China Growth Stocks

[ratobranco]

OK, here you go:

short SCEI 1.54
short CSKI 2.27
short NEWN 1.81

We'll check back in 12 months.

As for the rest of your post, we first need to recognize something very important that a lot of people here are missing. Just because it's difficult to make money on the short side right now doesn't mean that there is money to be made on the long side.

The issue is no longer whether these companies are frauds--everyone knows they are frauds, including the longs. So it's very difficult to add value by making negative bets. The market has already rocketed up the price of those bets.

The issue is share liquidity and finding a way to build a position without getting caught in a forced cover, or having to pay the entire principal in interest, or having to pay a 100% or 200% annualized put premium as you wait. Many of these stocks have 100% borrow rates with 30% of their floats shorted and are deep into Regsho violations.

So it's hard for these stocks to go down. And it's hard for an investor to stay in the positions long enough to go along for the ride.

But that doesn't mean that the stocks aren't going to go down. Oh, they are absolutely going to go down... to zero... what you've seen over the past 9 months is perfect confirmation of that fact. The chart of this space as a whole is an absolute nightmare.

I agree that the traders in Paltalk will sometimes be able to play bounces from the long side, particularly in fraudulent names that have just been hit and that are about to respond. But there's another difficulty to consider. You're not in a bull market anymore! Wake up, this is a bear market, unambiguous and unabated. And so it's all the more difficult to have sustained rallies. Every rally in this space has faded miserably. You get at most one or two days to take profits. In that kind of environment, even the best traders will lose money going long.

That's not just my opinion, that's what's actually happening right before our eyes. Look at JoeN, a great trader--but even he admits he's losing money. Just look at his post on here a couple days ago.

The number one rule for trading is, don't trade against the trend. Never never never. But that's what people here have been doing for nine months! They have been fighting the micro trend in the space, and now the macro trend in the overall markets. Stop doing that, damnit! It's stupid!

Let one of these turds get above the 50 or 100 dma, and then you can start thinking about going long. Until then, you should either be neutral or short.

If one of these stocks is not a fraud, the market will know before you do. Believe me. There are thousands of smart people, many of them chinese, on the ground looking for companies that are not scams. If they are going to be found, you won't be the one that finds them. The price action will reflect the strength before you even arrive--but that's OK, you can play the trend. We're not there right now. There is a reason why almost every single one of these stocks is so heavily shorted, and the reason is that the market is on to them. The ones that aren't shorted are either really small and uninvestigated, or the market just doesn't know yet. But that's not a reason to go long. EDS wasn't heavily shorted when we started researching it, but that doesn't mean it wasn't a fraud. It had a low short interest b/c big names hadn't spent the money to look at it yet.

I can assure you that the people who are shorting these names know a hell of a lot more about these stocks than you or anyone else here does. I guarantee it.

As for your picks, I would ask: why do you insist on piling into names with such huge short interest? If a stock is coming off of a high-volume selloff caused by a hit piece, then I can understand jumping in to play the "company response" bounce. But to hold these things for more than a few days? It's just crazy. This is real money we're talking about. You're giving it to someone else in exchange for something that you know has absolutely no value whatsoever.

A serious question you should ask yourself: why are you confident that you know more than the shorts when it comes to the names you are in? To date, the shorts have won every single battle in this space by a huge margin. They have made longs look like a bunch of wide-eyed idiots. Yet you guys keep on at it, pushing against them, pushing against them, pushing against them. Why? What has caused people to think that this is a way to make money? When has it made money?

GURE is a joke. Seriously. I just cannot understand why any serious investor would go long such an obvious piece of shit. As for MY, I can't say on that one, but the shorts have been all over that name, all the way from 11.00. They were right from 11.00, why are they suddenly wrong now that they are sticking with the trade at 3.00?

Unless you know something that you think the shorts don't know, then it's just silly to take the other side of these trades. You're going against people who know what they are doing, know much more than you do, and who are willing to put their money behind despite huge short squeeze risk and huge interest on the borrow. I wouldn't blow them off.

Here's a question. If you want to go long this market, why not go long AAPL? It's cheap, it's growing, it's a great business, people believe in it, if the market bounces it will go back to 400 very easily, and you will make a cool 12% right there. But instead you want to stick your money into GURE and ride it down to zero? !!!

Or buy GLD. Beautiful chart. Probably going to $3000/ounce as this bear market intensifies. Or buy some US small caps. Or some Canadian oil and gas plays. Or red chips on the HK. Go look at Throwerw's global value investing board.

http://investorshub.advfn.com/boards/board.aspx?board_id=20764

Plenty of oversold high quality value growth names with 200%, 300%, even 400% upside potential. Yet you want buy GURE?

Best of luck to you, but I just can't wrap my mind around the logic there.