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Over heard this conversation at the movies..... (stocks)(11 posts)

Over heard this conversation at the movies..... (stocks)CARBON110
Jan 26, 2004 7:37 AM
This guy during the previews tells his mate he was watching the news and CNN was discussing the tickets for the Super Bowl. The tickets apprently are as difficult to copy as money is due to hidden holograms etc. So the guy gets online and tracks back to the parent company who owns the production company that make the Super bowl tickets. The stocks for this company were selling for .50 cents a share. He bought 2000 shares. Sure enough a week later the stock is up to 1.50$ a share and he put an automatic sell at $2.00. Not bad for two weeks
this is a strange storyColnagoFE
Jan 26, 2004 8:42 AM
For one...was this a new company printing the Super Bowl tix? Using some new patented technology? And why was the stock so low? Was this their first big contract? If it was that easy to determine that there was easy money to be made you'd think that the guy would have had a hard time even getting hold of the stock in the 1st place unless he was a major player. Maybe he just got lucky, but it sounds like he might have had some inside advice instead of just happening upon it via the net.
Anything is possible I supppose........CARBON110
Jan 26, 2004 8:57 AM
I'm not sure, it is all I caught of the dialouge but I thought some people here would get a kick out of it. Concerning picking the stocks, many times when the market is UP and in a + direction you can watch CNBC early in the morning and view their "hot picks" During the day you can watch those picks go up and down over two days. For example, they chose Autotrader.com as a hot pick awhile back and the stock soared and then dropped two days later. I imagine this is kinda what day traders do all day. You could very well be right but I just thought it was an interesting conversation.
Britech53T
Jan 26, 2004 1:28 PM
http://abcnews.go.com/sections/SciTech/FutureTech/luminescent_paper_futuretech_040106.html

This is one of the the big deals in anti-counterfeit technology on Super Bowl tics. I'm not sure Britech is publiclly traded, however.
funny linemohair_chair
Jan 26, 2004 2:25 PM
I love how the guy in the article says "it always ends up some poor couple who save up their whole lives to come to the game, only to be turned back at the gate because they bought a counterfeit ticket for $2,500."

Yeah, the heart just sinks, doesn't it? Poor couple. Maybe we can take up a collection. Anyone who would pay that much for a ticket to the Super Bowl deserves to lose it.
Possible, but not likely,TJeanloz
Jan 26, 2004 2:28 PM
This sounds like the baldfaced lies that were so popular in the .com heyday, yeah, I bought Intel at $0.50 a share too...People hear about these things, and then they claim to have been a part of them, apparently to impress their friends.

But he's almost certainly talking about ADV LUMITECH a.k.a Brightec, a local (to me) company.

So why isn't his story likely? It is possible that he got on his horse and bought the Company's stock (ticker ADLU, for anybody who wants to follow along on their Bloomberg) on the day that they announced the Super Bowl contract for 0.50 a share. That day, it traded from 0.48 to 0.60 a share. It is not possible that he entered a stop order at $2.00 and sold. $1.85 is the most this stock has ever sold for. But that's close enough to $2.00 that he was probably rounding up. So, it's possible that if he timed it PERFECTLY he could have made $1.37/share on the stock. That would assume that he got in at the bottom and promptly sold at the top. Except that Bloomberg says that only 500 shares traded hands at $1.85, so he was more likely in the large group of trades in the $1.80 range. I would be shocked if anybody actually timed this stock so perfectly.

Even so, net profit, before transaction fees, is $2,470 on a $1,000 risk. Which is really impressive in a % term, but not really in $ terms. There are a lot of stocks you can make this kind of small-time money on, but the model isn't scalable.
Bravo TJ Bravo!CARBON110
Jan 26, 2004 3:55 PM
well done! Thanks
Not scalable?53T
Jan 26, 2004 5:24 PM
You show that the guy could have made 247% Return on Capital employed. Why is the model not scalable? And why is $2,470 not impressive in $ terms. That's a new bike in my world (actually it could pay off a credit card in my real world).

The model is scaleable to a great degree. DO you think he would have upset the market if he bought and sold 20X the number of shares? I don't think so. Would $50K be significant in $ terms? That's a new BMW, with a Thule rack.
Look at the market...TJeanloz
Jan 27, 2004 6:44 AM
I paid my way through college doing exactly this, and the model isn't scalable. Which basically means [if you're good] that you can make small-time money pretty consistently, but once things get bigger, it throws the market out of whack. In this particular case, almost all the trades are for 500 or 1000 share blocks. At $0.50/share, that's $250 - $500. If you throw down an order for 100,000 shares, that's around 1 times the daily volume of this particular stock (at least in the pre-hype days, which is when you would be buying), and you can be sure you're going to move the market with that. I found that you can only reasonably trade up to about 2% of a stock's average daily volume before it gets difficult to either buy into or liquidate your position, and niether of those is a place you want to be. It's relatively surprising how fragile the market is for small-cap stocks - it is pretty easy to upset the balance and cause problems for yourself.

I don't know that I can convince you, but my experience has dictated that once you start throwing real money at small and microcap stocks, you end up burning yourself because you can't get out fast enough. It's quite easy when you're trading $20k; when you've turned that $20k into $500k, it becomes much more difficult to find stocks that can handle the trading volume you want to throw at them.
Good explanation, and...........Len J
Jan 27, 2004 7:50 AM
it's also why Mega millionaire's and large investment funds have to work so hard for returns. The most extreme example of this is Berkshire. They can move the market just by a hint that they are thinking about looking at someone.

Len
big enough, and problemsDougSloan
Jan 27, 2004 11:37 AM
Offer to buy more than a certain percentage of shares and it could trigger "control share acquisition statutes"> These at least complicate the process, and destroy the ability to secretly buy more than about 5% of a public company's stock. (in rough terms)

I worked as a law clerk for the federal district judge who handled a case by the State of Missouri against Karl Icahn when he was making tender offers for TWA around 1985, when this came up.

Doug