Morning gang,
This is from a long piece on the Street.com today. Scott, maybe you should assign someone to moniter this Trading-Places.com! <G>
Investors in huge numbers have been beguiled by the so-called "momentum trading" techniques of hedge fund gunslingers like Jeff Vinik of Vinik Asset Management. In momentum investing, you buy a stock not because it is any good as a business, but simply because others are buying it and the price has thus begun to rise.
Doing so successfully has been generating staggering payoffs. Consider what happened on Jan. 13 when, at about noon, an Internet chat room -- Trading-Places.com -- posted a tip that Golden Books Family Entertainment (GBFE:Nasdaq), the near-bankrupt New York publishing house that was then selling for 34 cents a share, would soon be the target of a takeover bid by Walt Disney (DIS:NYSE). Investors in the chat room began to load up on the shares, and trading volume quickened to 41,000 shares in the next hour, or double the pace of the previous hour.
Then, at 1 p.m., Bloomberg Business News carried a story quoting Disney chairman Michael Eisner as expressing interest in acquiring Golden Books, and within seconds the company's stock was overwhelmed with an avalanche of Internet buying orders -- nearly 1.4 million shares in the next 29 minutes alone. Finally, at 1:38 p.m., a spread-the-word tip materialized on a Web-site message board of Yahoo, and the fun really began as Golden Books' price rocketed to nearly 75 cents on volume of more than 5.1 million shares.
The next day, Jan. 14, was even wilder, as seemingly every Internet trader on earth piled onto the stock, sending trading volume for Golden Books past 27 million shares. Result? This essentially worthless, near-bankrupt company instantly became one of the year's biggest gainers (530% in just 48 hours).
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