Bharath Koteshwar - The Perfect Stock: How A 7000% Move Was Set-up, Started And Finished In An Astonishing 52 Weeks

How a 7000% move was set-up, started and finished in an astonishing 52 weeks

By

Brad Koteshwar

This book is a work of fiction. Places, events, and situations in this story are purely fictional and any resemblance to actual persons, living or dead, is coincidental.

2004 Brad Koteshwar.

All Rights Reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

First published by AuthorHouse 09/27/04

ISBN: 978-0-9769324-1-3

Printed in the United States of America

Bloomington, Indiana

This book is printed on acid-free paper.

Digital Editions (epub and mobi formats) produced by Booknook.biz

To my wife, who like the market, is always right

This is a work of fiction. The trades offered and the identities of the characters in this story are purely fictional and creations of the writers imagination. Any reflections of the characters or their actions to any person living or dead is by pure coincidence and without any intention. The dates do correspond to the actual movement of the stock price of Taser International - ticker symbol TASR. However, to simplify the understanding of the stock market to the lay person, no stock splits have been accounted for. Both prices and the volume of shares traded are discussed assuming no splits have occurred.

Memorial day weekend had come and gone. It was early June 2001. For the insiders at Taser it was turning out to be one of the slowest IPOs in years. An IPO or the Initial Public Offering is the first day of trade when a stock first comes into the open market. A private company owned and run by private individuals becomes a public company when it sells its shares to the general public. And thus the public is now able to be part of the ownership of the company through purchase of the companys stock and then becomes a shareholder of the company. The hey-day of the internet bubble was gone. Gone were the days when IPOs would come to the market and within days their price would be two or three times their IPO price.

Taser started its IPO day quietly. So quietly that besides the insiders hardly anybody traded the stock that day. The opening price was $7/share. It closed at the end of the trading session at $6.85/share. It had traded a mere 16,700 shares that day. The grand total amount that was spent by all trades that took place on Taser stock on its IPO day was a meager $116,000. The trade was not noticed by anybody other than the handful of insiders.

About 21 months later on April 18, 2003, it was still trading in unnoticeable amounts. In fact, on April 18, 2003, it closed at $5.45/share and traded a total of 66,200 shares. The dollar amount traded on that day was about $360,790. Yet again, the trade was under most folks radar. Nobody knew it that day. But there would come a day very soon that would show an incredible amount of trade on this stock.

On April 19, 2004, exactly 52 weeks later, Taser would trade over $3 billionthat is billion with a B worth of stock. It would hit an intraday high price on that day of $385/share and trade 10 million shares. Almost every stock trader in the country would have heard of it by then. And probably most of the actively trading public would have traded that stock at least once by then. A few would have profited on the stock but many many more would be left holding the bag. Those who profited would be an extremely small minority. The public at large would hardly make a dime on their investment and the vast majority would be left holding papers worth a fraction of what they paid for the stock.

From the April 18, 2003, price of $5.45/share to its high exactly 52 weeks later of $385/share, Taser would have made an incredible 7065% move. A small $5,000 account invested in Taser would be worth over $380,000 within just one year. For the insiders at Taser this would be absolutely the perfect stock. But for the outsiders it would be a far different story.

My involvement with Taser was for less than six weeks. But it would be one of the most rewarding six weeks in my life as a stock trader. The trading lessons I learned during those six weeks would turn out to be priceless in terms of my success over the rest of my life as a stock trader. It would be some time later that I would understand the true value of the lessons I learned then. I knew that we live in a country where ordinary folks can do extraordinary things. Which is what made America so great. I was going to realize once again that ordinary looking stocks can make extraordinary moves. That is what made the American stock market so great.

It was early spring of 2004. It was a time like no other. Martha Stewart, the domestic diva, had just been convicted of lying to the feds. Dennis Kozlowski, the poster child for the spoiled rotten rich American CEOs was on trial in New York. Dennis had been a bad boy. He had apparently stolen millions from Tyco, his own company. Dick Grasso, the chairman of the New York Stock Exchange, had been ousted from his position over a furor about an exorbitant pay package. Grassos pay had been almost $200 million, which he had helped push through for himself. Ken Lay and his boys, who ran Enron, had duped thousands of shareholders to the tune of millions of dollars. Some of the good old boys were being naughty again. But the rules that applied to them and other corporate insiders would be far different from the ones that applied to the rest of us common folks.

The devastating three-year bear market was behind us. Most portfolios had been ravaged. The one that lost the least was the best performing account. As they say, in the land of the blind, the one-eyed man is king. And now the stock market had bounced back significantly from the bear market lows of October 2002. In fact, in 18 months, the Nasdaq had bounced 90%. It was as if the public had forgotten the carnage left behind by the three-year bear market. Gambling in stocks was in vogue again. Stock market tips were available a dime a dozen and stock trading was rampant once again. It was time again for the game to come to an end. The fun had lasted a little bit too long. Once again the party had to end.

I was an old hand at trading. I had started out trading in commodities almost 20 years ago and had switched to stocks over the past 15 years. It was not the normal route. Most folks start with stocks and end up in commodities and not the other way around. I had found I could make similar returns in stocks as one could in commodities without having to take the larger risks and I could now avoid the sleepless nights that haunt a commodities trader.

I was always scared whenever I took a position in the market. That came from commodities trading. And this actually had saved me many times in the stock market from taking insurmountable losses. I could not take losses. If the price went 10% against my position, I would start to get nervous. This was a mechanism I had developed that was a result of many experiences of losses trading commodities. In my early days I did not have it in me to sell for a loss. How could anybody sell to take a loss? It just did not make sense back in my early days. Now, after many years of experience, I cannot take a position without allocating a fixed amount as the maximum risk that I can take on any trade I place. In the beginning I found it hard to execute the sell for loss as risk-protection. But after many large losses I started relying on stop-orders. This way the orders would be in place as soon as I entered a position. Thus, I protected my account from myself. I would avoid being placed in a position where I could talk myself out of a good decision.