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Strategies & Market Trends : Floorless Preferred Stock/Debenture -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (712)	7/13/1999 8:49:00 PM
From: Daniel Chisholm	Read Replies (2) \| Respond to of 1438

IMHO, if having to put up 200% margin to short an OTC-BB stock interferes with your willingness and eagerness to short a particular stock, this is your subconcious's way of telling you that you have not done enough research, and lack sufficient well thought out conviction to soundly and sensibly decide to short it. Ignore your subconcious at your own peril ;-) If you short a "fraud" or a pump & dump scam, where your target is zero or essentially zero, then reserving 300% or 400% for margin and waiting two or three years for it to go to zero still allows a very respectable annualized rate of return to be earned. For example, if I short $1 worth of Scamco and set aside $3 of capital for possible future margin requirements, and Scamco goes to essentially zero in three years, my earnings on my $3 of capital would be about 4% per year (investing the capital in T-bills) for a total of 12%, plus 33% (the $1 short proceeds that I own free and clear after three years, divided by the $3 in capital I needed to back the trade), then I've earned 45% over three years. Of course if that's not exciting enough for today's mutual fund speculators then please be my guest and juice up the leverage as high as you care or dare try(!). - Daniel