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Strategies & Market Trends : Roger's 1997 Short Picks
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To: craig crawford who wrote (9148)12/31/1997 1:00:00 AM
From: Rubber Man  Read Replies (2) of 9285
 
Theorectical return of a short.. here's a little chart.
(I use datek as you can see.)

Since your buying power goes up when your stock goes down, the return
on equity can be quite high. Here's an example of shorting a stock at
60 and continue to short it (with the additional buying power) every
$2.

Real Cash Actual $ B/P Short Val Acct Val Shares % gain
$30000.00 $ 0.00 $ 0.00 $19980.00 $10020.00 333 $60 100.20
$30000.00 $ 0.00 $ 0.00 $19980.00 $10020.00 333 $60 100.20
$30000.00 $ 656.00 $1312.00 $19314.00 $10686.00 333 $58 106.86
$30000.00 $1312.00 $2624.00 $18648.00 $11352.00 333 $56 113.52
$32700.00 $ 617.96 $1235.91 $20682.00 $12018.00 383 $54 120.18
$35300.00 $ 73.91 $ 147.82 $22516.00 $12784.00 433 $52 127.84
$35300.00 $ 929.91 $1859.82 $21650.00 $13650.00 433 $50 136.50
$37700.00 $ 585.87 $1171.74 $23184.00 $14516.00 483 $48 145.16
$40000.00 $ 391.83 $ 783.67 $24518.00 $15482.00 533 $46 154.82
$42200.00 $ 347.80 $ 695.59 $25652.00 $16548.00 583 $44 165.48
$44300.00 $ 453.76 $ 907.52 $26586.00 $17714.00 633 $42 177.14
$46300.00 $ 709.73 $1419.46 $27320.00 $18980.00 683 $40 189.80
$50100.00 $ 165.67 $ 331.33 $29754.00 $20346.00 783 $38 203.46
$51900.00 $ 821.64 $1643.27 $29988.00 $21912.00 833 $36 219.12
$55300.00 $ 777.58 $1555.16 $31722.00 $23578.00 933 $34 235.78
$60100.00 $ 233.50 $ 467.00 $34656.00 $25444.00 1083 $32 254.44
$64600.00 $ 139.42 $ 278.85 $36990.00 $27610.00 1233 $30 276.10
$68800.00 $ 495.35 $ 990.71 $38724.00 $30076.00 1383 $28 300.76
$75300.00 $ 1.25 $ 2.49 $42458.00 $32842.00 1633 $26 328.42
$81300.00 $ 257.15 $ 514.29 $45192.00 $36108.00 1883 $24 361.08
$89000.00 $ 163.02 $ 326.03 $49126.00 $39874.00 2233 $22 398.74
$98000.00 $ 118.87 $ 237.73 $53660.00 $44340.00 2683 $20 443.40
$108800.00 $ 74.69 $ 149.37 $59094.00 $49706.00 3283 $18 497.06
$121600.00 $ 230.47 $ 460.95 $65328.00 $56272.00 4083 $16 562.72
$137700.00 $ 336.21 $ 672.41 $73262.00 $64438.00 5233 $14 644.38
$158700.00 $ 291.86 $ 583.71 $83796.00 $74904.00 6983 $12 749.04
$186700.00 $ 247.39 $ 494.78 $97830.00 $88870.00 9783 $10 888.70

From the original $10000 ($20000 with margin), 333 shares were
shorted. In the end, when the stock is at $10, you have over 9783
shares shorted whose value is worth approximately $89,000! That's
almost a 900% return. The thing is, with such a large investment any
upswings in price can be disasterous.
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