Thursday, May 15, 2008
A Case of Haratzah on TASE
I am following Aura for about two years and observing the graph, it has downed on me that I had witnessed a clear case of ´haratzah¨, that is, a gang making money from the credulous investing or speculating public. Aura had the most active board on Globes and I was interested in learning so I befriended several board personalities, such as the DAYTRADER (Socher Yom). They provided constant updated information on the prospects of the company in Romanian real estate investment, and calculated the worth of the option on the basis of B&S formula. I did follow some of their advice and in general, I made a few pennies. Once, a member of the group wrote taht the option is about to jump to 700. I asked why? and he said that the B@S equation proves that. Laboriously (I was just starting) calculated the B@S value and to reach 700 it had to have a volatility of 70% which Aura did not have (only about 30%). He said that 70% was right. I said no and did not buy Aura Options. Consequently, there was a tremendous breakthrough (click on the graph) and he made much money and I nothing. Nothing published on the company justifies the sudden breakthrough but I am sure (it is obvious from the graph) that it was not predicted by the B&S. Till now I have no idea what made Aura's price rocket upwards. Gradually the option lost the public's attention and has been falling back to its former levels.
When I discovered that AURA owners are buying the stock, I decided to return and bought a few thousand shares. Already made 10% profit. Studying the graph I feel the board gang was conspiring ("haratzah" means manipulating the stock) and they did made a lot of money. Since then they disappeared from the board, or are writing under new names. This is a case study specially written for my learning diary. No doubt I am learning something every day, and I shall keep learning till I die as a very learned (and hopefully very rich) old Jew.