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Technology Stocks : Altaba Inc. (formerly Yahoo)
AABA 19.630.0%Nov 6 4:00 PM EST
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To: ALTERN8 who wrote (26297)1/15/2001 10:49:04 AM
From: Earlie  Read Replies (3) of 27307
 
Altern8:

As a company's stock price moves down, it frequently becomes an even better short target. Why?

- it loses its lustre to institutuional investors. (in a mania environment, money tends to move from tarnished stocks to untarnished stocks).
- it becomes much more difficult to raise either equity or debt funds. Even when the needed money can be raised, the dilution tends to be huge (equity) or the terms nasty(debt).
- investors who lost money on the stock "bad-mouth" it.
- if there is consequential debt, the debt holders tighten the screws.

I could go on and on. My point is that buying a stock simply because it has fallen is not a good idea. My best short situations in 1999 and 2000 were stocks that I call "mortally wounded". All of them had fallen huge amounts before I shorted them. All of them provided much lower risk as bankruptcy proceedings loomed ever closer.

Best, Earlie
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