The market gets stocks wrong to the upside quite frequently. There are a lot of factors that explain why. You have the incongruity created by short selling and short squeezes, you have pump and dumps, you have corporate lying and nondisclosure, you have fraud, you have accounting gimmicks, and so on. In fact, part of the reason BAC was able to get to $16 was because they didn't have to disclose the true market value of their assets. How was anyone supposed to know the terrible shape they were in?
The market can also get general moves wrong, such as going to 1350 this summer, a hugely overvalued level, right before a recession, and even worse, going to 1550, an absolutely horrifying level in terms of overvaluation, in 2007, right before the 2008 recession. The market was clueless as to the coming downturn in both cases.
The point though is that stocks don't usually *underperform* the market, with short interest rising as the price drops, in situations where longs are right. Shorts are always right in those situations.
If you disagree, give an example. You can't even say shorts were wrong to be in financials at the March 2009 lows, since all of those names have slowly returned to within striking distance of their previous lows--and that's after giving them a two year freebie to raise capital and earn risk-free money on treasury spreads.
2morrow has been pumping absolute crap with high short interest for well over a year. It's scary to think how much money people would have lost had they gone with his picks when he first advertised them on this board. My only point is to say there is a reason for the underperformance. People need to pay attention to that.
You don't go and buy bargain-basement crap that is vastly underperforming the market and that has a growing short interest. You just don't do it. It doesn't matter what management says, it doesn't matter what Rodman and Renshaw says, it doesn't matter what anyone says except what the real money is saying, i.e,. the people that are actaully putting real money to work. Unfortunately, people go long pretty lightly. Retail investors and mutual funds have no fear buying a stock; "Nice P/E, management has good things to say, market must be wrong, haha stupid market. I'll gladly buy some." But shorts do have fear. They have to be very careful. A mistake can be extremely costly. Thus they tend to treat their money with more respect.
Think for a moment: what is the threshold for me to get you to buy something? How convinced do you have to be to hand over money for a share?
Now, what is the threshold for me to get you to short something? How convinced do you have to be to borrow shares and sell them, and then sleep on that overnight?
There you go. That right there should tell you the difference in terms of who is more careful with money, who does better research, and who is more reliable in their judgement, longs or shorts.
Longs, especially longs here, have been flippant and irresponsible with the money they manage. What they need is more fear, not less. To buy this crap at this point is just disgusting IMO.
And still, 2morrow is going irresponsibly pump CHME and BOPH despite the massive portfolio drawdown created by his past picks? I'm going to call that out.
Back when JoeN was trashing CCME for going down and for being shorted, we had an argument over whether the shorts should be respected. I took the wrong side of that argument at the time, as I was still one of the clueless longs looking for treasures in China.
But I think at this point we all know who was right. The shorts were right. BIG TIME. People here need to show some respect.
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