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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Short And Distort – Naked Short

Short And Distort – Naked Short

5 posters

Go down  Message [Page 1 of 1]

1Short And Distort – Naked Short Empty Short And Distort – Naked Short Thu Dec 22, 2011 3:07 am

sriranga

sriranga
Co-Admin

Short and distort is a less publicly known investment scam similar to the classic pump and dump. Shorting is a word in traders jargon and means basically selling a stock, currency, paper or any other similar financial item that can be traded. Short and distort is as illegal as the pump and dump. The short and distort scheme is used in a bearish trend (prolonged period in which investment prices fall) and is the inverse method of pump’n'dump.


The short and distort player will look for stocks that might be overvalued. When there is little activity on a stock due to news, the short seller may come into the market and sells the stock. He will then spread unsubstantiated rumors and other kinds of unverified bad news in an attempt to drive down the equity’s price. This can be done by negative posts to message boards, chat rooms, newsgroups, issuance of newsletters recommending the sale of the stock, seminars, private phone calls and similar. The plan is to entice investors to dump their stock with the prime objective of driving the price down. Instead of excitement, the distorter tries to stimulate fear. When the price is falling, the manipulator will buy stock to cover his position. Buying the stock at a discount and thereby making a profit. In order to create a selling frenzy which the distorted must do in order to buy enough stock to cover his position and not drive the price up he will create the impression that there is a great deal of selling taking place. He will do this by having his friends and brokers cross stock to each other giving the impression of large volume. In the end the investors who bought stock at higher prices will sell at low prices because of their mistaken belief that the stock is worthless, caused by an effective negative campaign.

TIPS FOR AVOIDANCE

- Everyone providing investment information or advice must fully explain the nature of the relationship between him and the company that is the subject of the report. If there is no disclaimer, investors should disregard the report

- Potential profit should not be exaggerated. Assumptions upon which the earnings model is based should be clearly stated so that the reader can evaluate the reasonableness of the assumptions. If a report lacks these details, it is generally safe to assume that the report lacks a sound basis, and investors should ignore the report

- It is a good sign if the author’s name and contact information is on the report, because firstly it gives you a way to contact the author for additional information and secondly it shows the author is proud of the report. If the author’s name is not given, investors should be very skeptical of the report’s contents. Don’t believe everything you read and verify the facts on your own before making an investing decision

- Beware if the report contains a lot of great words and exclamation points. Good analysts are not supposed to be boring, but good reports don’t read like a Mcdonalds commercial. A good report should be interesting, but would never use exaggerations, sure things and guarantees. You would never be suggested to mortgage your home to buy a stock

- An ongoing research coverage usually acts as a sign that the firm legitimately believes in the long-term potential of a stock

Source: http://www.bustathief.com

Please read the following link
http://forum.srilankaequity.com/t14250-pump-and-dump-stock-fraud#92021

http://sharemarket-srilanka.blogspot.co.uk/

2Short And Distort – Naked Short Empty Re: Short And Distort – Naked Short Thu Dec 22, 2011 9:14 am

Rajaraam


Vice President - Equity Analytics
Vice President - Equity Analytics

As usual you have done a extreamely good work. I think You have become No. 1 in posting for educating the members in share dealing. I sincerely tell you I am learning very much from your highly informative posts.

Thank you very much siriranga. Hope could learn more from you.

3Short And Distort – Naked Short Empty Re: Short And Distort – Naked Short Thu Dec 22, 2011 11:04 am

lokuayya


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

thank you sriranga,
i am also learning lot from your postings.some posting are very timely.

we can see lot of such things happening in market these days.
like bird flue news .
some shares are steeply down by trading only 100 shares.eg one buyer put buy order for only 100 shares.then following day another 100 shares few rupees lower .i see there are many example like this.

when market moving up lot of gurus come up valuation reports ,growth news etc.
when market is down bear gurus come in with dooms day news.
practically we see such things.

these extreme news spreading is good for us if we study this carefully because we can identify the things happening in stealth manner.

4Short And Distort – Naked Short Empty Re: Short And Distort – Naked Short Thu Jan 05, 2012 12:08 pm

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

GREG followers please read this.

5Short And Distort – Naked Short Empty Re: Short And Distort – Naked Short Sat Mar 03, 2012 8:49 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics

Kumar wrote:GREG followers please read this.

Even ACME followers.

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