IR therefore I AM

Some weeks back, I promised to discuss “bear raids” and how to combat them. First
a definition: A “bear raid” is a concerted effort by a group of traders
to drive down the price of a stock by selling shares short and buying them
back later, hopefully for a handsome profit.

Bear raids are believed have originated during the 1920s when the rules and
regulations were not as stringent as they are today. Known “players”
such as Jesse Livermore and Joseph Kennedy would collude and spread rumors
to drive down stock prices.

Some telltale signs to watch for:

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The battle lines are drawn; however, this one looks like it might end in a
stalemate.

Under pressure from Congress, the SEC has proposed various rules to restrict
short selling, a legitimate investment strategy whereby investors profit on
a stock’s decline. In a short sale, an investor borrows stock and sells
it in the hope that its price will fall. If the price does drop, the seller
profits by “covering” or buying the stock back at the lower price.

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