Tuesday, December 30, 2008
This is not a call based on the fact that the stock is cheap(it is) or that it operates in what is basically an duopoly with S & P. It's not about the 0.76 PEG ratio or the grotesque short ratio that will trigger a pop once everyone covers. No, this is about us, as investors, and our very short memories. Right now, all we can talk about in reference to the ratins agencies is their massive failure, their conflicts of interests. I'm sure books will be written about them, just as analysts were burned at the stake after the Internet bubble burst. I think that people will forget these facts within a year. Businesses will continue to look for Moody's despite the fact that they dropped the ball and enabled the catastrophe that has been the last year. There will be calls to change their models and new players will emerge in the space, but in the end Moody's will remain one of the big boys.
Posted by W. P. Thatcher at 8:48 AM