Speculating is what stocks are all about at the end of the day. It doesn't matter whether its a stock trading for a dime, a dollar or one hundred dollars.....The question investors and traders ask themselves is: "Will this stock increase in value"? If the player decides a stock has a good chance to increase he'll go long, if he thinks its overvalued....he can avoid it, go short, or buy puts. Pretty simple.

Of course I'm always prattling on about "smart money" types.....and from my perspective "smart money" types are not speculating, they know.

Right now everyone is speculating the potential for a phase III trial for RVX-208. But could it be that there are individuals who "know" that a phase III trial is coming? For arguments sake, let's say there are.

Understand please that this is strictly hypothetical. I think the trading suggests there are "in the know" smart money investors accumulating the stock, but I could be wrong. But again, for the sake of argument, let's say my read of the trading is correct, that there are "smart money" and 'in the know' types accumulating. And we'll further assume that the reason they're accumulating is because of a forthcoming announcement on a phase III trial.

Okay....clear as mud? Now the fun stuff.

Right now RVX has a market cap somewhere around 200 million Canadian. What would be a reasonable market cap for a company with a phase III trial for a compound with the potential to positively impact a whole range of diseases including diabetes and alzheimers? I don't think 1 billion USD is out of the question. That would mean a 5 to 6 fold increase in the market cap, and assuming the current share structure a PPS of $12+ on the TSX.

Frankly if a phase III trial is in fact announced I think we could see close to a $2 billion USD market cap given the wide ranging potential applications for RVX-208, heart disease, kidney disease on top of everything else.

Now....again continuing with the hypothetical. Smart money in the know types....are highly confident that with a phase III announcement that RVX will explode higher. So what do they do? Shares are tightly held and thinly traded. If you pick up 10,000 shares at current prices you'll be paying around $25,000 CDN, with the expectation they'll be worth $100K+....maybe $125K for a gain of $100K.

That's a nice gain, about a year's salary for a lot of people. But I think anyone who "knows" something is coming down the pipe, that 10,000 is a pretty small stake. Instead I would expect there would be individuals looking to accumulate 100,000 or more. And if we're talking about several individuals the totals they'd be looking to buy could easily number in the millions.

So what to do? Go to Tim Hortons, log onto the free Wi-Fi...open up your discount brokerage account and start hitting buy? I don't think so. Well heeled investors will engage a pro to do the work for them. If they just start hitting buy and start snapping up whatever is on the ask the PPS could run away from the quickly, eroding the potential profits and also attract attention. A professional Market Maker Broker Dealer is a far better choice.

This is where ploys like the so called "Wychoff Method" are used.....with short selling used to lock a stock into a trading range, testing the resolve and patience of ignorant and price sensitive retail investors.

I don't know whether I've shared it here before or not, but years ago the United States Department of Justice chronicled a price fixing practice called "moves on request". Basically Broker A will call Broker B and ask him to move his bid/ask on a given stock up or down, based on the way he wants to manipulate the market. He'll ask the bid/ask to be moved up when he's long and looking to create some buying interest, and down when he's short and needing to shake free shares to cover. Broker B will comply because there will come a time when Broker B will need the favour returned....quid pro quo, you scratch my back etc.

Bottom line, I think the reason we've seen some short selling here...and why the volume has dried up, is because I believe there are big positives coming and there are individuals looking to lock up as many shares as possible as low as possible.

Because of that I'm a buyer at these current levels while volumes remain light.