To: Guy. who wrote (4770 ) 3/14/1999 1:38:00 AM From: realmoney Respond to
Guy, I agree that arguing gets us nowhere productive, but there is an important reason why I became so upset with Bisell's post. Many people reading these threads are inexperienced investors and can be easy prey for stock promotion schemes. Of course at some point, all of the stocks hyped by these promoters crash. In order to keep these "suckers" from losing faith in what the promoters might be touting next, they need someone to blame for the falling stock price. Sometimes, they'll even have one of there own pretend to be a short seller and accuse him of somehow magically making the stock go down by "bashing" it. Remember that most people reading these posts are new investors who don't even really know what short selling is. They are led to believe that it is something illegal or immoral and since the short seller is usually telling them things they don't want to hear, they are quick to accept him as the "enemy". In reality, short selling is a necessary part of the market. It provides liquidity and is often the first line of defense against fraudulent stock promotion schemes. Short sellers risk more than longs when they take a position in a stock. After all, if you buy a stock for $10, that's all you can lose. If I short a $10 stock, it could go to $20, $50, or even $100. For this reason, short sellers are usually more diligent in their investigation of a company and are certainly not known for shorting good companies in hopes of just "bashing" then down with negative hype. I hope this clears thing up a bit. For an entertaining example of what I'm talking about, you should read "The Black Art of Making Money in Penny Stocks". I have provided a link below. Subject 26211
