Reminds me of that Canadian gold company (I think it was Bre-X) that went bust several years ago. The stock sored when they announced they had discovered the biggest gold find ever in Indonesia and had the test results to prove it. The whole thing unraveled when their geologist, enroute to a meeting with a potential partner that quested the results, mysteriously fell out of a helicopter. You might be right about GOLD, but if they announce a major find tomorrow, hope you can hang on.
Might be a good idea to do some more research on Randgold Resources. Hint: its a member of the FTSE gold index and is a division of Randgold & Exploration. This is a real company with real reserves and production. You may rethink before equating it to a 'bubble internet stock'. Disclosure: I have no positions in companies mentioned.
To make things clear. I'm not saying that this company is a fake or worth next to zero. Maybe it is a solid company with sound management. But, my technical systems are telling me that this thing is way overbought. In addition they don't have earnings, relating to the internet IMHO, which is not a bad sign for a short position either. I may be that Gold is going much higher, also that good news is coming out, the chart would even support such a thing. "Buy the rumour sell the fact". Neither am I expecting this to be a simple and easy short postion, but the same was true for KKD, this irrational Krispy Creme thing. I dont have a problem to short these krispy creme kind of stocks. Sorry for my bad English, but I am not a native speaker, also I may be totally wrong. Mea culpa.
No problem. I wasn't criticising you at all. BTW, you may be interested to know that GOLD owns reserves of 2.85 million proven ounces of gold. Most of that is still in earth's bowels. Yet that would make its theoretical NAV 1 Billion US$ (at $355/ounce). Its current market cap is a well below half that amount. Sure the stock may go down. But is the company a bubble? I don't think so.
Gold falls like a stone after it went straight up to heaven. So I cover part of my postion and take some profits. This thing just went wild and now it cools off.
My opinion there is no way a South African gold field can be a phoney in the same way Bre-x was. The gold mines there are still highly scrutinized and anything fishy would be investigated by the gold sector and the government. The Canadian government knew about Bre-x way before it collapsed and did absolutely NOTHING. You can't even think about comparing the two countries never mind the companies.
Good trade on GOLD which as you say was very much overbought. But you do need to be very careful with the KKD's and GOLD's of the world. Obviously CMGI was a bad joke but if you had shorted it in 1997-2000 you were in big trouble uless you were in and out. Here are some comments from an article in TheStreet.com. "Not that shorting Krispy Kreme -- despite its cult status and its heady valuation -- is necessarily such a good idea. "This is the quintessential example of a stock I would never short," says Bill Fleckenstein, president of Fleckenstein Capital and a noted short-seller. "I don't short stocks just because they're overvalued. I particularly stay away from stocks that are crowded [with shorts] like this one. I've seen this movie too many times before." An overvalued and overloved stock can always get more overvalued, more overloved. As its shares run higher, anyone who has gone short has to worry about losing money. Some will cave in, rushing to buy back the stock they have borrowed, and in so doing sending the price ever higher. If short interest is high, a short-covering can send a stock appreciably higher. That's something like what's already happened with Krispy Kreme. Much of its big jump has been the result of rolling short-covering -- some people throwing in the towel and buying back the shares they borrowed, others borrowing those shares as they come back on the market, and so on. "The amount of people that lost money trading this stock," says Gruntal director of equity trading Sam Ginzburg, "could fill Giants stadium." His advice to those who would get involved with Krispy Kreme, on either the long or the short side: "Don't do it. Don't trade this stock. Leave it alone. Give your money to charity." And another thing is that GOLD has a small float and trades on thin volume so if this really started to go against you (new discovery? or whatever), you'd maybe have no where to run and hide. Just some thoughts.
You are right. Yes, this KKD thing was really a damm short I will always remember, but in the end it eventually came down. Have done hundreds of short sales during my career as a trader and what I've learned is that one has to have enough money to withstand any potential short squeeze. So, for me, it's all about size. Also I have short positions in order to get my portfolio more market neutral if I'm overall quite long the market. This is what I learned from an old and wise Dutch trader: Never go home without a short position!! This wise Dutch made some $ 10.000.000 in October 1987 alone with some nice puts.
There were lots of arguments how solid this company is. Take a look at the chart and see what happened. What goes up like a rocket, often falls like a heavy stone. IMHO.
I'll give you a word of advice that i have learned from painfull experience, DON'T SHORT THINGS THAT GO UP LIKE ROCKETS. I don't short anything with high relative strength anymore regardless of the fundamentals. Better to pick off hurting stocks like KO.