hedge funds manipulate stock in secret, page-39

Let me suggest - you seem to be saying that the market is wrong. The market simply is. There is no wrong or right with the market. People are the ones who are right or wrong. They are either on the right side of the market (whether that is the market in general or the market for a particular stock, or group of stocks) or on the wrong side.

If the fundamentals warranted it, the savviest of buyers would be turning Centro around.

I believe Livermore's main thesis, no matter what contemporary tactics and technology might have developed, is that ultimately the price of a stock is determined by its fundamentals.

If the fundamentals are good, and the savviest of investors will have that information, the price of a stock will rise. They will buy and the shorters will have to cover.

I might add that my post was in no way influenced by fluctuations in the price of CNP in recent days. It is a stock I do not follow. I have been totally ignorant of CNP's price gyrations in recent days.

My post was purely a reaction to the psychology I could see operating amongst many market participants. We even have some people saying that short selling should be banned completely. That would be a radical development in stock market operations. Short selling has been pictured as evil at various times throughout the history of stock markets. England banned short selling in the eighteenth century. Warren Buffett, on the other hand, believes short selling is necessary in the process of uncovering fraudulent accounting and other problems at companies (a la Centro?). Apparently short selling was at least partly behind the discovery of the dodgy accounting practices at Enron.

I posted Livermore's quote and my rider to it as an attempted antidote to the somewhat (in my view) hysterical reaction to a (probably) legitimate activity on the part of hedge funds. The reaction I refer to is clearly evident on stock forums. It falls into the category of: "Ain't it awful". What? Stock operators carrying out perfectly legitmate activities? Free markets are not beholden to national pride or any sense of fairness. They are what they are. Free markets.

Further, the demise of Centro was well and truly telegraphed by the market. The weekly MACD turned negative early in 2007. This was followed by a break of the key support level around 8.50 somewhat later. From that point on, on a technical basis, this stock was a short. You can't blame people, some of whom have huge resources at their disposal, for taking the opportunity to make money from such an obvious short. No doubt, many of those same people have continued to add to their shorts as Centro dropped and using whatever strategies at their disposal to do so. The bombshell (their debt cover problems) which resulted in Centro finally crashing has made those people fortunes.

Centro, on fundamentals and on technical evidence, deserved to be shorted.

When the fundamentals warrant it (if that ever occurs), Centro will turn around. The first people to benefit from that will be the savviest of big investors. Until that turn around occurs, I believe it is unwise to invest one cent in Centro.

It is best, in my view, to be cognisant of what the market is doing and what it is telegraphing. Anybody involved in the market should make sure they can read such signals. If they can't - they shouldn't be trading or speculating or investing. If a person can't read the signals - they are simply gambling.

Just my view on things.

Cheers
Red