kevinm

Another Big Bank Failure: More Likely Than Not to Occur

Some of you would benefit from learning some manners.

Reggie has been consistently bearish on the financial stocks for many months. I, for, one, am appreciative of his insights and articles, and have made a lot of money following many of his short recommendations. I would have done even better if I had followed them more aggressively!

Given government backing of the banks, he may now be overplaying his hand. Or maybe not. I don't have the stomach to short them any more. However, his research is incredibly detailed and has been insightful. He is consistently one of the most worthwhile posters.

Morgan Stanley: Exploding the Short-Seller Myth

Suppose MS is worth $50 a share--you are absolutely sure or it. Suppose a short seller sells a million shares at the open and the stock drops a buck. Now suppose you buy 2 million shares at the market and the stock rises two bucks, going from down a buck to up a buck. The short seller panics and closes his position, driving the stock up yet another buck.

It is all psychology. The problem is, few "investors" really know what a stock is worth, and most of those lack courage in their convictions. If the stock is down, they freak out and want to sell. If it is up, they are giddy and want to buy. It is exactly the opposite of what good investors do. It really has little to do with short sellers. The same thing happens the opposite way when momentum stocks go up.