SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : C-Cube
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Robert Gintel who wrote (14611)4/26/1997 3:08:00 PM
From: stockbug   of 50808
 
Please let me say that what I am about to say is not meant to question your experience or expertise. If anything it might show how much I really don't understand.

I agree this is a money maker for you and other firms. The only way this is really profitable for you is if you bought your shares at say 25 and with margin rates being 9% plus then your return is equal to at least your loss in equity value on an annualized basis and for the other firms it is pure profit. If the shares appeciate enough in value I think you can make more a lot quicker. If your shares were purchased higher like ours there is no way the rate of return would equal that generated from an ever increasing amount of interest being charged to shorts even when the price goes up.

Unless I am uninformed about the process I also think you are forgetting the reverse side which is occurring when the stock drops just as they send you money if it rises you must send them money if it drops and if the drop is significant you could loose the money if not just the use of it as long as the short stays in place and the price stays down. Also as that short balance drops you get less interest on a declining balance. This eats into your working capital. For a firm that has a client on margin with the stock and a short borrowng the stock they are making a profit on both ends up or down.

You also know that if the stock stays depressed in value long enough it can stay down no matter what factors come about that could move it back up. The shorts would then be able to cover because disgusted shareholders would sell giving up the shares the shorts needed to cover with.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News