Like Henry Blodget
, Mary Meeker is a top-flight Wall Street analyst
who was among the first to predict the dot-com boom
. She’s now being held up as an example of how dot-com fever went overboard.
Blodget came up from relative obscurity, but Meeker joined the game in 1986 and became a reasonably big-name analyst covering the PC industry. When Meeker started following companies like Yahoo! and America Online, it was a gutsy move -- breaking from a comfortable, wealthy industry to cover something most people had never heard of -- but it was prescient. She liked the Net before it was trendy, and as Net stocks went up, so did her stock in the media.
She’s been less visible since things went sour, but she still holds optimistic stances on the big-name Internet stocks. Rightfully or not, I give Meeker more respect than Blodget, because she obviously knew what she was doing in the early days of Net mania. Too bad she let it get out of hand.
Meeker and her firm, Morgan Stanley Dean Witter, have been sued by investors for her overly bullish calls. As in a similar suit against Blodget, investors are accusing her of issuing rosy reports to attract dot-com firms to Morgan Stanley’s investment banking arm. It’s not an unreasonable claim; some analysts’ salaries are tied to the performance of the investment banking division, i.e. they make money not by picking stocks right, but by getting more business into the door. Something to think about if you’re a serious investor.
UPDATE: A judge threw out multiple suits against Meeker during the week of August 21, 2001, instructing attorneys to reword their cases and refile within 30 days. The judge's beef was that the claims were needlessly inflammatory and "in grossly bad taste."
UPDATE2: In October, eight class action suits against Meeker were dismissed by a federal judge, who called the lawsuits "gross and unrestrained." Brokerage houses had been worried about having hundreds of similar suits filed, but the ruling quashed that possibility.
-- Wired.com: http://www.wired.com/news/business/0,1367,16970,00.html
-- The Wall Street Journal, August 2, 2001
-- Business Week, happy side (1999): http://www.businessweek.com/1999/99_39/b3648032.htm
-- Business Week, sad side (2001): http://www.businessweek.com/magazine/content/01_18/b3730088.htm
-- Reuters story, Nov. 15, 2001