Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Amazon Natural (AZNT) -- Ignore unavailable to you. Want to Upgrade?

To: zonkie who wrote (9020)	10/18/1998 1:59:00 PM
From: Angusb	Read Replies (2) \| Respond to of 26163

Happy Sunday eh?. Allow me to clear my (good?) name. I do know something although I am clearly on the outside looking in with respect to AZNT. The whole short squeeze thing has me confused. I have watched several short squeezes in Canadian penny mining stocks, and even taken advantage of short covering to salvage some of my $ after a poor investment. Here is my take on short squeezes from a Canadian perspective (there are a lot more here because of the greater ease with which one can short a penny stock) 1) Most 'squeezes' are carried out (by whom? the MM's or promoter?) by engineering a quick and short lived run-up of an already overvalued stock. This causes a rash of covering (at a loss) and keeps the short position small and the shorts fearful. 2) Some of the nastier squeezes are engineered (IMO) by the promoter or a well heeled insider running up the share price in a stock with a large short position (sometimes after a substantial decline). This causes a rush of covering before the profits are lost and allows the insider(s) to unload their paper at a reasonable profit 3) The stock prices always revert to their unmanipulated value fairly quickly. Volatility and volume may remain high on those issues where the promoter is particularly skillful at running the stock up or down. Rumour has it that a number of investors made their fortune in the glory days of the VSE simply by playing the manipulations of one particularly skillful promoter. Anyway, sorry about the rambling - back to my point. It is very difficult for a small long to make money on a short squeeze. They are rarely if ever advertised in advance and represent only a fraction of the total float. Timing is extremely critical and in my experience the insiders and professionals will always have a better handle on the timing than a small investor. If you are unable to unload during the peak of the squeeze the share price will quickly revert and you will have lost your chance. It seems crazy to buy into a stock in anticipation of a short squeeze - especially if it has been advertised in advance. Seems to me that only a fraction of those who buy in will benefit IF the squeeze actually materializes. The rest will be out in the cold. The manipulation and shorting of pennies is more complex than I've described but the conclusion is the same: Buying because of a rumoured short squeeze is a losers game.