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Technology Stocks : Seagate Technology - Fundamentals
STX 237.60-1.2%Nov 21 9:30 AM EST
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To: Stitch who wrote (302)12/5/1998 9:29:00 AM
From: Carl R.  Read Replies (2) of 1989
 
Shorting is a funny business. Remember that stockholders want to believe good things about their company, so at the first sign of good news the stock runs up. I shorted APM at 20 only to watch it go to 30 and kill me. I said, what the heck, and went long from 30 to 34 even though I believed it was worth $10. I shorted it again at 25 on the way down, this time much more profitably.

Just as good stocks go straight up, bad stocks rarely go straight down. They tend to move up with the sector - for awhile - but eventually these sort themselves out. I have learned that I don't feel comfortable shorting stocks for long, so I rarely do it long term. Buying puts does take some of the risk out of it, though, so I usually go this route these days even though you have to pay a time premium. Another approach is to take a hedged position - long a good company and short a bad one - in the same sector. This strategy can be frustrating because both move together most of the time, but can work in the long run. Still it can take years for differences to become clear.

As I said, I don't like shorting long term, so my answer is usually short term shorting or buying puts. Mostly I try to pick good companies and go long, especially in rising markets.

Carl
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