Wednesday, October 29, 2008

Market Watch: Volkswagen Oops!

Little has been written about the role of the financial press in the market mess and of analysts quoted in the media. Here's an interesting item from the cover of the last weekend's issue of Barron's, the financial weekly. As part of a market roundup headlined, "More Pain," the story called Volkswagen "perhaps the most overvalued big company on the planet" and cited analysts who said the European automaker's shares "could fall under 100 euros... Its market value of $84 billion is triple Daimler's, a seemingly nutty situation."

Fast forward to Wednesday, when Barron's sister publication, The Wall Street Journal, reported VW's stunning 348-percent rally over the previous two days. "Hedge funds around the world absorbed a punishing blow Tuesday, as soaring shares in Germany's Volkswagen AG created one of the biggest losses from a single bet in recent memory," the article said.

"The funds are expected to face billions of dollars in losses, according to prime brokers familiar with the positions, because they were wagering that VW shares would fall. Instead, shares of the big German auto maker soared 82% Tuesday to €945 ($1,185)...

"VW shares are up 348% over the past two days and 267% in the past month."


TAGS: markets

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