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Microcap & Penny Stocks : LifeOne, Inc. (LONE) -- Ignore unavailable to you. Want to Upgrade?

To: daaan who wrote (202)	3/25/1999 7:03:00 PM
From: Sam Matz	Respond to of 1834

OT I found the following on the AOL. It was a good read and maybe worth everyone's while: To: Surfer (7990 ) From: Vendit Thursday, Mar 25 1999 6:48PM ET Reply # of 7994 More help: Market Maker Speaks Out - Ways of a MM (Market Maker) I was a OTC MM for about 10 years ending in the late 80's. Since then I have been strictly an investor. Since I have not been that up to date in MM rules I will only make statements that I feel fairly confident are still accurate regarding these activities. By and large most MM don't have a clue nor do they care to learn, about the fundamentals of the stocks they trade. They just try to make orderly markets. When dealing with BB stocks it is very easy for a MM to get trapped into being short in dealing in a fast moving market. Reason being; most of the MM's in this stock are what are called "wholesalers" this means they don't have retail brokers "working" the stocks. So they have to rely on whats know as the "call" from larger retail houses. If a "Big" retail firm like an E-trade calls up a market maker to purchase say 5,000 shares of a stock, they expect to get an "execution" from that market maker. If he turns them down, or only gives a partial then the "Big" firm will go to another MM. If this second MM "fills the order" then that "Big" firm has a moral obligation to continue to give future "business" in that stock to tha MM who preformed (his life blood). This will go on until he "fails" to perform and so on. Contrary to popular opinion the "Big" firms Do NOT neccessarly go to the "Low Offer" to fill a buy order (Or high bid for a sell). The "Go" to who they think will perform to fill the order and expect that MM to "match" the "low offer" in the case of a buy (bid in the case of a sell). Even though this MM might in fact be the "high bid" and not really want to sell any more. As a wholsaler he must perform or he will get a reputation as a "non-performer" with the "Big" houses and will cease getting "calls" which means he will soon go out of business. I mentioned above that this activity is very significant to BB stocks. I say this because most of the trades in these BB stocks are "unsolicited" and are done through discount houses, ergo "Big" firms. With the above groundwork layed, let me try to explain how market makers get short even if they like the Company; Lets say that a stock (shell) has been lying quitely at $.25 bid $.50 offered. A limit order comes into one of the MM's to Buy at $.50 for a thousand shares. Prior to this trade that MM may be "flat" (neither long or short any shares). He fill the order and is now short 1,000 shares. He may raise his bid hoping to find a seller to "flatten" out his position. But before he realizes it a wave of buyers have come in and cleared out all the $.50 offers. Now the stock is $.50 bid .75 offered. Here comes that "Big" firm he just sold the 1,000 shares to at .50 with another bid for 1000 at .75. He makes this print. Now he is short 2,000 at an average of .625. The market keeps moving and now its .75 bid 1.00 offered. Now he has to make a decision. Just like investors, MM Hate to take a loss. So 9 times out of 10 he will now sell 2000 at 1.00 making him short 4000 but with an average .81. At this time he would love to see a seller at .75 so he can cover his short and make a few bucks. But instead the market keeps moving up. Now it is 1.00 to 1.25 and here comes the buyer again at 1.25. He doesn't want to loose the call so now he needs to sell 4,000 at 1.25 to keep his break even point above the bid. Now he is short 8,000. Market moves up to 1.25 bid 1.50 offer here comes the buyer now he feels he must sell 8000 here because "stocks don't go up forever". Now he is short 16,000. And so on and so on. If the stock keeps moving up, before he realizes it he could be short 50k or 100k shares (depending how big his bank is). _________________________ Finally the market closes for the day and on paper he may look allright in that his "break even" price may be around the closing price. But now he has to figure out how to entice sellers so he can cover this short. It is important to note that if this happened to one MM it has probably happened to most all of them. Some ways MM's entice sellers; Run the stock up with a "tight spead" in a fast market, then "open" up the spread to slow down the buying interest. After it has "cooled off" for a little while lower the offer below th last trade right after a small piece trades on the offer then tighten the spread so that the sellers feel they can take a "quick profit" by "hitting the bid" on the tight spread. Once the selling starts the MM's will walk it down quickly by only making small prints on the way down with the tight spread. Another way is by running the stock up in the morning, averaging up their short then use the above technique to walk it down in the afternoon. Hopefully after doing this for several days, it will demoralize the buyers. The volume will dry up and the sellers will materialize thinking that the game is over. Contrary to popular opinion, MM usually Do Not Cover in Fast moving markets either Up or Down if they are short. They Short More. They usually try to cover after the frenzy is out of the market. There are many other techniques they use but the above are the most popular. This technique works about 9 times out of 10 particulary in a BB market. However that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped. If the Company has solid fundementals and a bright future. Then the stock will do very well. And the activity that caused the situation will prove to even help the future stock activity because it created an audience." dimgroup.com

To: daaan who wrote (202)	3/25/1999 9:38:00 PM
From: MonteChristo	Read Replies (3) \| Respond to of 1834

Couple things my friend, this ain't my thread. This is our thread. I know a lot of people get all wired about off topic posts and such. But what I find is that threads are not as much about stocks as they are about the regular posters and their interactions with each other. We all have a common interest in LONE and so we post here. Is posting here going to help the stock price? No. Will it give us better understanding about what is going on good or bad? Yes. Do we all benefit from one another? Absolutely! So my feelings are that if you've got a tip you'd like to share with us, lay it out. This thread or the old one doesn't really matter to me . . . I just need to look at two spots rather than one then. For the newcomers and people who want to do some quick research when this puppy starts to climb, I'd make the first line "Off Topic", but hell, it's about us. Does that make sense? I mean really, are my wife stories really relevant to the business of investing in LONE? Well, maybe it's run a few off!!!! I'd like to hear from some others on this topic. This is our thread and heck, you know where I stand . . . as long as we've been in this thing together, I like to hear about Walleye's cesspool, the juice company, or what Jayne has to say. The fact is that as long as we're communicating, that's what makes it interesting. What do you all think? Well gang I'm gone for a week. Heading to beautiful southern Florida for some R&R. Now just to warn you . . . whenever I'm gone something always goes on with this stock. I went to England a year ago last fall and this sucker shot to $2.25 or whatever it was. I went to Cleveland for a week last year and it sunk to $.30. So good or bad you all better brace yourself. Watch for an 8K next week. And have fun and BE HAPPY! :o)