If there's one thing the bears and people who love to short stocks should have learnt from the 1997-2000 stock bubble it's never to try and short 'cult stocks' because their price behaviour will always defy reality.
The current poster boy of cult stocks is obviously Google. Many are lining up to short this thing but then many are also forecasting ever higher prices and the trend is certainly both up and powerful.
And all this that from a company that has only one precocious revenue stream.....
Note: As of 18th Jan Google's share price was down 4.75% but then these swings are to be expected.
Trading Strategy For Cult Stocks
The best and usually most profitable move is to do nothing, just forget about shorting them (no position = no losses)
Do the hard thing and buy them! But only on sharp declines, say 10%-20% over a month or so - study your price charts from cult stocks back in 1997-1999
If you do want to short then at least let them blow off the steam over several months, watch them break down and then short retracements
Incidentally, it's interesting to note that the marketing website message boards are all getting very tired of Google announcing that they're getting into this market, that market, this market and that market etc.
As one poster pointed out 'it's now almost impossible to pick up any print publication without some mention of Google within it.'
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