Replies to post #6530 on SmartMetric Inc (SMME)

[optimisticbutpatient]

I don't have an issue with short selling

It is as you say perfectly legal, and you are right in that short selling itself doesn't lower the price. The issue comes when an attempt is made through misinformation, disinformation or rumour mongering to adversely affect the price of the shares.

In this manner the seller is not shorting the stock because he believes it will fall. He is shorting it and taking actions to encourage it to fall.

Short selling is done when a trader has borrowed stock he does not have from a broker (paying the broker a fee for borrowing the shares), and then sells it at market price. He makes his profit by waiting for the price to drop then buying an equivalent number of shares to return to the broker.

The issue comes if the price does not drop. The seller has to repay the shares that he has borrowed and also raise enough money to cover any costs.

The real worry for them is that short selling of stock leaves you open for limitless loss. The shares that you have borrowed must be repayed. You borrowed them at 10 cents and sold them expecting the price to drop to 5 cents so you could buy and return them.

The share price does not drop however but goes to 15 cents, then to 20 cents then to 50 cents. You are now in a position where you have to pay five times what you borrowed (plus commissions) to cover the debt. There is no upper limit on the possible loss.

So what do you do if you are in that position. Hire a few two pot screamers to rant, rave and provide disinformation. It works even better when they write in bold and capitals.

And yes, this is illegal. But whether it's worth SMME's effort to complain or whether the SEC would follow it up is open to debate.

OBP

[Mattski]

Hi Joker
I'm interested in your personal opinion of the company. I only ask this because in your first post on IHub on the 14/3/2015 you ask for the opinion of others on this site. Then five days later you, out of appreciation, let us know that after much D&D you decided not to invest in the company. Yet I am ever so curious about your thoughts as it appears to me your keeping abreast of what is going on and yet as far as I'm aware you still have no vested interest what so ever.
I for one don't have the time or bother to waste defending others, being involved with or even thinking of forming an opinion about something I believe has no significant future.
However, you seem well schooled in the details of the company and keep a fairly regular take on this site and your opinion would be greatly valued.
Regards
Matt

[kr26]

I have some doubts as to whether anyone can actually borrow the stock in sufficient quantity to enable a short-trade. This is not a well traded blue-chip..it is basically a penny stock on a sub-board. I would imagine its very difficult to effectively borrow stock in this , and then execute decent-sized trades given the underlying volumes and liquidity. Whilst I'm sure we'd all like to think that LNM has gone short huge amounts of SMME at bad levels, the reality is he just trash talks the stock when he runs out of vaseline. I suspect the stock is low because of the company's poor track record in delivering a product, as well as the copious chunks of stock that are being sold by suppliers, contractors and employees who are paid in stock. Hence, from here, future price movements will reflect product reality , not mythical short-covering etc..