The purpose of this blog is to provide financial advice for companies that are struggling with cash flow constraints, and have been unable to acquire bank financing. Contributions will be made by employees of Acrius Capital, as well as business partners. We will also post articles from public resources when we believe they are pertinent to the subject of Financing or turnaround assistance for small business owners.
Tuesday, November 8, 2011
Beware low volume, high volatility stocks such as Groupon and LinkedIn
If you trade stocks on your own, beware low volume, high volatility stocks such as Groupon and LinkedIn. Large institutions can buy these stocks up in large volume, drastically increasing the share price due to the low volume of available shares. Then individual investors see the price increase and they want in on the action, so they buy, and oftentimes they are buying from the market-maker that created the price increase. When the price tops out, the market-maker has sold out at a huge profit and nobody is left to buy up the shares at the inflated price; and then you have freefall.
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