Shorting stocks: Broken stocks - Analysis Message Board

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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis

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To: Vol who wrote (2212)	4/18/1999 2:11:00 PM
From: Vol	Read Replies (1) of 2506

How to handle shorts gone bad in a screen: I need a good defense for a short gone bad. Every now and then, my screens will pick out a stock that will skyrocket. BTW this is usually due to a rising market/rising tide. I've gone back and looked at the stocks that ended up 50%, 100% or more at the end of me holding period (6-12 mo's) to see how they did afterwards. 80-90% fell back to near the short point within 6-12 more months. Very rarely did a shooting star emerge; it usually looked like the last manipulation of a broken stock before it gave up the ghost. Still, I need a plan for not letting one runaway kill the gains of the rest on my shorts. I'm afraid of buy stops b/c of the whipsaw effect. I've thought about buying puts, if available, to limit my loss. Any suggestions? Vol

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