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Gold/Mining/Energy : Precious and Base Metal Investing

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To: Gary H who wrote (20838)	9/21/2003 12:18:17 PM
From: Tommaso	Read Replies (1) of 39344

>>>One of the advantages of going short is that stocks tend to go down faster then they go up<<< I certainly hope no one pays any attention to that statement. Any responsible discussion of short selling (and there are, as you know, a great many) emphasizes that the risk of owning a stock outright is only 100% of your capital, whereas with a short position you can lose many times your original capital. Also, since over time the general direction of stock markets has been steadily up (sometimes only matching inflation, but up nevertheless), shorting stocks is over a long period of time going to bankrupt the person who does it. That said, I would agree with you that right now may be one of the best times for many years to take short positions. I am not holding any outright short positions, but David Tice is doing so for me with the Prudent Bear Fund--and I have just set up a large position of various LEAP puts (January 2006) on the QQQs. I also made a lot of money shorting QQQ repeatedly and covering whenever I had a pretty good profit, from about the middle of 2000 for the next six or eight months. And I was short IBM in a small way a few times last year. But one must never represent short selling as being a sure way to quick wealth. It has been a quick route to poverty for many. As I am sure you know. Not only did I not get paid interest on the proceeds from my short positions, but I had to pay dividends. I thought I was being very smart back about 1998 when I went short against the box on some stocks I had inherited that had very large accumulated capital gains. Turned out to be a very stupid and expensive project.

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