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Thursday, December 06, 2007

Grilled Bear Meat on the Menu

Groundzero posted the following comment in our facebook group "Spiral Forum: Trading Futures with Groundzero Discussions" to Glen's comment "The bears are feeling the heat right about now...."

Yes, and these bears have no idea what is still in store for them over the next few weeks...

GZ (December 6, 2007)
I replied here with the following observation:

If we come out of the hole like we did in 1998 after we had the big banking bottom in 1998, they will be in deep trouble. I recall my "(newsletter) explore portfolio" (started Sept. 30, 1998) went from being down about 20% in October (1998) to finishing December (1998) at up 58% followed by 117% more in 1999 (performance graph.) I think some of the four letter stocks I like (today) could be on some naked short lists, a new trick by bears to drive prices down.... so if they get insolvent, their broker/dealer backers will have to cover... it could be a bloody mess as some of us stock up grilled bear meat to feast on for the next ten years.
Being "naked short" means someone sold shares they were unable to borrow. Thus, if they are forced to cover short due to a margin call, they will have to go find shares to buy at any price. If you think a short covering rally is big, wait until we see some naked shorts forced to cover.

Recent 10 to 20% one day gains in stocks I have such as VLNC, VRGY and FNSR will look tame to what a naked short rally could look like.

Just think about how much these little stocks could move up if the investing public were to one day return to high risk growth stocks that go up.

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