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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: H. Wai who wrote (6409)	12/28/1997 2:39:00 PM
From: uu	Respond to of 64865

H. Wai: You state: > Could you explain why you think there is direct relationship between the expected expansion in SUNW's P/E and its short interest? Well, it goes all to the market psychology which is based on the concept of When unknown, things are doomed to be terrible! Everytime a stock breaks its historical P/E, P/S or other fundamental data most will come to think that the stock is overvalued! After all that particular stock is where it has never been before! As a result of this psychology shorters comes to think that the stock is doomed to go down because its new higher P/Es can not be justified by looking at its past and historical P/E. Therefore they start shorting the stock hoping (actually in their own mind confident) that the stock will soon go down to its previous P/Es and other fundamental data! However one thing these people tend to overlook is the company's prospects and future outlook! If a company such as Sun that is about to face an explosive growth can deliver both in terms of revenue and earnings, then the continuation of a thinking process that SUNW still does not deserve to have new higher P/Es is false. So what happens is that as P/E goes higher so would the number of short interest in the stock and as Sun reports its quarterly reports so would the price (mostly because of the fundamentals but also because of the fuel that shorts will add to the price by all trying to cover their position in a rush!). And the process continues! Regards, And a Very Happy New Year! Addi Jamshidi