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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Yamakita who wrote (3981)	1/28/2002 10:17:58 PM
From: GraceZ	Read Replies (1) \| Respond to of 24758

Its the return on investment not the percentage move on the stock. He "invested" $.30 to get $60. You'd have no problem with that calculation if you looked at a long transaction that an insider had made where they received pre-ipo shares at $.30 and sold them at $60. There's no difference in figuring the return long or short. Actually it works out to be better than what Jochen figured because he would have gotten paid interest on the $60 while he had to hold it as margin from the sale. Of course I can't see him holding that short as it rose up to previous highs in April 2000. You never know though, stranger things have happened.

To: Yamakita who wrote (3981)	1/28/2002 10:18:33 PM
From: Elsewhere	Read Replies (2) \| Respond to of 24758

Maybe a better way to understand the calculation is to think of it reversely: if you buy a stock for $0.30 and it reaches $60 it is a 200-bagger - you agree with that, don't you? Ok, so going from $60 to $0.30 by shorting results in the same profit, "upside down." Of course, going from $60 to $0.30 is a price reduction of 99.5% but that's not what counts - the important parameter is the return on investment. The investment is the price I pay to cover, the return is the initial price I get for shorting - with the twist that the usual sequence of first buying, then selling is reversed which can be confusing. I felt obliged to post about the GX call because it is simply the best one I have ever experienced personally. It wasn't just a lucky hit but a projection based on a fundamental analysis of the company: the trouble arising from heavy investments for a product whose future price could be expected to decline. I very well remember the blindly bullish mood in 1999 up to March 2000. Major flames were directed at ahhaha for his prognosis, not only on the GX thread, but he stood by his judgment unflinchingly. He has made his mistakes, too (some ATHM, EXLN statements) - nobody is perfect - but the GX gain outweighs all errors by far. That's why I am hanging around here: I try to learn how to make such calls.