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Technology Stocks : PairGain Technologies
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To: LLLefty who wrote (29968)4/9/1999 4:49:00 AM
From: John Stichnoth  Read Replies (1) of 36349
 
Another Viewpoint on the hoax--I think the media got it wrong in talking about how the hoax moved the stock. In fact, the stock didn't really move that much, and quickly corrected. It shows that the internet investor was relatively sophisticated in double-checking the story allegedly posted by staceyitn.

Remember, the stock rose 30% from 8.50 close to 11.125 peak. But the hoax buyout price was supposed to be close to $20. And, part of the rise can be attributed to the AWRE move (at least, there was some consensus on this thread on that on hoax day). Why didn't it rise more? Because there were other sources on the internet available to check the story, which people demanded to see before taking the plunge. The 20-30% rise can be seen as an appropriate adjustment based on speculative interest that the story might be true--relative to the 100+% move that would occur upon confirmation.

Could a non-internet hoax have been perpetrated? Sure. It used to be (I'm not sure how often it still happens) that a lot of stories going out over AP were put-ups. Get some cub AP reporter. Feed him/her a line. The allegations go out. All of the sudden you've got bogus info being splashed a lot more places than the Yahoo and SI message boards.

Oh, and BTW, I wouldn't assume that some of the day's activities weren't generated by "full service" customers. Those brokers get on the net just like the rest of us to supplement their info from their research departments.

JMO,
JS
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