Henry Blodget was flying from Houston at the onset of the tech bubble when he started crunching numbers. As an analyst at Oppenheimer & Co., working in equity, he dashed off two reports on the plane. One was on an online retailer called Amazon, which was trading at $240, a price that many Wall Streeters in 1998 believed was way too high for a fast-growing yet money-losing startup.
After running through the numbers Blodget came to the opposite conclusion, forecasted that the stock would trade at $400 a share, filed the report and didn’t think much of it.
His prediction became a media event, leaving a trail of shocked stock watchers. Yet three weeks later the stock soared past $400 a share and Blodget became a poster boy for the dot com bubble, taking a job at Merill Lynch for a reported $12 million a year and becoming a celebrity with appearances on CNBC. A few years later his career on Wall Street came tumbling down almost as fast as the tech economy when the bubble burst. Then Attorney General of New York, Eliot Spitzer, came after Blodget for publicly touting stocks that he disparaged in internal emails. Then the SEC charged him with securities fraud. In a settlement Blodget paid a fine and agreed to a permanent ban from the securities industry.
Blodget had become a symbol for everything that was wrong with Wall Street, an object of scorn, derision, and hatred, and this, he told Sarah Lacy at this evening’s PandoMonthly in New York, was an “incredible weight.”
“I felt terrible for my family who was hearing about it,” Blodget said, and apologized to his father who shares his name because it was being dragged through the mud. Through it all, he contends he was not — nor is he now — the greedy monster portrayed in the media. “I am certainly not the person that I am reading about and everybody I know is reading about every day,” he said,
Fortunately, he added, these were only professional and personal integrity disasters. His family wasn’t sick. He didn’t have an incurable disease, and people who have suffered far worse than him have bounced back “to do the amazing things.”
He said at one time, when he was an analyst, millions of people listened to him. “All that trust has been destroyed,” so now he would spend the rest of his life earning it back one day at a time from everybody who would give him that chance. “I understand not everybody will, and that’s OK. I understand. If all I knew about me was what I was reading about me I would be hateful and angry and skeptical, too.”
That’s when he decided to make a career change and move to journalism. He started his blog and began writing for Slate. I recall an especially astute op-ed Blodget penned for the New York Times in 2005 on economic bubbles. He pointed out that the Internet bubble paralleled that of other industries characterized by revolutionary technology. Specifically, he pointed to canals, railroads, telegraphs, telephones, cars, radios, and personal computers, which “progressed (or are progressing) through four phases of development: boom, bust, mature growth and decay.”
When I read it, I marveled how a guy viewed as a symbol of the dot com bubble had gone through his own boom and bust, and was just entering the mature growth phase of his career. Presumably at Business Insider he will have a long runway before he’ll face decay.
[Photo by Timothy Briner for Pandodaily]