Good reply, Chris. I've often wondered the same thing-- surely these shorties would stand to make FAR MORE PROFITS if, after grinding down a pps as far as they could take it, they then take the other side and let the "reversion to mean" principle spring that pps back up and thus make lots of money on the upside.
Which brings me to a larger and more "sinister" point: namely, as folks like Jeff Nielsen have argued at Seeking Alpha with respect to the price of silver and silver stocks, maybe some REALLY BIG MONEY special interests want to make this sector (in this case, the U.S.-listed China smallcap stock sector) SO RIDICULOUSLY VOLATILE as to scare away even big institutional money let alone smallfry retail investors like ourselves. The over-arching aim would be to discourage American and European investors from investing in China's growth, so that more monies would go into buying American and European companies.
Rato and i have discussed the possibility of what he calls "investor ethnocentrism" before on the CGS board.
I think it's what Jim Cramer is doing when he so often eschews all China companies except BIDU and wants his viewers to buy AMERICAN companies with big biz in China (likie CAT NVDA MRVL YHOO BID YUM, et al.)
IF (a big IF) this "investor ethnocentrism" is in truth a significant factor here, and some "patriotic" hedge funds are deliberately messing with this sector, not just to make profits shorting, but also specifically TRYING TO DISCOURAGE INVESTMENTS ALTOGETHER in this sector b/c they fear too much American money flooding into China cos., then we're really up against a more formidable foe in the investment game.
My own view is that, even if this is the case, IN TIME the value investing approach of institutional and retail investors will win out, for Smart Money will sooner or later gravitate to the best investments (i.e., the most profitable companies).
JMO.... comments welcome....
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