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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: smchan who wrote (64671)	12/18/2000 11:11:57 PM
From: Mama Bear	Read Replies (1) \| Respond to of 122089

That's why I said the initial required security would have to be important. Let's try it this way. Assume you have 10k in a money market and short 100 shares of WXYZ at 100 on 1/1. Your generous broker charges no commission to simplify these examles. However, he does not pay a short rebate. On 12/31, WXYZ is still at 100. However, you have $10,600. If your short sale returned 0% on you 'investment' of 10k, why was there a 6% increase in your account balance? In this example you again short WXYZ at 100 on 1/1, 100 shares. But in this example WXYZ falls in value on the 31st of each month by $833. At the end of the year, you have a little under $21,000. You only had 10k tied up for the first month. How can you argue that you had 10k invested on 7/1 when WXYZ was trading at 50? Why is there an increase of more than 100% in your final equity after WXYZ has fallen to 0? Regards, Barb