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

To: Mama Bear who wrote (64676)	12/18/2000 11:29:28 PM
From: smchan	Read Replies (2) \| Respond to of 122089

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? You are correct, on 7/1 I don't have 10k tied up, but I did initially on 1/1 which is why I argue the original investment is 10k. Similarly, if I go long on a 10k investment and the value increases at the same rate, my buying power goes up accordingly - but my original investment is still 10k. Why is there an increase of more than 100% in your final equity after WXYZ has fallen to 0? The extra 6% is interest I assume. But aren't you charged interest on the stock you've borrowed to short? (Pardon my ignorance, I really don't know as I've never held a short longer than overnight.) Thanks for your patience with me Mama Bear. I'm learning. :-) Thanks, Sam