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AOL Shorts, Will they Survive?

An SI Board Since February 1998

Posts	SubjectMarks	Bans	Symbol
124	2	0	AOL

Emcee: Cynic 2005	Type: Unmoderated

Introduction Market Data Compact

History reveals that there are several anectodal evidences which relect the prevailing mania during manic bull-phases of any market. Each manic phase will be described in terms of ridiculous trading activity in a few hype stocks. I believe that current AOL stock trading is an icon of such activity.

I have long been pondering about the fact that the madness of today's "new-era" momentum investors is very well reflected in their enthusiasm for a garbage-prone company(*) called America On-line.

Incorrigible creative accounting has been in such a Vogue at AOL, they wouldn't give-up their passion for it. After taking huge write-off for earlier accounting irregularities in early 1997, a couple of quarters ago the company admitted that they were forced to restate the previous quarters' earnings by SEC. They went on to state that (my paraphrasing) they will not guarantee that further restating of previous earnings will not happen. That reminds me of that incorrigible alcoholic. Only an alcoholic who has no intentions of being reformed will issue statements like "I will try to stop drinking, but no guarantee."

While the company management deserves credit for exceptional growth of its on-line business and building a solid brand-name, their credibility and integrity is always being questioned by many. Everything on this earth has a reasonable price. No one ever tells that AOl is worthless company. But, the way AOL bulls bidding its price higher and higher makes us think if this market cares about fundamentals and valuations anymore.

In the mean time, there is a small group of people who are short AOL stock are at loss of words every time the stock ticks-up 5 or six points following some bad news and even more after some good news. While I don't suggest that the stock is being manipulated, but AOL is such nightmare for the shorts that one short called it Jason, the movie - Friday the 13th fame! -g-

Today's 11 point surge towards $110 hurts many shorts for sure. In fact, it may very well be a short squeeze. The news that drove the price today is AOL's decision to rise the unlimited access fee 10% to 21.95.

After losing quite a bit of money on AOL puts earlier, today I saw a short squeeze coming and jumped in to calls (around 12:30) which are now about 75% higher.

And, there are another set of questinnable (my opinion only) earnings coming out, I believe tomorrow. God help these new-era investors with such a passion for junk. I personally don't wish them bad-luck. But I want to remind them about the adage, "those who live by the sword shall perish by it."

While this is a long-term phenomenon that WILL happen to the bulls of AOL stock, at least after a few months, in the short term, a few people are wondering about life's miseries and why they have such a tough time against them eventhough what they are doing is so obviously correct. This brings to the subject question of this thread: "AOL, will the Shorts Survive?" An deviant of the question posed on the other thread. A support group, if you will. -g-

You may start your story some thing like this...
"I shorted AOL @40.... "

Fire it away!

Good luck!
-Mohan (once a short and currently a AOL call holder)

PS: The reason why I referred to AOL as "garbage-prone" is that every other week I get a AOL disk in the mail. If I am tired of receiving them, I can imagine how may mail carrier felt. -g- No sooner I get them from my mail box, I toss the disks in to by garbage-bin. Why waste energy to open them? -g-

Go to reply# or date (mm/dd/yy):

Reply	Message Preview	From	Recs	Posted
124	!. CONTENT PROVIDER ERA COMPETITORS Prodigy CompuServe America	William A. Schramm	-	4/21/1998
123	<i> think that he is wrong. Hang in there, Glenn. (BTW -- I have May 65&#	Glenn D. Rudolph	-	3/31/1998
122	I think that he is wrong. Hang in there, Glenn. (BTW -- I have May 65's.)	yard_man	-	3/31/1998
121	<i>To me there are still many reasons to expect AOL to fall flat on its f	Glenn D. Rudolph	-	3/31/1998
120	Theory: this AOL Enterprise is really what has been driving the rise of the st	White Shoes	-	3/30/1998
119	AOL Enterprise Announces New Remote Internet Access Services in Partnership Wit	Glenn D. Rudolph	-	3/30/1998
118	<i>congrats. I think you'll be keeping all the proceeds of your sprea	Glenn D. Rudolph	-	3/23/1998
117	Probably not. The shorts are the main reason why AOL is presently where it is.	Tony Wang	-	3/22/1998
116	<i>congrats. I think you'll be keeping all the proceeds of your sprea	Glenn D. Rudolph	-	3/19/1998
115	congrats. I think you'll be keeping all the proceeds of your spread and yo	yard_man	-	3/19/1998
114	<i>Merrill cuts AOL to near-term Neutral. Why am I not surprised?</i&g	Glenn D. Rudolph	-	3/19/1998
113	Merrill cuts AOL to near-term Neutral. Why am I not surprised?	fred woodall	-	3/19/1998
112	<i>No connection, really. I just have a lot of MUPF. Earnings were report	Glenn D. Rudolph	-	3/17/1998
111	No connection, really. I just have a lot of MUPF. Earnings were reported yeste	yard_man	-	3/17/1998
110	<i> I don't think MU will drop that much today. I'd like t	Glenn D. Rudolph	-	3/17/1998
109	I don't think MU will drop that much today. I'd like to be very wrong	yard_man	-	3/17/1998
108	<i>March 17th the AOL split becomes effective. I think that it is likely	Glenn D. Rudolph	-	3/17/1998
107	YHOO & MCI Monday lauched their previously announced on-line service. Not t	fred woodall	-	3/16/1998
106	I'm going to do a bear spread. If it goes up enough or just doesn't dro	yard_man	-	3/12/1998
105	To All: Before shorting, etc. Read #8780 on the other SI thread "AOL-Will	George Bielski	-	3/12/1998
104	<i>March 17th the AOL split becomes effective. I think that it is likely	Glenn D. Rudolph	-	3/12/1998
103	<<March 17th the AOL split becomes effective. I think that it is likely t	Bald Man from Mars	-	3/12/1998
102	March 17th the AOL split becomes effective. I think that it is likely that the	yard_man	-	3/12/1998
101	<i>Not close enough to the actual split.</i> Barry, I am sorry bu	Glenn D. Rudolph	-	3/12/1998
100	Not close enough to the actual split.	yard_man	-	3/12/1998

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