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Gold/Mining/Energy : Yamana Resources INC. T- YRI
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To: Abner Hosmer who wrote (1779)12/2/1998 5:20:00 PM
From: Elizabeth Andrews  Read Replies (2) of 2346
 
Being short a stock is exactly the same as being long once you understand the probabilities that drive the value of the equity. Clearly, it's best to only short stocks that are going to zero. But it is just as good to have a set of probabilities that imply a stock is unlikely to go up even if the best case scenario comes true.

That's what I currently believe about YRI. The probability is that its assets cannot carry the current market value and the immediate dilution that is already built into the capital structure. The odds are the stock will go down not up. If this reasoning is applied to long positions and short positions the odds are that you will win over time. Given that the home run happens rarely in the mining business the odds are against any company hitting the mega deposit, especially on one hole. (Economic) ore deposits are extremely rare but there's lot's of good drill holes that tend to confuse things.

Owning a stock seems to come with a bias that has proven costly to me in the past. I'm just trying to learn from my mistakes, recognizing that I can't do anything about the quality of the grey matter. I'm not arguing for either. I just want to make money consistently and know why it happens.

By the way, some of the best shorts on the NASDAQ are non-resource stocks that have come from $20 to $2 and are going to zero because they have no business. These are best but don't happen often.
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