Art, I went to WebEx with the initial thoughts to buy it, then discouraged by their poor balance sheet and the fact their main customer bases are mostly .com companies. I like the idea of video conferencing, so I turned around and bought PLCM. I had the thought to short WEBX as well, agreeing with several points you mentioned. However, some wealthy people offerred them $21 per share in March 2001 for $4 million, and despite the heavy shorting actovity, the stock did not fail the base between $20~$22. I figured if somebody wealthy and well informed is willing to buy their shares at $21 in march 2001, there is really no reason for the under informed me to short them at $20.
The price chart of WEBX looks like a nicely rounded cup and handle chart to me. Giving their explosive revenue growth, I gave up that idea of shorting :), so I have no long or short position in WebEx although I started that topic with some enthusiasm on SI.
Greenspan seems to have determined to print enough money to support the economy. He has shown recently to go as low as 0.5% in interest rate. When the interest rate (discount rate) is below the yield of short term treasury, there are huge incentives for the institutions to borrow money from the FED and inject tremendous amount of liquidity to the wall street. The stock market will have to go up if money supply is greatly increased. I really don't feel to short any stock during an environment like this. That's why I even covered my short position in KM early this week, although I know KM truly has the potential to go below $7, even $0.
I am still about 40% in cash, no short position, and look to fully load my account during the next retracement when people are debating the "uncertainty." But it's not a good time for me to short in my humble opion, no matter how shabby a company's business may look like. As a matter of fact, I really think WebEx in year 2001 could be the Amazon .com in year 1998~2000. Shorts can't win in a bull market as longs can't win in a bear market. Wish you the best of luck. |
