Replies to post #44329 on CMKM Diamonds Inc. (fka CMKX)

[average investor]

Actually I am Janice. You are now talking of Credits versus Debits which I will use your senerio.

Our bank “lends” our deposited money to others and we Knowingly allow this because we expect compensation in the form of “interest” and other compensation on our deposits.

True the bank is “A” winner since they receive a higher percentage of the interest that is charged for “loaning” out OUR money. But we also are COMPENSATED with a percentage of these profits and other types of compensation such as free checking, etc.


And do not be naïve... YES extra money IS created from the “external” source that the money is “knowingly” lent to in the form of “INTEREST” returned on the loan.


Where shorting a stock has exactly the reverse effect in that the dilution of the market cap by these borrowed shares in effect drives down the base valuation of each share of stock and ONLY compensates the shorter if the “self-fulfilling prophecy” of the stock going down so that the short can cover at a lower price and make money does occur.

Notice the only one who is COMPENSATE is the shorter and everyone else loses.

So I guess that all the good investors in a stock and the company “ARE THE ONES NOT USING THEIR HEADS”, since the only one who makes money in a short situation is the shorter.

[Jim Bishop]

It's pointless...give it one shot, they don't want to learn, it's not worth the second shot.

[RFL]

For once I am in agreement with you. Nonetheless, AveInv is onto something here. IMO the example is okay except that the reference is to a short sale where there is a ligitimate borrowing of shares to cover the short. I think that AveInv means to be addressing the impact of "Naded" shorting". In that regard, the twist at the end is altered somewhat in that once the naked short is covered all is balanced when accounting for shares. The impact, however, is whatever dilutive damage to the company occured as a result of the naked shorting via share price as a direct result of the transaction itself and any dilutive effect those phantom shares might have had while they were out in the market.
The primary direct effect on a Company occurs when the Company is dependent on the sale of additional shares to fund day to day operations. That just might be where the short seller's miscaluted in the case of CMKM. If UC had all of his operating funds lined up before the battle, the impact of the artifically diluted share price will not affect his ability to operate while the battle in on. THAT'S THE BET. I'm betting that he has it because everything points to UC wanting to battle. It's your job to scare everybody into the thought that he doesn't have it. Good luck. RFL