Wednesday, March 12, 2008

Our Third Short Sitting With JRJC

We continue to reiterate the underlying weakness in the Shanghai Index as a major reason to be bearish on China Finance Online (JRJC). Their subscription business model relies on a stable Chinese stock market, at least, and we only see the Shanghai falling further over the next weeks as it searches for some equilibrium level. We see JRJC testing $12.00 by their next conference call. We see JRJC's SG&A costs rising further as a result of their aggressive expansion in face of tremendous inflationary pressures in China, coupled with a bad stock market. Our readers would be wise to hold their short positions. We will provide an update to this trade one week from today, on Wednesday March 19th. From the desk of the Psychology of the Call team, we thank you for your attention.

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