William--
Your points are well taken. But if YHOO's spike up is, (as I suspect), the result of a short squeeze, then it's only a matter
of time till some big-time selling starts by all the longs who
have doubles and triples on paper and don't want to lose em.
I shorted AOL @ 114, thinking it was the top, but when it charged
up to 124 I covered @ 122, taking the loss because it seemed there
was no end in sight, and that if it kept going up, I'd short it
again later at a higher price. Took the loss and went hunting for other fish to fry. Don't fight the tape.
Then YHOO shot up to 74, so I shorted it Friday @ 73. This time I have a protective stop set to BUY/CVR @ 76. If I get stopped out, fine, no big deal. If not, I'll feel happy knowing that I have at least a small hedge against a general market decline from
(IMHO) this near-term market top.
From what I've seen here and other boards, most people have
a very narrow view of their portfolio, and not enough
diversification, with tech-stock players sometimes buying up
several of the companies in an industry, and all it takes is
one of em pre-announcing bad earnings and they all fall in
sympathy.
With the market so high, it really does make sense to have at
least SOME of a short position in a stock that's taken a
tremendous runup and appears to be over-valued (based on the fundamentals).
That way, when we have the next correction, there'll be something
to ease the pain. I picked YHOO for this. Does anyone have any better ideas??
(Shorting SPY you have to pay the dividend, and YHOO
has a much higher beta than SPY.)
David |
