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Strategies & Market Trends : Roger's 1997 Short Picks
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To: craig crawford who wrote (9146)12/30/1997 10:15:00 PM
From: craig crawford  Read Replies (2) of 9285
 
<< Rather than typing it out again here is my explanation for how shorts can acheive more than a 200% gain on their short. >>

I must have been tired when I did that analysis looking back on it now. A 200% gain implies a tripling of one's money. If you place $10,000 in a margin account you can short $20,000 worth of stock. If that stock goes to zero you are left with $20,000 (leaving out interest/commissions) which is a doubling of your money. That would signify a 100% return. Of course you could increase your return by progressively adding more and more to your short as your margin power increased, giving you returns of over 100%. But I was wrong to say over 200% in real world terms. You could begin to approach 200% but I guess you couldn't exceed it. I'm too tired right now to try to figure it out. Any math whizzes out there who want to take a shot at the theoretical return?

I knew there was a reason why I wasn't cut out for college. <g>
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