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Technology Stocks : DSSI/DATA Systems & Software
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To: Jimbo Cobb who wrote (771)10/26/1998 10:51:00 PM
From: Bennett Zimmerman   of 1061
 
Mark,

Here's another trick:

Buyback shares with company money.

Issue options to employees.

Hire PR firm to hype.

Sell or exercise options in the midst of publicity campaign while poor suckers are enticed into buying shares (with dreams of multi hundered percent gains)

(This hype phase is so great that many innocent investors don't lighten up but instead are convinced that Carribean islands and easy retirement are just months away. They hold out or buy more!)

Followed by reality. Missed milestones, etc.

Drop in stock price

Then those who lost buy more with hopes that stocks rebound to more "natural", "more fairly priced", level.

When prospect fail at company, they run out of cash

Company then raise prices at highly diluted levels, as you note.

(These comments are generic to any small, poorly traded stock)

I find it is best to avoid situations in which management has done anything questionable. You and I have certainly seen a few of these over our years talking on the internet!

Buyer beware.

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