No. of Recommendations: 41
This shouts out the "Wisdom" of the stock market. Most big money managers are market losers -- as already evidenced by the fact that 80% of mutual funds lose to the indexes each year (that's why we recommend index funds).

http://www.fool.com/news/commentary/2003/commentary030826JF.htm?ref=foolwatch

Jeff, you've got to be kidding with this conclusion. You take an eight month period in which the Nasdaq is up 30% to support the hypothesis that institutional short money is dumb? How do you think your numbers would look if you ran them in 2000, 2001 or 2002? Better yet, take a look at this paper, which looks at more stocks in a longer period and finds that heavily shorted firms tend to underperform other stocks, following up on similar findings in another paper from 1995. In other words, short money on balance tends to be right.

http://www.afajof.org/Pdf/October_02/shintjf.PDF


Again, it's somewhat baffling. As with last week's top 10 shorts, most balance sheets on today's list outshine those at the companies America widely owns. Here, only Charter and Comcast have dismal balance sheets. Charter looks especially precarious, piled with debt, while burning through remaining cash. But Comcast, which has the most debt on the list and one of the highest valuations, is also one of the country's most widely held stocks.

Meanwhile, most of these popular shorts -- Dell, Oracle, Applied Materials, Yahoo!, Amgen -- are strong, expanding businesses throwing off free cash flow. Yeah, I know. Our country is nuts. Or the market is, anyway. Maybe we all know that by now. If we don't, maybe we should.


You could have written the exact same two paragaphs in March of 2000. Good balance sheets and expanding businesses should baffle you if a comany's valuation is pricing in Olympic feats of capitalism and a good deals of its value is routinely transferred to management through option issuance. I'm not qualified to value all ten companies on the list, but I can tell you I'm hardly baffled by them.

Here are most shorted stocks by shares on the Nasdaq from August '99 and their subsequent performance, a month I picked somewhat randomly except that it was intentionally before the market dropped but not near (in value) the absolute peak:

Intel -33%
Cisco -44%
Dell -37%
Worldcom -100%
Microsoft -43%
Nextel -38%
E*Trade -64
Global Telesystems -100%
Qualcomm -19%
PeopleSoft +21%
Qwest -85%
MetromediaFiber -100%
Amazon -26%
Oracle +35%
Ameritrade -51%
At Home -100%
Iridium -100%
GlobalStar -100%
Global Crossing -100%
Sun Microsystems -81%
Average -58%
Nasdaq -33%
S&P500 -19%

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