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Microcap & Penny Stocks : Rocky Mountain Int'l (OTC:RMIL former OTC:OVIS)
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To: KINGSTER who wrote (33412)1/5/1998 9:18:00 PM
From: TideGlider  Read Replies (1) of 55532
 
DD comments: I have been reading some Internet message boards that talk about short squeezes in two stocks: EUTO and RMIL. Does a short squeeze really exist in these stocks or is it just hype to inflate their prices? Message posters claim illegal shorting.
SD Reply: For a "bonafide" short squeeze to occur, someone or lots of investors need to buy a stock "long" and remove those shares from the public float, typically by taking physical delivery of certificates. This is done to deprive short sellers of collateral stock required of them and force the short seller to buy-back at higher prices.

Nevertheless, professional short sellers do have their ways of continuing to sell short or avoid "buy-ins" ad-infinitum. This is also referred to as "illegal" short selling and is a topic for a future Stock Detective report: Other than encouraging long-term shareholders to request physical delivery of their share certificates, the only feasible defense against the ravages of small-stock short sellers is for a company is to achieve financial success and garner widespread support at comparable market valuations.

For well-intentioned upstarts and development stage companies with little or no fundamental strength (earnings or equity) short sellers can easily spoil the party. On the other hand, for scam stocks, short sellers sometimes show uncanny ability to bring inflated or manipulated shares back to reality.

- S.D.
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