One of the key features of our stock market is one that is occasionally trumpeted by serious investors, but, as of yet, has not ingrained itself in the public consciousness. Namely, the price of a stock has nothing to do with the value of the company that it represents. A company that has no profitability, and could even be losing money, can possess a huge stock price, while a company racking in insane profits can be flying under the radar with a relatively low stock price. The only thing that determines stock price is how many people are buying or selling the stock. If it’s a popular stock and investors are jumping in, then the price goes up. If the company becomes unpopular (irrelevant of profitability) and investors sell the stock, then the price goes down. In short, the stock market is translating PR into dollars.
Mark Cuban, one of those crazy rich guys who is way better off than you are, has blogged about this phenomena more than once. Helaine Olen, in her bestselling “Pound Foolish”, expounds on this idea forcibly and credibly. Even the super conservative government minders of the nation’s financial system frequently fret about certain news tidbits because of the effect that they’ll have on the market. The world generally considers PR pros to be at best an entertaining nuisance, but on a global scale it’s PR that can make or break fiscal health and government policy. Academics like to sugarcoat this concept by relabeling PR as the “power of ideas”, but whatever you call it, the crux of the matter remains the same. What people believe and feel is often the ultimate decision maker for real world events.
Here’s a few recent examples from big stages:
- The world’s perception on Syria constantly changes based on the reporting and handling of the events happening. Putin’s op-ed in the New York Times is just the latest twist in the story.
- Twiiter tweets its IPO announcement and the media world erupts driving even more Twitter frenzy.
- President Obama recently hired Rick Stengel from Time magazine to be his undersecretary of state for public diplomacy and public affairs.