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

To: smchan who wrote (64680)	12/19/2000 12:04:21 AM
From: If only I'd held	Respond to of 122089

No, because until the stock goes against you, you are not on margin. Think of it this way. When you initiate a short sale as Barb describes, you are using equity (borrowing power) rather than cash. As the stock goes down, your equity increases. You do not get into your cash unless/until you cover the stock at a loss.

To: smchan who wrote (64680)	12/19/2000 12:09:21 AM
From: Mama Bear	Read Replies (2) \| Respond to of 122089

"if I go long on a 10k investment and the value increases at the same rate, my buying power goes up accordingly " But the only way to get at that money is to borrow or sell. A short position that has fallen by 50% has put cash money in my pocket. "The extra 6% is interest I assume." Correct. It's dividends from the money market. It's what convinces me that a short ROI can't be calculated. How can the money be in two investments at once? "But aren't you charged interest on the stock you've borrowed to short? " Only at PT Barnum and Co. Some brokers will charge margin interest if you exceed buying power. That is still a rip off since they hold the proceeds in their money market account or lend it to longs and charge further margin interest. Regards, Barb