Paul,
> Is there a point in time at which
> the shorts take over from the longs?
In case of IOM, it broke when it did not
deliver revenue and earnings growth. AMZN does not
have earnings, so it may break down on revenue
growth slowdown. AMZN got onto the annualized $1 bln.
sales last year. BKS has approximately $2.7 bln. annual
sales. Assuming that AMZN does not take over other
retail markets (CDs, PCs, beanie babies, etc.),
and that it grows to BKS revenue, and that it has
to deliver 50% revenue growth per quarter to satisfy
the "investors", it will take another year for it to
reach the BKS sales. So in this case there will not
be a disappointment this year. However, this model
is totally baseless. The break may come much earlier
or a bit later. If you really want to short it,
wait for the disappointment to happen and act then.
You will lose ~20-50 points, but you may make money.
On the other hand, if you compare
Internet to biotech bubbles you'll notice
that these break totally on investor sentiment.
But they usually don't have neither earnings,
nor revenues, so it's a bit different game.
BTW, in all questions of shorting, consult
John G (https://www.siliconinvestor.com/profile.aspx?userid=93590).
He is a professional hedger, and his threads
on high-flyers and broken stocks are excellent
reads. Personally, I'd rather short broken stock
than a high-flyer. But then, I wouldn't short at all. ;-)
Good luck
Jurgis |
