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Politics : Formerly About Applied Materials
AMAT 327.01+2.5%Jan 16 9:30 AM EST
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To: Sam Citron who wrote (48206)6/20/2001 1:58:16 AM
From: KMcKlendin  Read Replies (4) of 70976
 
Why don't I short?

I've never shorted, and after reading your post I wonder if it's possible to defend my nonshorting policy. I'll attempt to do so. Hopefully Sam, AD, Jacob or another with shorting experience can then educate me by demonstrating any logical errors.

I don't short because:
1. According to textbooks the market delivers an average annual return of ~11%. Therefore your average long, will, over time be a winner. Conversely, the probability is that my short plays will loose money. I would prefer to have the market biased in favor of my position.

2. Overvaluation may be easy to find, but predicting the Bubble's end is is difficult. It was no secret that internet and B2B stocks sported excessive valuations. One was completely justified in shorting them. Yet many rational shorts were crushed as valuations grew ever higher undeterred by reason. Had I been short, I would have lost all my capital as AMZN doubled and doubled again, and never survived to enjoy the eventual crash.

3. I am a simplistic, LT kind of investor. Successful shorting (like successful options investing) likely takes more knowledge of accounting, industry conditions, and technical analysis than I currently possess [I dare anyone to refute this point :)]

--Keith
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