Online Inc.'s (AOL) recently sagging stock should boost the morale of shareholders worried about negative market reaction to the company's merger with media giant Time Warner.

Shares of AOL and Time Warner have fallen sharply since the deal was announced on Jan. 10 as investors grappled with valuation questions accompanying the marriage of a fast-growing Internet leader with a larger, slow-growth "old media" company.

Fortunately, we have Henry Blodget to talk sense into a skittish market. In a report on the mega-merger released Wednesday, the influential Merrill Lynch Internet analyst argued that the combined company "is well positioned to benefit from the ongoing impact of the Internet on the global media industries."

This is not groundbreaking stuff. Plenty of other analysts and columnists have made similar observations in the weeks following the deal. (In a February newsletter, I wrote, "AOL and Time Warner have formidable assets between them, and they are well-positioned to emerge as the top digital media/entertainment/information conglomerate in the world.")

But nobody, other than Fed Chairman Alan Greenspan and maybe Morgan Stanley's Mary Meeker, can move Internet stocks like Blodget. Shares of AOL were up nearly 12 percent by mid-afternoon Wednesday, while Time Warner's climbed 10 percent. These are stocks that have been dead in the water for most of this year.

Granted, the Nasdaq surged Wednesday, so maybe AOL and TWX were just riding the wave. However, in the past year I've seen shares of Amazon.com (AMZN) and other e-tailers move up and down, sometimes dramatically, based on Blodget's pronouncements.

Of course, much of this kind of activity comes from investors anticipating the market's reaction to comments from a Blodget or a Meeker. Still, there's no doubt that many investors are looking for a stocks guru to guide them.

The irony is that, thanks to the Internet, investors now have access to more information about public companies than ever before, and thus should be less swayed by the opinions of experts. But that's just a theory. The truth is, as long as there are people looking for answers, there will be gurus. And if you don't believe me, just ask Henry Blodget.