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18 Jul 2009 05:17 pm
The Ugly Shoe Bubble
by Patrick Appel
The WaPo reported yesterday that the company which makes Crocs is in trouble. Rob Horning has no sympathy:
I think that it is safe to assume that Crocs might have found itself in
some trouble regardless of the recession. It always amazes me that
companies like this get hyped in the financial press; it seems a bit
irresponsible and cynical. The unspoken subtext seems to be this:
Everyone knows that eventually the trends that such companies are built
on will pass, but everyone also believes that the other investors are
more naive than they are and have bought into the trend unthinkingly.
Everyone then wants to exploit the other’s presumed ignorance, assuming
some other fool will be left holding the shares when the day of
reckoning comes. And the press is there to cheer this game along,
pointing to how much growth the company has seen during its peak
trendiness, encouraging the extrapolation of such unsustainable figures
into the future. I wonder if all the analysts who recommended Crocs a
few years ago (or the ones, probably the same ones, who recommended
Krispy Kreme in the late 1990s) feel any embarrassment at all.
Ezra Klein piles on.
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