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Technology Stocks : Zitel-ZITL What's Happening
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To: David who wrote (1075)11/24/1996 2:02:00 AM
From: Terry Blount   of 18263
 
Whether you short a stock or go long as long as you are using the same amount of money the profit is the same.... long or short. The reason I brought this up is because I posed the question in daytraders chat room one day and some of the guys thought that since a $15 stock falling 30% would be $5 which means that a $10 stock going up $5 would be a 50% gain. While it is true that a stock falling 30% has to rise 50% in order to gain back the $5... the point you must not overlook is that the same amount of money will buy MORE stock at $10 to go long than it would buy at $15 to go short.

So is it easier to find stocks that will fall? I've heard that far more businesses fail than succeed... so your chances of finding a failing stock is greater... but keep in mind the profitable businesses do well enough that the sum total is about 12% average gain per year for the entire market. Anyway, I've studdied historical records and tracked the changes after stock make strong upward movements and it became obvious that stocks that go up fast tend to be the ones that go down fast... actually faster when stop-loss orders start automatically kicking off to preserve the investor's profits. But there's still that question of how high they will go before they burn out. This is why it was so interesting to me to find that a list of 332 stocks that went up over 30% during a 5 day period eventually fell from that price enough to give you a chance to get out without any loss EVERY time... except once and that one will probably fall too before too long.... and even if it doesn't, finding someting that is predictable as 331 to 1 is clearly not "random" and where random is absent profit is present.
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