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To: GraceZ who wrote (202004)	11/4/2002 8:46:37 AM
From: Tommaso	Read Replies (1) \| Respond to of 436258

Any short position has to be covered eventually in some way. Even shorting against the box helps to send a stock up by helping to create shortage or deficit of shares because the stock has been pre-sold and is no longer available for the ongoing auction process. The money managers who hedge by shorting the QQQs help build a floor under the market at the level of their short, and if they (prudently) set stops to cover just above that level, they can ratchet the market on up, especially if they decide to put the short back in at a higher level. The whole process adds a lot of volatility that has little to do with anyone's perception of actual values. The whole market is leveraged in both directions. Unhedged shorts who do not have deep enough pockets to ride out a rally are forced to subsidize it as their margin calls compel them to cover. I learned all this the hard way in 1999 by maintaining a short position in XLK, the technology index. Eventually I made money, but not much, and not without a lot of intermediate terror. Happily some individual puts worked out better and made it possible for me to maintain the margin for the XLK. Now of course if I had known that what was going on was the biggest stock mania in all history, I would have waited to put on the short and done much better. But I have done OK.