Martha Stewart

I am talking as a poker player here without knowing all the details. But it sure seems to me from that viewpoint, that the chances she's innocent is greater than most think. My main reason is that it seems hard to believe she could be that stupid. Selling the day before the drug gets rejected? (I assume that if her broker did it on her behalf knowing everything but not telling her, she is not guilty). Common sense says that if she was told, she would have ordered her broker NOT to sell, we are talking about a pittance to her right? Compared to the incredibly obvious downside.


Besides the above, I saw her on TV yesterday and her short comment and demeanor was somebody who wasn't "bluffing" in my experience.


Perhaps the details of this case renders my above comments meaningless and her guilt is a slam dunk. If so please let me know. Because if that is not the case I'm buying her stock. And please don't reply with simplicities like "rich people are sometimes greedy" or "smart people sometimes do stupid things". All true but not enough to talk me out of a good bet. If the particulars of this case are at the moment such that her innocence is plausible, I want to bet on it. If not, please tell me now.

today came out assistant broker recanted story about a standing stop loss order. doj now investigating her for obstruction of justice. gettin real interestin. they may not get her for insider tradin but may get her for the cover up.

The questions I would ask are:


1) How likely is it that Martha Stewart guilty of whatever they are accusing her of doing?


2) How large of an adverse effect will her guilt have on the intrinsic value of her company?


3) What is the approximate intrinsic value of her company?


Well, I'd look at #3 first in this case. For the company to trade at over $13 a share I think the market is factoring in long term 20% growth in earnings. YMMV of course. But this already doesn't make much sense to me because although this is a plausible best case I would expect a market price to take into account a range of possible earnings growth rates.


I have no idea what a good legal opinion of Martha Stewart's situation should be, so I'm in no position to directly answer your question. But I'm suggesting that you put numerical values--your best rational estimates--on the 3 points above before making your bet.

Assuming this will be settled soon, all that matters is the chance she is exonerated and how various outcomes will affect the price that day.

I don't know how long it will take but the longer it takes the more the true value of the company will become a factor.


Maybe you can find a way to bet directly on her innocence without having to touch her stock?

The fact is Martha Stewart makes very lovely flower arrangements that just melt my heart. Her new patio furniture series is great and so are her new Fourth of July cookie cutters. Ultimately, we must value her company based on how good her products are. And they are very good products, indeed. I am a big Martha Stewart fan and I never miss any of her shows. I owe the loveliness of my quaint country home with a pink front porch to Martha Stewart's decorating ideas. I will never sell my stocks in Martha's company. Go Martha! Go girl! We love you!

It doesn't matter whether Martha is guilty or not.


If the case ever gets to a jury, she'll make the jurors a

plate of hot cross buns and skip out of the court room

faster than OJ on speed.

how do you know such a bet is + ev? or better how do you determine when it is?

What I am counting on to happen is that the Merril Lynch broker admits he gave her a tip without telling her why. I just bought 100 contracts (10,000 shares) of July 15 calls at 30 cents each. A $3000 flyer that makes me 25k if I get lucky.

25k upside vs 3k downside.


odds your scenario unfoldin make it +ev. got it and like it!


i want to say that when dave makes a call like this its worth notin. thank you dave.