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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (3163)	5/14/2000 1:58:00 PM
From: Tommaso	Read Replies (2) \| Respond to of 3339

No, it is almost impossible to get incredibly rich by shorting, except for a very few lucky people who recklessly put everything they have in cheap puts. Even then a collapse of the derivatives market might prevent their profiting. The most you can ever do shorting (if your broker abides by the rules) is to double your money, since you are asked to make an initial margin deposit of equity equal to 50% of the stock shorted. If the stock goes to zero, you double your money. Of course, as with gambling on futures or anything else, a person could theoretically keep adding to a short position on the way down, but most people who try that get totally wiped out by temporary reversals. It's true that I do hold a large short position in XLK, which makes it diversified, but all I expect to do is to preserve my capital and maybe make a modest profit--and then go back on the long side at a lower level. I could double my position in XLK shorts now, but if there were a 10% rise in tech stocks I might be completely wiped out if I did that. As it is, I can handle a 100% rise if need be. Still gambling, but with ten times better odds. By the way: better than 90% of investors think the way that you do about the markets, so you can just write me off as a minority kook.