Oversold Bounce

You loved The Vomitmaker, a new video game that every kid wanted and every janitor hated. Played all over schools, all around the world. It was $100 a share and stayed there a while...until Dramamine sponsored the game. Then the game's, um, denouement...stopped happening. The stock plummeted to $32...the bounce...but then the non-believers sold in another wave and the stock's bounce became oversold, as shares went to $18. With $22 a share in cash and $5 in tax losses and other real estate and patents, investors were valuing the operations of the company at less than zero, like a Mel Gibson movie nowadays.

So you bought in big, believing that vomit would return as the fancy of teenage boys. And you hoped the bounce's oversold status would go away, like the smell of three-day-old vomit.