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To: wpb_kid who wrote (7126)	3/31/1998 5:28:00 PM
From: John Mattessich	Respond to of 8116

To all : From The Motley Fool : 4. WHAT IS A SHORT SQUEEZE? What effect does a large short coverage have (generally) on the stock's price? Generally, heavy buying increases the price while selling decreases it. Assuming the stocks price has been steady, or climbing, and many shorters attempt to cover their losses, how will this affect the price? What you are referring to, in investment parlance, is a "short squeeze." When a number of short sellers all try to "cover" their short at the same time, that does indeed drive the stock up. Our approach when shorting is therefore to avoid in general stocks that already have a fairly hefty amount of existing short sales. We try to set ourselves up so we'll never get squeezed. I'll point out that short squeezes can be the result of better than expected earnings or some other fundamental aspects of a company's operation. They can also be the result of direct manipulation. That is, profit-seeking individuals with large amounts of cash at their disposal can look on a large short position in a stock as an invitation to start buying, driving up the share prices, thus forcing short-sellers to cover. This in turn drives up the price, and before you know it, the share price has soared!