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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (7879)	4/26/1998 4:59:00 PM
From: Lazlo Pierce	Read Replies (1) \| Respond to of 18691

In your example, you said imagine the person who shorted @ 6. Well, the move started with the stock ~ 6 - 7. It probably didn't attract many shorts till late the first day ~ 12-13. If you are going to rail about the stock manipulations, and the unfairness of it all, you'd be better served to state some more likely scenarios. ********************************* Here's part of a Cramer view on it.(from thestreet.com) ....But the market failed us in K-tel. No institutions wanted in this stock. No institutions owned it ahead of time. Why should they? It's been a real dog. Nobody knew who "lived" where in the stock. Or what levels brought out sellers. It was a classic mismatch between demand and supply, because of a dubious Internet announcement. So when faceless day traders bid the stock up, the market makers did not know where to turn. So they shorted it to the buyers. And day traders trying to scalp few points shorted it, too. Made sense, too, given the run on the darn thing. Was it really transformed by an Internet statement? I know I was sorely tempted to short K-tel every time CNBC played I'm Your Boogie Man, but I was worried that I could not find the stock to borrow that I needed to sell short. Remember, again, that's the key difference between shorting Intel and K-tel. Firms on Wall Street, big firms like Goldman Sachs and Merrill Lynch, have whole divisions set up to find stock for short-sellers. They scour vaults, check accounts and help you borrow stock to short. They will find you Intel. You will get your "borrow" as it is called. But they can't find you K-tel. Not a chance. All lent out already. Or not even held by any of their accounts. "No stock available." So, when you buy K-tel you are probably buying shorted stock. The person or firm on the other side of the trade will hope that the stock falls THAT DAY. He will then recover it and make a profit. When a stock is up 16 and closes at the high, after you have shorted it, you are in trouble. When it fails to come down THAT DAY, and you can't buy it back THAT DAY, you and your brokerage house will have to find stock to deliver and you can't. That's what causes the giant jump. Because the market makers have lost control of the thin float. And the "borrow" departments can't find any stock. So the short-term traders have to buy the stock back wherever it is. Even if it is 100% higher. Or 200%. Or 300% for that matter. You think rational, calm individuals buy a stock up 16? No way. But brokerage firms can force you to buy so you can deliver the shares you sold. And they can "buy it in" for you themselves, at any wild price they would like. Brokerage buy-ins are like licenses to steal. They have the least price sensitivity of any buyer of any product anywhere. Because the first law of brokerage is "Thou Shalt Not Fail to Deliver." And remember, for short-sellers, whether they be by-the-day or by-the-year, getting squeezed is the cardinal sin. What a combo. ** thestreet.com