Let me continue the story about a crazy stock. In 2009, my older sister read a financial column in newspaper which recommended a strange stock. It was an industrial stock with no prospect at all. But the stock "shell" (a slang for Hong Kong investors which means the status of being a listed company) was sold to a solar energy equipment company. The article claimed that the company will have a bright future. My sister believed and bought a few at around $1.4 per share. Although the amount she bought was nothing in comparison to the big wealth she owned, her emotion was driven by it. After several months, the stock dropped and dropped. As an (pretended) experienced investor, I advised her to cut loss but she refused. After a year, the stock dropped to $0.3 and finally reached 0.15! My sister felt very down and she finally managed to let go with it. She thought as if she have not ever bought this stock. This stock was totally disappeared in her mind.
After several years of dormancy, this crazy stock finally waked up! In 2014, Starting from $0.5, it surged to $1 dollar. I told my sister that she could nearly return to her warm homeland! "Return to one's homeland" is a terminology of Hong Kong investors.If you buy a stock but it drops below your buying price for a long time, you long for the rebound just like a home-sicked wanderer longing for home. When it rebounds to your buying price, it can be described as a wanderer returns to his homeland.
She was glad to know that good news. As she has not logged in the investment account for many years, she totally forgot the password. I advised her to request the broker to activate the account and she should be ready to sell the stocks if the price reaches her "homeland". After two months, this crazy stock surged to $3 and I was overjoyed while my sister kept calm. As a pretended experienced investor, I suggested her to sell half of her shares to grasp back the cost. I thought this tactical move can place her to a unbeatable status. But she was bother to contact the broker to do so. Days after days, the stock rose again and reached $4. Then it seemed to be weak and remained stagnant for two weeks. But starting from this week, it skyrocketed again! It surged more than 10% everyday. Yesterday, it was rumored that a hedge fund has shorted a huge amount of shares. The fund is forced to buy back now. Lots of hedge fund always do something stupid like this. Shorting a stock means borrowing the stock from someone or institutional investors and sell it in advance. They expect they can buy back in a lower price so as to earn the price different. Hedge funds always short the "overestimated" stocks and I can say they underestimate their fools.
At the same time, the company announced a 55% expected profit increase in the coming year. Last morning, speculators pushed the stocks 40% up and hit $9 dollars and further pullback let it closed at $7.4! The stock became super volatile. The market capital of this stock reached 300 Billions! My sister is still holding it without selling a single share. I became super nervous at that morning but my sister still calmed! The story still continues and it should be a happy ending.
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