>Does the fact that there were no shares available for short sales tell you something? It should. Whenever
there is this great a consensus by the general public they are almost always wrong.
Just imagine Joel how high AOL will climb when these short start to cover.
I can't wait, and either can my one stock portfolio.
Happy shorting!<
Dick, I do not believe your interpretation is correct. Academic studies have shown that the most heavily shorted stocks tend to underperform the market. (To be fair, that does not necessarily mean that they go down, only that they do not do as well as the market at large. Since most shorts do not get to earn interest on short balances, it can still be a losing proposition.) You are right about the heavy short interest, however, creating possible scarey scenarios as we have seen time and again. Nevertheless, although I own puts, as I said before I would have done a straight short if I could have gotten the shares, since I do not pretend to know the timing of AOL's demise if and when it comes. My problem with shorts is that they tend to 1) overextend themselves--they short more shares than they can afford to and therefore are forced to close out on short-term up moves, thus exacerbating the problem 2) they tend to be very technically oriented, so they close out if the stock starts to show "break-out" potential again causing a self-fulfilling prophecy.
Although I am sure brokers love these people, I cannot pretend to be smart (or foolish) enough to play that game. I am generally in it for the long term, but I want to make sure to cut my losses when and if I am wrong. |
