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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: Carl Yee who wrote (1597)8/5/1998 5:03:00 AM
From: Q.  Read Replies (1) of 2506
 
Carl, a bear market like the one we have now applies a fantastic leverage to discounted convertibles that are getting ready to flip.

The more the stocks fall, the more appealing they are to sell. That's because the number of shares to be sold by the convertible holders just gets bigger and bigger as the stock falls.

This is of course exactly the opposite of the case of a typical quality stock, which becomes more of a value as the stock price falls.

Anybody hedged with a shortfolio of discounted converts is going to feel a lot better in this bear market.
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