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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Keith A Walker who wrote (6970)	9/15/1999 4:52:00 PM
From: Art Bechhoefer	Respond to of 60323

Keith, you're absolutely right that options are about as good as playing the horses. I don't rely solely on a pattern of insider selling as an opportunity for a short sale or purchase of put options. That is just one factor that an investor has to take into account. In fact, a combination of factors are usually required - poor quality management, insider selling (where the sales form a large part of each seller's holdings, not just a few percentage points), risky fundamentals, such as no profits, high debt, and a growth rate that doesn't justify existing stock price, lack of proprietary products or services, and serious competition in the marketplace. In light of all these factors, AOL probably doesn't qualify as a short sale because it is still the dominant internet service provider. For the same reason, Microsoft, which could get stung on the antitrust litigation, so dominates its market that shorting the stock is simply too risky. But on the other hand, with the high degree of institutional ownership that characterizes MSFT, a series of unfavorable news events with lower profit implications could drive institutional investors away from MSFT, and the stock could then fall very much the way Philip Morris fell after the earlier tobacco cases that were able to prove that company officials knew aobut the effects of tobacco but hid the news from consumers. I haven't seen too many opportunities for shorting, where all these conditions were present. Art