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Strategies & Market Trends : Floorless Preferred Stock/Debenture
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To: Daniel Chisholm who wrote (713)7/13/1999 11:10:00 PM
From: dumbmoney   of 1438
 
If you short a "fraud" or a pump & dump scam, where your target is zero or essentially zero, then reserving 300% or 400% for margin and waiting two or three years for it to go to zero still allows a very respectable annualized rate of return to be earned.

If you earn a positive return, however small, on shorting you have done well, because you have added to your overall return while *decreasing* risk. The alternative use of margin, borrowing to buy more long stock, *increases* risk - so you can't directly compare in a meaningful way.

For those of us who will never be more than 100% long, shorting is 'free' and the margin required is essentially irrelevent.
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