Vape Holdings Inc. (fka VAPE)

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VAPE is Not a Good Short Candidate Anymore
At 20-40pps VAPE may have been a decent short target but anyone shorting here is a degenerate gambler. Sure, there is more profit to be had shorting VAPE at 3 opposed to other penny plays where the downside is mere pennies, requiring a risky amount of volume needed in the short position to generate worthwhile profits from the trade. However, like those other penny MJ plays, VAPE has a massive upside potential that could cause shorts to fall over each other in their efforts to cover.

In fact, if ever there was a dangerous MJ play to short VAPE would be it. The low float could make for a nightmare covering a short position. Also, with some good news or earnings, VAPE could double or even triple in a heartbeat. And let's not forget, we've all seen the 40+pps high.

I stand by my "observation" that 1.25 is in play here because of a sizeable gap up in Nov 2013. Despite that caveat, I would certainly not advocate shorting.

From what I can discern, as with most MJ equities, the short volume with VAPE is really non-existent. I posted a message on the ERB8 board regarding my thoughts on short players in the MJ markets. I just don't think they are much of a presence and it it's misguided to act like they are some sort of bogeyman causing sell offs.

MJ / otc stocks do not have derivatives so shorting is not only difficult to adequately manage the risk of the position, but it just isn't that profitable without doing so in dangerously high volumes. Most retail discount brokers like ETrade, Schwab and Ameritrade don't even allow for shorting penny stocks (or sub-$5 stocks).

What causes the sell offs are weakling flippers and psuedo investors who expect the stock to jump 1000% the day after they get in but when it moves 1% to the downside! those players dump and run. Also, MJ stocks get hyped and everyone starts chasing the momo but inexperienced players don't sell the rips and get trapped in the sell of, only to finally sell at the bottom.

Most significant is the cycle that the MJ equites have executed for the past 3 years, something I first started posted about in 2013 when I noticed it. In February 2012, CB!S went from .02 to .24 in about 2 months but then sold off by about 63% the rest of the year. In February 2013, MJN@ went from .02 to .50 in about 2 months but then sold off by about 63% the rest of the year.

Currently this sell off patter is reoccurring in 2014, exacerbated by the major bump from the Colorado legalization. Many stocks are up enormous amounts, from 500-5000% but they have now sold off according to the aforementioned cycle.

I'd like to see this cycle broken. With Washington legalization next month, mid-term elections in November and an acceptance level for MJ at new highs. Unfortunately, most of the inexperienced MJ market participants are now spooked. I've seen people on these boards go from total enthusiasts to relentless bashers because of the recent downtrend. The SEC action against several companies has spooked a lot of people, myself included.

But I'm not going to be chased out of the MJ market so others can steal shares. The conspiracy theorist in me wants to think there are reasons why the SEC / hedge fund cowboys are unfairly pumping the brakes to slow this industry before it becomes too large. The MJ market holds such vast potential, it dwarfs even the grandest aspirations. Medical applications of cannabis could generate $100s of billions, recreational application can and already does generate billions (legal or black market the demand is there) and the industrial application could be worth trillions from plastics, textile, fuels, food, opening a new commodity market........

Stop the madness already and let's get this thing started!