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I've been looking around the net to find the details of the geithner plan and have yet to come up with any besides the WSJ speculation, so I query how so many of you have come to the conclusions that you have reached regarding how good of bad the plan is. Have you actually found the plan or are you speculating as to its construction and contents?

As for PPD, short squeezes are profit opportunities. I you are a decent money manager, a short squeeze is a guaranteed way of doubling down or tripling down on your profit potential. By definition, a short squeeze is very temporary in nature and not based on the fundamentals so you know for a fact that the position will fall once it finishes spiking. Armed with this knowledge, how could you not make money?

I see references to short squeezes often in the amateur forums, ex. the Yahoo boards, stating how XYZ will get wiped, etc. If you heed my recommendations of taking bites small enough to afford you the opportunity to go negative or better yet hedge your position with options or take pure options positions, you have manageable or guaranteed caps on losses. This means that you can simply sit back and watch the squeeze occur, and once it is over you should be awashed in profit. Let's take a close look at what was probably the mother of all short squeezes that had so called "professionals" killing themselves and going out of business (due to lack of patience and risk management):


Assume you bought ATM puts in VW Ag at 200. It doubles, your puts go OTM, then it startes to fall and you buy more. You have the opportunity to take some profit but you don't break even. You ride it through because you are aware of the Porsche trade. The spike doubled and fell back down in 1 day. Now it spikes again, and you double down again. Then bam! The stock increased 5x fold from 200 to nearly 1000. Instead of panicking, you sit back and wait for the volume and the madness to subside, and you add to your position as it subsides. Your first set of puts would not have broken even, your second set may have eked out a tiny profit or loss, your last go around was Christmas come early, for at least the next 8 years. The only way this would have did you in is if you bit off more than you could chew. That would have been gambling anyway and if you do that you will get wiped sooner or later, regardless - short squeeze or not.

Short squeezes are always temporal in nature! This is why you always trade off of the fundamentals, and simply be aware of the flow of monies in the market.

In addition, it is the associates that sell the memberships. If they are found out to be a scam, the memberships simply will not happen. The analogy to Netflix is inappropriate since Netflix relies on conventional sales channels - eg direct over the web, TV and radio advertising wherein PPD relies on the MLM pyramid model of using associates to sell memberships. If associates drop out en masse, no memberships will get sold.

Just think of what will happen to Netflix if they closed down their marketing web site and no longer advertised...