Has NVE Finally Been Exposed?
By Duru
November 24, 2004
All year, I have followed a momentum,
speculative, junk stock called NVEC. I have even tried trading it periodically
with varying success. Through all the drama, all the hype, all the rumor, all the
smoke and mirrors, I have often wondered what the real story is behind NVE Corp
(NVEC). Well, the Motley Fool wrote the piece I have long awaited.
Aptly titled "NVE's
Nanotrap Only Snares Speculators" this expose tells a lurid tale of,
well, smoke and mirrors, sprinkled with large heapings of greed, and pure
unadulterated victimization of stockholders. The author of this article
claims that NVEC has no real technology and has no real prospects. It is too
bad that stocks like this ever get as high as they do because the simple fact
that the stock had gone up so far and so fast gave the company's business
legitimization in the eyes of many stockholders. It is the classic
self-reinforcing principle that is a stock is going up so well, it must be
legitimate. Looks like 2004 has been a year of reckoning on
the way back to single-digit (and worse?) status. Here is a graphic of
the brewing disaster (charts thanks to TC2000):
The only reason why this stock has probably
not already returned to whence it came is that there are so many shorts piled
into this one (including the notorious stock-killer Asensio!) that their occasional panics at
"good news" keep igniting enough buying interest to make people think
there is indeed a real story here. If you want to follow some of the drama up
close, the ever-intrepid Kirk
Report has made numerous notes over the past year or so. Asensio has also been pelting NVEC all year-long with skeptical and revealing reports.
Note that while
2004 has disciplined NVEC by 50%, it has still had a monster gain from its
humble beginnings in 2003. So, while there is far yet to fall, it could still
be a while before the buyers of NVEC finally face up to what appears to be an
empty, null, and void future. (Of course, I suspect most of the buyers of NVEC
are little interested in whether the business is real but more interested in
whether they can get the stock moving profitably. Momentum stocks like this are
usually the playthings of traders and not part of an investor's recommended diet).
I typically do not use this space to talk
about individual stocks, but I was quite motivated to add to this tale after
ready the Motley Fool article. I am hoping that this can serve as a lesson for
those of you who are quick to believe and even quicker to buy!
Be careful out there!