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Pastimes : Ask Mohan about the Market

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To: Rational who wrote (8989)11/22/1997 7:13:00 PM
From: Tommaso  Read Replies (5) of 18056
 
Because I am such a worrier I raise the question again:

Has anyone ever sold short, believed they had made a fortune when stock price(s) collapsed, and then found they could not collect?

I think that the BEARX fund has a big portfolio of US Treasuries to back all their positions--that in fact they use as security for their short positions. But is there any chance, for example, that my SPY short would fail to be honored if the market declines?

(To ask this may seem paranoid, but over the years I have read about and even been caught up in so many scams, defaults, class action suits, write-offs, bad debts, etc that I wonder how secure the short side is, esepcially since if a small investor shorts the proceeds are never really his or hers)
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