Meet Gene, a NASDAQ Market Maker Message Board

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Non-Tech : Meet Gene, a NASDAQ Market Maker

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To: Keith Monahan who wrote (458)	8/5/2000 2:22:16 PM
From: ahhaha	Read Replies (1) of 1426

There is the upside long term bias and there is the negative psychological implications of margin, both working against holding short. Also, there is an abstract asymmetry in that gains are bounded below but losses are unbounded above. Is this realistic? Sometime I'll tell you about the short squeeze in Resorts International in the '80s. The long side is built on knowledge, but the short side is built on the excesses that knowledge brings. You can guess what knowledge can achieve fairly well, but you can't guess how stupid people will get in their excesses. Trying to take advantage of excesses forces you to trade. In the past there were funds who built a portfolio of shorts. They had no longs. I'm not sure if such funds still exist, but in the past during the worst bear markets these funds would way under perform. They either had to convert into hedge funds or quit what they were doing. If you approach the stock market as a casino, you will lose. The exchange is just a place you go to buy and sell. Investment decisions have nothing to do with today's and yesterday's price.

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