MGO, Migao Corp.

This one is in the Sino-Forest category where truth is simple in the eye of the beholder, certainly when it comes to the analysts who move from ecstasy to utter despair on a dime on even the slightest rumor. Here is the chart from June 14th and today’s.

mgo mgo nov 2011

As you can see , I have changed the count. Like all stocks, or at least most, I assume an A-B-C counter-trend correction into early 2011. Despite the fact that the C did not exceed the top of the A leg , this “fits” much better (click on the charts to enlarge). We got the 4-5 as anticipated and made new all time lows. This may be as good as it gets but another 4-5 is certainly a very real possibility , even if it goes a little higher at first.

MGO Migao

In the wake of the Sino Forest debacle quite a number of other companies on the TSE that have similar profiles (essentially foreign operations and owned to a great extent by Chinese investors ) have dropped like a stone in sympathy. Apparently it is still important what company you keep. Migao is one of them, here is the chart;

mgo june 2011

I do not really care about this company or any of the others. However what is interesting is that all of this was reportedly started by an unknown hedge-fund by the name of Muddy Waters. The scary part , in my view, is that one after another mutual fund managers etc.etc. confess to having owned the stock without really knowing anything about it. All manner of excuses are given but in the end it is hard to escape the conclusion that hiring a monkey with a set of darts might actually yield better results.