Gerald, or anyone who cares, I have a couple of thoughts to share.
There is a lot of debate on this forum over the following issue: Long or Short; who is right? There are people who take extreme views on both sides. And of course there are people who are not so extreme.
I believe that neither view is entirely correct. Things are not so black and white as that. Let's consider the issue from this point: Will a person taking a position on Iomega at today's prices make more money by going long or short?
There is no one answer to that question. First, you have to consider the time frame. Are we talking about the next two weeks, two months, or two years?
I believe that a person who shorts Iomega at, say, 23, may very well make a profit. There is every chance that IOMG may drop somewhat within the next few weeks. If someone wants to buy at 23 and cover when it hits single digits, I believe they're dreaming. Then there's the chance that a short squeeze will cause them to lose a bundle. This is because there is a very large short interest, and shorts can't always control the timing of the cover.
Someone buying Iomega today might be able to make a profit within three weeks as well, but I don't think they should expect to double their money. I don't believe that they are risking as much as the shorts are, since they can always just hold on during the dips, even adding to their long positions if they choose.
I also happen to believe that someone buying at 23 has a very good chance of doing very well in three months or longer. I think that Iomega's trend line will continue to be up, overall, though certainly not straight up. I don't trust my ability to time the market, so I'm just hanging out on the long side.
Of course, the absolute most money to be made in stocks is by always going long at the lows, and short at the highs. But if you can always predict the lows and highs perfectly, you could also make money by starting a Psychic Hot Line.
I realize that none of these thoughts are profound. I just wanted to share them.
- Allen |
