Sunday, May 4, 2014

The Irony of People Protectors

Short sellers have profited from Stock manipulation and promotions for years. Timothy Sykes has popularized the idea of short selling "Super nova's" - Over extended chart patterns of penny stock promotions. A new breed of short sellers have descended upon the OTC market over the last couple of years. I like to call these traders "People protectors". The irony of this title is this breed of traders couldn't care less about people. They use tweets and articles to scare people into dumping their stock, hence profiting from short positions. A tactic not so dissimilar from the Seeking Alpha pumps on the long side we have seen over the last few months or more. Below is a picture of one of the more notable Seeking Alpha 'pumps' - YOD.
 The image on the left shows the chart for YOD - You On Demand Inc. The highlighted section shows the impact of Seeking Alpha's positive article. The article described YOD as "The Netflix of China". The stock price went from $2.50 to over $7.00, and has now come back down to $2.70. Short sellers have now taken to Seeking Alpha to promote their short positions and create panic in promoted stocks. As a short seller myself, I do not deny that these "dumps" in promoted stocks are inevitable. But there is no doubt that Seeking Alpha articles can certainly hasten the process. One of such Seeking Alpha short sellers is  Penny Stock Realist. His strategy involves short selling promotions. Most of his shorts usually involve writing seeking alpha articles. To be clear, I have no personal issue against Penny Stock Realist. But I do find it very ironic that he spends as much time bashing promoters but profits off of them. As short sellers, what would we short if promos or manipulation did not exist? Isn't bashing promoters biting the hands that feed him? As for the idea of "protecting people', will Penny Stock Realist spend time writing articles to bash promos if he did not have a financial incentive to do so? Fact is...Stock Realist doesn't give a crap about people. He writes articles to scare stock holders into selling their shares hence sending the stock price lower, leading to profits on his short position. But hey, I have no problem with wanting to make profits either on the long side or short side. After all, I am a proud capitalist. My only disagreement with Stock Realist is this; Why does posing as a "people protector", bashing stocks and profiting from promos make one much different from the Promoters themselves? Fact is Short sellers benefit from Promos just as much as the promoters themselves. Wonder what these "People protectors" would do if Promoters ever went out of business. A question that shut Stock Realist up and left him dumbfounded. I guess he's never thought about that. Just my two cents.


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