Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Rascal who wrote (23011)	6/18/1999 10:45:00 AM
From: Steeny	Respond to of 41369

I'm not referring to the regular people who have online accounts. It is the daytrading firms that provide massive leverage to people that I am thinking of. Someone with 20g can control 200g at these firms and there are thousands of such firms. I was skeptical of their power too, until I started reading some stories in WSJ and NYTimes the past few months. It is tough for them to short, though and I think they are enhancing the bull market. I don't think they can overcome fundselling yet, but I wonder if they have given funds pause before selling. IMO, 5 years ago, funds would not have held AOL through these valuations. Just a theory that daytraders might provide some glue here.

To: Rascal who wrote (23011)	6/18/1999 1:53:00 PM
From: David E. Taylor	Read Replies (4) \| Respond to of 41369

Rascal: "Think about the massive power of the big money guys." Ever think about the massive power of 7 million online account holders, or the not insignificant power of 60,000 plus SI members? Sure, the big money funds hold a lot of shares of large cap stocks like AOL, but so, collectively, do we individual investors. If just 10% of the online investors just bought 100 AOL shares each right now, we'd have upward buying pressure of 70 million shares! I've reflected quite a bit on this subject, especially when I read posts where people express their sense of helplessness, frustration, and anger at the analysts, large brokerage and mutual fund firms for what is often perceived to be market manipulation by the "big guys". What's impossible about this (hypothetical) news item? Wall Street Journal, September 30, 2000 A group of the world's largest mutual funds and brokerage firms, including such household names as Fidelity, Janus, Putnam, Merrill Lynch, and Morgan Stanley Dean Witter, today filed a complaint with the SEC charging the Silicon Investors (SI) Organization with illegal market manipulation. According to a Fidelity fund manager acting as spokesman for the mutual funds group, the complaint stems from trading activity over the past several months in the shares of AOL, which started the year at a 52 week high of 200, but which then went on a roller coaster ride to a low of 150 in April, then to a new 52 week high of over 250 by mid July, before falling back to a new 52 week low last week at 145. Apparently, the funds decided to reduce their positions in AOL by about 25% (125 million shares) over the first three months of the year as a result of AOL reaching a new all time high of 200 during the first trading week of the millennium. The funds began selling AOL despite strong "buy" recommendations by most internet analysts, including the highly followed analysts Mary Meeker at Morgan Stanley and Henry Blodget at Merrill Lynch. Several major hedge funds also began to accumulate large short positions in AOL over this same time period. However, the heavy fund selling was largely offset by heavy buying by individual investors, who added to their existing AOL positions following a strong "buy" recommendation by the SI AOL Analyst Advisory Group (AAG) in January. Continued heavy buying by individual investors prevented AOL from falling below 150 and turned it around in April, even as Meeker, Blodget and other industry analysts were changing their "buy" recommendations to "sell" as they perceived a weakness in the stock. As the funds belatedly began boosting their AOL holdings and the hedge funds scrambled to cover their short positions, AOL's stock skyrocketed over 100 points over the next six weeks. According to one individual investor who asked not to be named, the SI AOL AAG began issuing a series of increasingly strong "sell" and "short" recommendations as the stock soared to 250 in July. As the buyers dried up, the funds were stuck with high priced AOL stock, which then began a slow slide down to its current level of 145 as they tried to unwind some of their holdings again. The present SI AOL AAG recommendation is not known, but the complaint to the SEC alleges that it has again been issuing "buy" recommendations" to its members as the stock price has declined. "It's not fair" complained one exasperated fund manager. "There are over 10 million of these investors out there, and they have a collective buying power of over $500 billion. They can move even a large cap stock whenever they like, and they can turn on a dime. We just can't move that fast, and our index funds are stuck with the stock and just have to suffer this roller coaster ride every time they decide to change their positions." The SI AAG's are clearly a new force to be reckoned with in the investment world. Starting from the first AAG for AOL which was organized last year, there are now 15 AAG's operating on SI, issuing recommendations to over 500,000 lifetime members and 4,500,000 affiliate members, Each AAG is made up of six individuals who have demonstrated the necessary in-depth knowledge and understanding, and who are elected by popular vote on the discussion thread for each stock Interviewed on CNBC's Market Watch about the market moving power of such a large number of organized individual investors, a spokesperson for the SI AOL AIG simply said: "Welcome to a level playing field guys". Sorry for the long post, just dreaming away on an otherwise boring triple witching day! David T.