MakeMoney, sincerely appreciate your concern....
And I am serious about short some of those net stocks. Now, I will not be targeting some of the 'blue chip' internet stock such as CMGI, YHOO, BCST, AMZON, AOL, etc. But some of the second and third tier companies present themselves as excellent short opportunities.
For example, this PFRM (perfumania) that went up 80% today on news of website opening is a perfect opportunity, IMHO. Companies such as PFRM attracts day traders and momentum players who will not stay with the company when the run ends. And the size of PFRM prevents 'smart money' from taking a substantial position in it-simply too risky. The average retail investor (these stocks trade in general of 100-500 shares) will run with the herd. And there is usually an inevitable drop in the price when the day-traders and momentum players start dumping, and this will in turn cause some weaker hands (longs) to fold up tents.
On the other hand, the risk I'm taking is that if the company comes out with some internet relating PR (however obscure), I could be scr#$d. Just to protect myself, a 20% stop-loss is put in.
All in all, I don't think shorting internet stocks are that risky, if one picks the right ones (2nd and 3rd tier companies that just had a huge run-ups such as MZON, SKYM, GEER, MLRE, etc), cover with a 20-25% gain (don't get too greedy and get hit over the head with another PR) and protect the investment with stop-loss, I think there's some easy money to be made.
And I'll let you know how PFRM works out tomorrow :-). Thanks again for the concern. By the way, I'm only using about 10% of my portaflio for short positions (not crazy enough to risk too much). |
