In the world of today's equity markets, there are literally thousands of big board stocks that you can position yourself any number of ways in. Between ETFs, stocks, bonds, and options, you can basically position yourself any way, with leverage or without, to benefit from any kind of circumstance.
Think the banana crop is going to be light in Bahrain? There's an ETF for that. Think the Puerto Rican junk bond market is lucrative? There's an ETF for that. For every ETF, there's options and inverse ETFs. There's now 3x leverage both ways on a lot of index ETFs. It has become a festival of derivatives these last couple of years - is it any wonder mom and pop have no idea how the markets work nowadays?
The point is, there's a billion different ways to make or lose money in the market.
Now, when I think about the scope of all of those types of investments when compared to the potential risk that comes with something like an NQ Mobile (NQ), I'm baffled.
Yes, NQ Mobile has had a bounce off of its lows now that they have switched their auditor. Do I think the market misread this set of events? Definitely. I was expecting NQ to trade around the $2-$3 range on the news of them not being able to get along with their auditor, but that's just me. I staked a short the day the news came out and I was carried out. That's life.
As I said to a friend on the phone yesterday, we can only place our bets based on the evidence. How the market takes the news is a completely different entity that we have no control over.
So, incidentally, for the short term, bears have been "proven wrong", even though there remains tons of unanswered questions about the company. Longs and bulls who have ridden NQ Mobile all the way down from when it was trading near $20 have felt the need to try and rub this in to many authors, but when you look at the six month chart, you can assure yourself that NQ has not been a lucrative long position over the last 6 months.
The security looks like it's going to be finding some steady ground here in the $6.75 region, where it's trading today. I'm guessing that as days go by, the market will continue to be reminded that this company has still not filed in its 2013 report with audited financials, and even when they do - it's going to be with a second auditor, because they likely couldn't get something past the first auditor.
I'm not trying to fear monger, but there is a legitimate chance that the SEC could halt this stock any moment for uncertainty surrounding the company's financials. I've seen the SEC halt companies for less. Then again, this is the same SEC that just allowed trading to resume on Cynk Technologies (OTC:CYNK) - a company that is almost a case study textbook example on how to run a pump and dump fraud.
Exoneration or no exoneration for NQ - that is going to be the question. As I sat and pondered the direction this stock is going to move in next, I asked myself another question:
With all the options available to trade nowadays, why would anybody risk it with NQ Mobile?
I continue to urge extreme caution in trading in NQ. Looking for profit in a stock with this much bearish scrutiny on it could spell a recipe for disaster. Conversely, going short here could be a quick way to get carried out, as I experienced firsthand on bad news that the market somehow mistook for good news. I don't plan on trying to time this one again.
That being said, the market can remain irrational longer than you can remain solvent - today's a good day to remind yourself of that.
NQ, at these levels, is nothing but a coin flip.
Best of luck to all investors.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.