A Letter to Martha [Special] October 24, 2002 A Letter to Martha [Special] October 24, 2002

Dear Martha,

We haven't met before, but I wanted to write to say that the more the world seems bent on tearing you down, the more I want to build you up. I'm a Fool, of course -- I don't much like conventional wisdom. My intuition tells me there's far more right about you than wrong, and I'm documenting this perception here because I think you deserve it. Plus, no one else seems to be saying so.

Yeah, I've read about your trade of ImClone Systems (Nasdaq: IMCL) . You apparently sold about 4,000 shares of the stock the day before bad news about its biotech drug was made public. Following revelations about the approximately $280,000 trade, your own company has lost hundreds of millions in value, and your reputation has suffered comparably. Maybe I'm the one getting gulled here, but I wouldn't think you'd do anything particularly nefarious for what is, in relative terms, such a scanty amount.

Many have prejudged you. They envied your success in the first place. Some even felt threatened by it, and they have gloated with each compounding headline. People seem to forget you've:

  • Created thousands of jobs.

  • Practically created an industry.

  • Given joy to millions of people.

  • And earned everything you've achieved.

There's too much envy in our world felt by too many people who have achieved so much less. They try to make their negative emotions compensate for the difference. They encounter little resistance to their Martha jokes; they "yes" each other; they affirm their own worthiness in their mutual attempts to elevate themselves above you. It's cool to dump on Martha, these days... as cool as it was to do the Wave at sports games, or the Macarena at concerts. In other words, it's become a clichéd, rote reflex that lost its interest for me months ago.

Earlier this week, I learned the SEC is pressing civil charges against you. Yes, that action once again made the top stories -- above and beyond just the business stories. The articles were full of after-hours quotes of your stock, saying it was down from above $7 to just $6.25 in "after-market trading." I was reminded once again of the uselessness of such quotes when the next day, the market bid up your stock by a full 13% on a poor day for stocks in general. The news services were mum on how or why your stock could possibly have risen so dramatically that day, perhaps as confused as the casual observer was as to how or why.

I think it's because civil charges only attempt to recover money, not impose jail time, and the market picked up on that. And while criminal charges may still be a possibility, from what I know as just an interested observer, I think the case against you is extremely weak. I think CEO Waksal told his family members to get out, the word went 'round Merrill Lynch, and your broker called and said if the Waksals were selling, shouldn't you, too? I may be quite wrong about this, but my own guess is that you're too generally busy in your day-to-day life to think or worry much about your stock portfolio. That's why you hired a full-service broker to make decisions and execute trades for you! Any inside information appears mostly confined to the Waksals and the Merrills -- just my personal opinion, without having more facts than anyone else.

Last week, one market analyst following your company even threw in the towel, saying it's no longer possible to figure out what is true here -- how much real damage has been done.

Another top headline, of course.

Anyway, I'd just like you to know that the very same day that story hit the wires, the ink was drying on my next monthly recommendation for our Motley Fool Stock Advisor newsletter.

With three bucks per share in cash and a profitable company whose brand name is known and respected internationally by a legion of loyal purchasers, I think I got a bargain on my Martha Stewart Living Omnimedia (NYSE: MSO) shares at $6.03. Time will tell.

Foolish best wishes,

David Gardner

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