Defining Moment
About 4 months ago, some of us were discussing the possibility that DMX be exactly where it was at this afternoon's close.
It came under the heading of Worst-Case Scenario.
It may not be finished: it could get worse. I have traded 2 stocks where I've seen this happen: the notorious Bid.Com, BII.TO and, more recently, CSY Wireless, CSI.TO.
In both cases, margin calls by TD knocked out stops all the way down.
In both cases, what "news" triggered the fall? None Nothing at all. Nada. Zilch.
We should be aware of the following possibility: if the current draw is over, and Acqua is arranging a new set of Amigos, it is conceivable that TD may not be among them.
That is, whatever constraints existed on TD because they were an Amigo will no longer exist. They may be free to issue margin calls on a Grand Scale, Monday.
A month ago, I posted that my dream was that exactly this situation would occur: that the price would drop to $2. I would then borrow $10,000, and buy 5000 more.
If it hits $2, that is exactly what I will do.
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Selling 6,000 or 10,000 or 20,000 shares (out of ~50 million) at the last possible moment on a thinly-traded day in a bad market was something that could be easily done, by most of the posters on this board.
It's a breeze. Wait until the last 5 minutes, pick up the phone, and sell the shares at market.
It's that simple. Anyone could do it. Anyone with a macabre sense of humor could have done it - and very likely will profit if they buy back in next week. They've just reduced the price on "x" thousand shares.
And anyone who did it would KNOW - with certainty - what reaction would follow. Sure enough, the boards lit up, with...
"What the f***?", "Explain this, Pumpers!"
...and a whole litany of incredulous posts about what was essentially a cheap, simple trick, that MEANS nothing. Somebody just bought themselves a weekend of helpless laughter for around $18,000 - and will very likely PROFIT from it next week.
This whole story is a play on the fact that Acqua selling has driven the share price to ridiculous lows. It is impossible for most people to look at the share price, and believe that the stock has any value. Let's face it: it's counterintuitive.
That is why DMX is the Essential Contrarian Play. It defines the difference between legitimate expectations, and the share price.
Some nitwit posted that the share price never lies. Oh no? Then maybe he'd like to pay some Nortel holder the former $120 dollars for a share that is now around $2.66.
The share price is a lie: it's a construct, an amalgam of many things.
Selling shares of a pharma with no major approvals, and no revenues into a Bear Market will have a predictable effect. It's guaranteed to drop.
The share price means nothing. The FA hasn't changed one bit.
This is a tempest in a teapot, a joke: much ado about nothing. That's my opinion.
If the price hits $2, I'll be buying more.
Jim |
