The Twelve-Dollar Prophets

In 1999, two academics built a stochastic model that valued Amazon at $12.42. The market said $76. Then the market lost 92%. This is the story of the sleight of hand the crowd performed on itself — and the math that saw through it. A deep dive into the Schwartz-Moon framework, real options theory, and the precise mechanism by which the dot-com crowd confused optionality with certainty.