View: "I can NOT figure this one OUT."
View,
As more and more people get involved in technical tea-leaf reading we will see more and more pronounced swings and more and more complex approaches to "technical analysis". All this bodes well for the fundamental investor, because the market will become more and more inefficient, the swings will become wider, stocks that are going up well scoot up past their fundamental value and stocks going down will dive below any fair price (one thing does keep a stock in check on the down side though, and that is the possibility of "unfriendly" acquisition as well as negotiated acquisition).
Overall, we will find better and better opportunities to short and better and better opportunities to take a long term long position.
Shorting will become more dangerous for those who have limited resources or who don't set hard and fast exit (cover) prices. Going long will often be more painful. A decent buy in the 10 range will likely keep on going down, especially if it breaks 6 or so and the eager "technical" shorters open positions. But although one may have to watch their intelligent buys continue going down, they will ultimately be rewarded just the same as they always have been, once the institutions start buying.
In Informix's case, the mutual fund managers are not participating. I would guess that most of the buying is by individual investors, which is not enough to stop the drop of the stock against the large number of shorts we have seen in the last 60 days. If IFMX does not break four and it starts to rise (late next month, probably -- or earlier, although I hope not -- since I would like to buy more) then the shorts will cover and this will send the price up to 6 or 7. If earnings are good, and institutional investors do not come on board, expect the price to sink once again.
Anyway, it all looks like noise looking back fifteen years or even five years from now.
- RDH. |
