Sunday, November 2, 2008

Who will be the buyers?

Lets say the value of companies are undervalued, does that mean they will return to value? Only if there are more buyers than sellers of the assets. But if this is a liquidity crunch that has threatened everyone, who will be the buyers? Sometimes technical natures of markets trump fundamentals.

Everytime Archie Andrews went over to visit Veronica Lodge at Mr. Lodge's mansion, he always kept knocking over his precious collectibles. It would appear that individuals selling off their mutual funds and liquidation of hedge funds could result in our blue chips, as they have already, getting knocked down lower. Of course, not last week.

I think last week it was short sellers closing positions and possibly encountering short squeezes. Also, will it be time for foreigners to back the truck up? And maybe the Americans who just didn't undertand the past 4 years economic boom, now see things on the bargain counter. But how does one measure these thoughts?

The penny stocks do not have the support by institutions nor funds due to their low cost and were the first to be knocked down. The Blue Chips are the last ones standing and have share prices in the two digits as well as millions upon millions of shares outstanding. So is it possible to put on a trade of penny stocks/short blue chips. Or just forget about shorting and go long the Abe Lincoln stocks.

I mean Obama is the symbol of what Honest Abe fought and died for.

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