for those of you waiting for a short squeeze, page-72

Thanks for the link to the article ash. This document is the most important one I've read with respect to the share market and it now really makes a lot more sense to me how companies that against all logic become so undervalued.

Here's a simplified scenario of what I see could be happening with three parties involved.

1. The fund manager of institution A buys heaps of company X shares using client money. The fund manager doesn't really care about the value of the portfolio because he charges the clients a fee anyway and his institution A mostly makes profits by earning fees and shorting.

2. The fund manager of institution B had already bought heaps of company X shares a long time ago for much cheaper than today's price using client money. The fund manager doesn't really care about the value of the portfolio because he charges the clients a fee anyway and his institution B mostly makes profits by earning fees and shorting.

3. Institution C sees that company X is going through a bit of strife and sees an opportunity to short their stock. The fund managers of all three institutions are buddies and C tells A and B of his strategy.

4. The deal is that A will make stock available to C for shorting. Institution C will create a special client account for Institution A and B so that they can make a cut from this shorting strategy. Institution C needs no money from clients to pull off this strategy so the profit will stay with the three institutions and the three managers will all earn nice bonuses if the strategy is pulled off successfully.

5. So what is the purpose of institution B? Institution B will allow C to purchase stock off market for short covering if the situation becomes a little difficult for C otherwise B will always cover on market.

6. Institution C receives stock for shorting on market or off market from A and goes ahead with prolonged shorting of company X. The supply of stock available to C never ends because institution A continues to supply stock to C. C will buy on market to cover shorts but if things are looking ugly C will buy stock from B for short covering. C makes a nice fat profit (Fat Bloater is slavering at this point) from unsuspecting retailers and other institutions not party to their scheme.

7. Institution A and B have made a loss on their clients money and they explain that it is all due to difficult market conditions (they created those conditions in the first place). The managers of A and B give themselves nice bonuses for their excellent management.

8. Institution C has made heaps of profit and gives A and B a split according to the agreement with their special client account. The money is kept by the institutions and not clients. The roles among the institutions may rotate so that A and B don't lose all their credibility with clients.

9 Institutions A, B, and C are greedy and have no morals. They shorted company X stock down to a level near what B what had bought it for and maybe less than what A had bought it for. They all know the stock is cheap and start to buy it up cheap from frightened retailers and other weaker institutions. Their buying causes the share price to climb but the story is not over. They take turns with this shorting arrangement and ensure the stock of company X remains volatile allowing them to rob retailers caught out in the high tides. They will only scale back their shorting of company X when it has become a truly stable company with a stable earning but the shorting will never completely end because these managers masters of the share market game.

Well that's my take on what could be happening. Any one else with ideas to add to this?