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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (80544)	5/10/2000 11:54:00 AM
From: Tommaso	Respond to of 132070

My XLK short position is treating me awfully well, but I sure see why hardly anyone gets rich going short. When a market is going down (and I mean WAY down, not these Mickey Mouse hiccups in the high techs), if you are confident of a stock's intrinsic value you can keep buying it cheaper and cheaper. But in a euphoric bubble, it is simply impossible to "average up" because the cost of going short can easily outrun your resources. I simply was unable to add to my XLK position as it ran up and was getting sweaty about being able just to maintain it. And the margin requirements rise even faster than the shorted stock. It's a lot more pleasant as it goes down, as the reverse happens. 50% margin to short a stock at $100 becomes 100% margin if the stock falls to $50, and the brokerage will let you drop that to about 30%, so at that point you can take out 140% of your original deposit if you want to. How come no one ever explained all this to me in detail before? A lot of support for this monster must have come from shorts who were completely squeezed out. Guess I just got tired of not finding anything (except oils) to buy on the long side and began working the short side of things. Boredom is just as risky as euphoria.