Goldbrick Shares

If we find a rock in our yard, clean it off, and paint it gold, it may look all shiny and valuable, but on the inside, it’s still just a rock. Sometimes companies are like gold-painted rocks: they look really great on the surface, and their high stock price reflects their shiny exterior, but on the inside, they’re a lot less impressive. In fact, they might be close to worthless.

Those overvalued shares are referred to as “goldbrick shares,” and they get their name from a shady practice used back in the Yosemite Sam days where miners would paint a random brick gold and then try to sell it as the real thing. Sometimes goldbrick shares happen because of market speculation, and sometimes they happen because the company hypes itself as being a lot more awesome than it actually is. Whatever the cause, the effect is the same: unwary investors could end up paying way too much money for stock in a brick trying to pass itself off as a gold bar.