Cymer (CYMI) Message Board

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Technology Stocks : Cymer (CYMI)

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To: Cymeed who wrote (10675)	11/28/1997 3:45:00 PM
From: ben luong	Read Replies (2) of 25960

There are incentives for brokers to find customers stocks to short: (1)The proceeds of the sale, in most brokerage firms, are locked into a short account. These proceeds generate interests for the broker. The customers only get credit to their margin account if the stock goes down. If the stock goes up, the customers are debited in their margin account for whatever the amount they need to pay to cover their short position. Very seldom are customers get paid interest on their shorted position. (2) The transactions generate commissions for the brokers. (3) For each short sale, the broker is guaranteed to get another commission in the near future when the customer bought back the stock. The brokers reserve the right to call the borrowed shares back at any time. In short, it is a win-win situation for the broker, and the customers take large risk for their shorted position. Shorting is popular, especially in a down market like this because there are opportunity to get large profit at a very short period of time. Stocks often go down much faster than they go up. It is this quick profit potential that make shorting so appealing (satisfy the gambling nature of human mind). I think if your cymi shares are hold in "street name", the broker is able to lend them to someone else to short. Do you just have a cash account or you have a cash/margin account. You can call up your broker and ask to speak to the manager (I will not talk to salary-based brokers since they often don't know much more than you about the stock market) It is also possible that fund managers are shorting CYMI because CYMI is on the Cabot Newsletter's buy list a while ago and the newsletter later announced to sell CYMI because it fell more than 20% of their purchased price. These people are shorting on the momentum.

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