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Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: Clever Nick Name who wrote (8906)	5/2/1999 4:34:00 PM
From: ahhaha	Read Replies (2) \| Respond to of 29970

No, it doesn't mean a lot of people think the shares are over-priced. This is a common error. You are forgetting that low commissions and derivatives have enabled an extended hedging process played by most institutions and the public. This process ensures that expected return is minimized. The purpose of this objective is for appearances. They sacrifice results in order to look good. 95% of the short interest is hedged. The strategy works, for example, like this: You believe ATHM is trading over-priced, so you sell short stock and sell short put. Meanwhile you are holding 10 times more shares in long stock. Or you just initiate a short stock position. The long shares are for investment. The short shares are for trading, hedging, and other financial games. Does this mean you think the shares are intrinsically over-priced? No. It's just a gamble in a stock which you know. Long ago a high short position was considered negative because it was assumed that big boys were doing the shorting and they knew something that the public didn't. Then short interest rose near a bottom and declined near a top. Now because of extraordinary hedging from all sectors, it works in opposite. That doesn't mean that high short interest will cause the market to rise, it only means that short interest is high.