Stratex Networks, Inc. (STXN) Message Board

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Technology Stocks : Stratex Networks, Inc. (STXN)

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To: Shankar Kumar who wrote (967)	6/30/2000 12:45:46 AM
From: Rob Preuss	Read Replies (1) of 1762

Purloined from the Yahoo thread... Those guys on the Yahoo thread purloin my posts from here, so I guess I won't feel bad about stealing their posts. I thought this one provided a lucid explanation of what just occurred to our DMIC with the Russell rebalancng: Lets pretend that you manage a Russel 2000 index fund, lets call it the "Big Johnson small cap fund". In this fund you hold 60,000 shares of DMIC. The legal description of your mutal fund mandates that your fund can only hold stocks listed in the Russel 2000. You just became a seller of DMIC. You call your trader and direct him to sell 60,000 shares of DMIC, small blocks, best bid, all trades complete by close of market Friday. Your trader will work the market to get you the best price. He will try not to crush the price by offering large block at the market but he also knows that as Friday approaches, his ability to select selling prices for your stock evaporates. Now the problem. You are not the only fund trying to get out at a good price and word is on the street that there are sellers. Unless there is a large institutional buyer who is willing to buy the stock at the current market price, the market makers have to sell it on the open market to mainly retail investors. The market makers know that there is selling pressure so they won't absorb the stock into inventory at the current price. So what happens? The market makers move the bid down until demand can stabilize the price. That demand showed up in the 32 to 34 range today. Call it manipulation or accept it as a fact of life in the open market. I see a wonderful chance to get in in the low thirties. Could be our last chance ahead of earnings. (The above was post 8157 by MACD_jam.) BTW> In case you guys on the Yahoo thread were wondering, I never post over there on any of the stock threads. Its not that I don't realize some of you* make good thoughtful contributions, its just that there are so many others that post plain garbage... and there's no way to effectively police the Yahoo threads. So I scan the Yahoo threads for an occasional pearl, but all my posting is here on SI where the discussions are far more civil and productive. No hard feelings. *My favorites posters over on the Yahoo thread include fun-de-mental-man and The Bluezzz (among others). It would be great if we could entice them over here.

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