The reason why i sometimes toy with the idea of a "conspiracy" of shorts and anti-China bashers is that the evidence seems to show there's a lot more money to be made on playing the upside of a fast-growing China stock, than the downside, and that there's more than a shortseller's profit-motive at work to take down our China stocks.
I mean, last year and even this year quite a number of these China smallcaps were achieving 100% to 500% up to 1200% gains and more. Yet a short usually can "only" make about 30% to 60% on a big downward move with a stock.
So why not just go long on some of the more promising stocks and reap the bigger profits? I mean, had some of the China-bashers taken the long side of CCME and written some articles and blogs favorable to CCME, we might already be at $20 - $25.
Part of this may just be due to a "really contrarian," curmudgeonly nature. Some of these shorts are just very dour, sour people. In worse cases there's apparently an actual sadistic streak involved. To use Freudian-speak, they're really into thanatos (destruction) not eros (love). Such persons LIKE to see a company destroyed and long investors' hopes dashed. It's a sicko game, but there are a lot of disturbed people sharing the planet with us, damaged by bad upbringing, life traumas, faulty genes, their own bad karma or whatever....
One obviously encounters a number of these kind of people on the message boards. Even our dear John Bird / Waldo Mushman, who can sometimes seem quite reasonable and concerned (in a "public service" kind of way) about deceitful companies, also appears as if his trauma in losing $88k over his short bet on CSKI in 2008 has given him a real axe to grind and now he hopes and expects all his targeted China companies to "go to zero, BK." That's not very reasonable. Or kind to the shareholders.
But beyond these sour or actually sociopathic shortsellers-bashers involved, I think we need to consider that there might be a wider phenomenon at work here, perhaps some kind of "conspiracy" of anti-China "superpatriot" type folks who would rather attack and beat down a China co.'s stock and scare investors away from such "foreign" stocks rather than play the long side for much bigger gains.
So i find myself thinking it's the only thing that makes sense out of what we've seen.
Ultimately, I don't believe these shorts are going to win, and at some point i envision the possibility of a number of Chinese cos.' CEOs banding together to launch a formal complaint with the SEC over unjust smearing of their companies' reputations and perhaps illegal naked shorting of their stocks. It could even become an international incident with the PRC govt stepping in to complain to the SEC and other U.S. authorities.
Alright, i've talked enough about all this.
AI
