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Pastimes : Ask Mohan about the Market

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To: vegetarian who wrote (12334)12/24/1997 7:24:00 PM
From: Joan Osland Graffius  Read Replies (2) of 18056
 
Hi M. carter, The only way I know how to short the DOW is to use options. Maybe someone on this thread could give some guidance here. Options have time associated with them and some stocks can take a year to bottom out. When I short a stock I can keep the short as long as I want. I rarely short a small company stock because they can be bought out and you wake up in the morning with your short up 30% on the open which is not very much fun. Very few DOW stocks will be taken over by another company. Also I like to short stocks in a sector that is not doing very well. Generally the sector stock in the DOW will be the last to roll over and you can watch for this after the sector has been taken out and shot. IP and AA are good examples of this late this year.

You are correct that the time to change you stops takes time, but in my opinion you should be spending the same amount of time managing your longs. Going short is the same as going long as far as managing the profit. I use these tactics in my trading portfolio. Now my definition of trading is much longer than most people.

I do have a long portfolio of stocks that I do not sell unless the reason for owning the company changes. At this point in time I have this portfolio hedged.

Hope this answers your question.

Happy holidays, Joan
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