I trade many stocks both long and short (many more on the long side), and I have to say that what you describe (bandits manipulating a stock price to unrealistic levels) happens far more often by longs than by shorts.
Many POS stocks get run up by "bandits," insiders wanting to dump their shares, or momentum players searching for a greater fool to sell to. Look at DOCI that ran up from pennies to over $6 last week on message board hype and momentum traders, even though the stock is undeniably worthless per a bankruptcy agreement. Look at ADSP, a $3 stock that got run up to 57 on misinformation, manipulated press releases, and momentum traders. Look at those UCLA students who recently were arrested for hyping a penny stock on hundreds of message boards with false information to run it up and dump it on innocent fools. There are many, many such examples of stock manipulation by longs.
I would venture to say that far more people get hurt by these types of manipulations than the one you cite, as the volume of buyers at unrealistically high levels is much higher on these stocks than is the volume of sellers at low levels on the type of stock you got hurt on. I would say far more people bought ADSP way above the current $9 and still hold it than sold the stock you mentioned at 50 cents. These people will probably never have a chance to recover their money, while people who held out on your stock have recovered.
I also heard there are shorts who knew that ADSP was really worth only $3-4 that got wiped out on the artificial run up to $57. Sure, they also made mistakes by shorting too heavily, moving stops, and adding at non-peak levels, but I personally know of several quality individuals who got hurt much more badly by this manipulation than you did by yours.
While the intentional manipulation you cite burns me up as well, the intentional manipulation on the long side (false takeover rumors, manipulative press releases, misinformation spread on message boards) is far more rampant and severe in this market.
I say that many longs are much more dangerous to the average trader than are most shorts, so please stop bashing the "evil short-sellers" without also bashing the, imho, much more evil "long manipulators."
Mr. Aloha |
