You took the words out of my mouth, or my keyboard in this case. Shorting of a listed stock and a BB stock are totally different. In a listed stock, you are dealing in theory with perfect information, in the sense that everyone is supposed to know everything at the same time (in theory). Therefore, if a stock runs up on momentum, it will come down when the momentum is over and fall back to a fair market valuation with buyers and sellers in equilibrium.
In the BB world, information is imperfect (though through the internet and these forums we are revoltionizing that). But what can happen is that a stock is shorted to death, such as this one was, and is artificially suppressed well below its fair market valuation. It is like a spring that has been squashed by a heavy weight. But when investors find out about it, and start buying, the pressure is released and it springs up to its fair market valuation, and then beyond at some point. So the time to short it is when it reaches its fair valuation, not when it is suppressed. The mistake Lucky made was that he shorted too early, because he applied listed stock rules to BB stocks. He should short this baby when it gets to -- who knows -- $10? $20? Time will tell. I would hate to predict a fair market valuation on this stock right now, given that monster contracts might be forthcoming. |
