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  • tradergonewild tradergonewild Nov 6, 2004 5:23 PM Flag

    Serious question for longs.Why would

    anybody want to buy more or take a new long position Monday or anyday before the lockup expires for that matter considering the uncertainty surrounding this stock.No stock split,likely more downgrades on valuation and rising stockmarket making the opportunity cost of sinking your money into this very risky high flyer all that much higher

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    • "anybody want to buy more or take a new long position Monday or anyday before the lockup expires for that matter considering the uncertainty surrounding this stock"

      My Reply --
      I have stated many times that those who bought in thw 190's overpaid but those who short in the 160's are playing an oversold stock .I bought at the close on Friday .
      To answer your question of why --it's very simple -- there are only a limited number of short shares available and most who shorted are in the stock or late to the party .
      If the stock reverses the trend it can go up much faster than down . There is a limit to the short shares but NO LIMIT to how many shares one can buy . The equation thus is NOT equal and with shorts dreaming of that lockup and not covering and most of them already in it leaves a prime opportunity for buyers . After all they won't have to compete with the shorts who cover or the momentum buyers . In my opinion --Goog has actually become a bargain .
      Now --if a 20 dollar stock went to 17 in three sessions after an analyst downgrade not too many would argue that 15 percent drop and some might even try for a point of a bounce . My guess is that Goog will have a bounce .
      The interesting part about the closing price is that in the high 160's both the longs and shorts are filled with hope .The shorts hope it will either give them relief from holding on since earnings OR give them even more of a profit as they become hypnotized by the drop much like the longs who bought at 200 . It's very easy to say "one more point , just one more point" and it's out of that greed and self induced perceptual illusion that many traders lose profit.
      Will Goog sell more ? It's anyones guess --it might --it might not --but I think my buy price of 169.23 surely beats paying 200 and it's already come down a long way --enough for a little bounce .
      The lockup was common knowledge before that UBS article came out --the bad news is already priced in -- the float hasn;t changed yet --my pure guess --it's a buy and I jumped in .

      • 1 Reply to yrralis1
      • >"The interesting part about the closing price is that in the high 160's both the longs and shorts are filled with hope .The shorts hope it will either give them relief from holding on since earnings OR give them even more of a profit as they become hypnotized by the drop much like the longs who bought at 200 . It's very easy to say "one more point , just one more point" and it's out of that greed and self induced perceptual illusion that many traders lose profit."

        I agree with you that some short might become somewhat hypnotized, BUT at around 120-130$, not 160$.

    • Serious answer: because if the stock holds up after the 16th (big if, of course) a lot of shorts will probably cover fast, and a lot wallflowers may be convinced that there really is only upside, despite the lofty valuation.

      I might buy some way out calls on the 16th to hedge my bets.

    • simple: emotion

      once stock starts running again look out...shorts will panic and new momo players will jump aboard for easy money

 
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