Thursday, November 19, 2015

Brother can you spare $106,000?

One longstanding mantra in the investment world has always been, buy on rumor, sell on news.  But thanks to social media, and a 24 hour a day business news cycle, this paradigm has gone much further than ever before, and where the media has become the platform for stock manipulation created on many levels.
We can recall a few months ago how weight watchers stock soared in the aftermath of an announcement that billionaire media mogul Oprah Winfrey had purchased a stake in the company, despite the fact that the fundamentals for the company had not changed.  And in a unique instance of speculation gone wrong this week, a short seller of a bio-tech company was suddenly crushed simply because an infamous name in the investment community stepped in to buy half the company he was shorting, and it has led to a margin call of extreme proportions.

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