Thank you Jim for providing the exact definition of "shorting the box". If I were to guess the origin of the name, there is an old betting term called "boxing the exacta". The exacta is a bet where you call which horse (or whatever you are betting on) will come in first and second AND in the correct order. Because horse one and two are both good, either may come in number 1 or number 2. Thus you place equal money on the 1,2 combination and on the 2,1 combination. This is called "boxing the exacta".
When you short the box in the stock market, you own both a short and long position in a stock at the same time. As Jim pointed out, it used to be a popular way of shifting income or from one tax year to the next. The latest "tax reform" disallowed this maneuver. BB blasted the Congress for their action. Taxing investment gains is not only a disincentive for people to invest their money, it is also a poor very way of raising government revenue.
I am looking seriously into the Roth IRA as a way of investing for tax free returns. Somehow when one door closes, another opens.
By the way, if anyone thought I was bad-mouthing either Xerox or Wal-Mart, they missed my point. I can just remember when Wal-Mart was selling at a P/E of 44; today it is 28. "Wal-Mart should be a part of everyone's portfolio" my ex-broker used to say in 1988. Well, a lot of portfolios got hurt in early 1973 when the bubble burst. Now the stock has completely different fundamentals; but it has lost its luster.
So will Coke... because it is nothing more than a soft drink. And I refuse to believe the Coke marketeers can keep the image glowing for too much longer. It is not a revolution in shopping, nor does it change the way people make copies, nor does it increase company productivity or revolutionize information systems. It is nothing more than a soft drink with no basis what so ever for having a P/E ratio of 40! (just my humble opinion, of course)
Greg |
