Doug,
I don't know if you follow the Yahoo thread or not but I found the following post both interesting and compelling. I would appreciate your interpretation of this post. It was in response to a plea by ChingLee for information about why this stock seems so unpredictable right now, and what could be causing this wierdness.
TheCalculator wrote:
It's perception. The big guys want to present a volatile, nervous perception of this stock so they can shake out and make money off the weak hands, and keep new buyers out of the market until they have accomplished their objective. But the little guy can capitalize if he has reserve to buy at these grossly under-priced levels.
You see, the big guys see a potential $40-$70 stock (this year) in front of them, but they want as many shares in their
hands before it gets there, so they are using their big money tactics to shake out the weak players and grab their stock. Along
the way to the price apogee, on the option expiration dates (like yesterday), they are going to put the stock at the price which
causes the most options to expire worthless, or maximize their option trading profits. (Sure, in the big picture, those profits are
just a few shekels each month, but you add up all the months and it turns into a pile of cash.) It's worth the risk to them to
deflate the share price, because they have plenty of shares to short and because they think the small investor will agree with the
nervous perception they want to portray about this stock.
The way for the little guy to win is to buy the undervalued diamonds (like CREAF), and buy more when they try to shake out the weak hands, and to hold his long-term holdings in his name rather than the "street name" in order to keep the shorts from using his stock.
The "manipulators" know they can easily grab the shares of the short term speculators and momentum players through quick run-ups. (Witness the infamous date of 10/22/97, when the short term guy was locked out while the big guys JUMPED THE STOCK 23% in a few hours before market opening.)
The million dollar question is, are they going to get the shares of you long term holders that buy before the run-up?. Or will you stare them down in the face of this adversity, and welcome the opportunity to BUY MORE?
And if you are tapped out, then hold on for the coming ride. But in the meantime, recall your shares.
thecalculator |
