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Microcap & Penny Stocks : DGIV-A-HOLICS...FAMILY CHIT CHAT ONLY!! -- Ignore unavailable to you. Want to Upgrade?

To: Richard B. Haenisch who wrote (13583)	6/17/1998 2:26:00 PM
From: Norman Stone	Read Replies (1) \| Respond to of 50264

>> NO SHARES? - HIGH DEMAND! << Wrong again -- NO SHARES, LOW SUPPLY -- is what you are saying. Really, there is a huge difference. Making supply scarce works ONLY if the demand ALSO goes up -- they are two independent forces. The price will rise if demand increases NO MATTER WHETHER HOLDERS SELL OR NOT. Since the share value rests on fundamentals in the long run, the price will equilibrate at the appropriate P/E level. If there are no shares at that price, then the buying will go elsewhere. It's not as if there are no equivalent products in the market. Short-squeezes and exuberant rallies provide the rare exception, temporarily, but how long will you tie up your cash waiting for the price spike that may never come, and the size of which you may misgauge, anyway? (Besides, if it is the short-term spike you are waiting for, then you are a trader, not an investor, and you are not talking about the long term levels, which will DEFINITELY equilibrate, and not require your retentive strategy.) GKIS went through a short-squeeze recently when it joined AMEX (becoming GKI). It "spiked" from 8 to 10 over a week, and now is around 6. This, after months of hype about all the shorts that would be turning blue looking for cover. Big whoop. It was a good play that week. The point is, choking off supply is a weak control that probably hurts the choker (by tying up cash) more often than it helps. DGIV over the last 6 wks is case in point. For informed holders like yourself, the loss from mistiming your buy into the next rally will overall be less than loss by erosion if you hold on during retracements. Meanwhile by holding on you are only slowing the price erosion, not preventing it, and you are helping the pump-and-dumpers unload more of their shares at the prices you could be getting. Again, I am not advocating trading vs. investing. I am only pointing out that holding is an ineffective price-booster except when there is a monopoly or quasi-monopoly, but that those conditions are too costly to create or sustain, in most risk/reward assessments.