The Atlantic reported on the tripling of the stock price of Etch-a-Sketch parent company after a gaffe by presidential candidate Mitt Romney. Here’s the play by play:
There it is, quietly moving between $4.00 per share and $4.25 per share for the past two months and then bam! Romney adviser Eric Fehrnstrom makes the gaffe of the month: "I think you hit a reset button for the fall campaign. Everything changes. It's almost like an Etch A Sketch. You can kind of shake it up and restart."
In the 12 hours after that comment, Ohio Art's price tripled to just above $12.00 a share. To give you an idea of how insane that is, consider that over the past three years, the stock has strictly traded in a band between $2.50 and $4.00 a share.
Efficient marketers of different stripes would need to respond to this somehow. One might say that because markets are efficient we would see the stock price fall back down to its historical values. The skeptic in me would say that if markets are efficient then this shouldn’t have happened in the first place. The conspiracy theorist would say that maybe the Romney is financing his campaign by talking it up and then shorting the stock later. If an economist really believed in efficient markets, would he also have to believe in conspiracy theories?
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