Forum Archive Index - March 2004

["Cristine Kerr" <criskerr@optusnet.com.au>]

Thanks Intrepid,

 

Good point. The market cannot just continue to rise indefinitely and therefore; does need levelling out from time to time.

 

For *ramping to push stocks above their value to ridiculous levels, we would need an imbalance in investors/traders, i.e.; a greater number of inexperienced/uninformed to experienced/informed.

 

Everyone has access to broker's and can go long, but not everyone has access to brokers who 'short' ,eg; they are able to find a broker, but are unable to meet a set of criteria, or; 'shorting' does not appeal.

 

Philosophically speaking; in terms of equal access this disadvantages some by limiting their ability to take advantage of and profit from bear markets, however; if everyone did have equal access then it is possible 'short selling' could become unprofitable and hence unattractive as a trading strategy.

 

Regards,
Cris

 

*NB 'Ramping' is the practice of promoting a stock without substance, eg; promoting a 'mystery' announcement that doesn't exist. A ramper may also hint they have inside knowledge of something good (or bad) that's going to happen.

 

The purpose of ramping is to push a share up (or down). I have seen full-on rallies caused by ramping. ABI is a recent example of a rally without substance.

 

Ramping is exercised regularly to achieve price increases and decreases. Researching a company, tracking its announcements, and being aware of related news helps guard against being drawn in by rampers and enables you to compare what is said against what you know.

 

This is not to say you shouldn't take advantage of rallies, however; becoming more aware of the cause (and effect) is an extra tool in your kit to help guard against risk.

 

----- Original Message -----

From: intrepidinvestor

To: sharechat@sharechat.co.nz

Sent: Thursday, March 25, 2004 3:52 AM

Subject: Re: [sharechat] Countering a Short Selling Trading Strategy

Short selling is a vital part of a balanced market.  It makes it less likely that a stock can be ramped to ridiculous levels by allowing other market participants to back a negative view of a stock rather than just not owning it.  It has no more spiralling effect than people buying a stock.