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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: Gary H who wrote (20874)	9/21/2003 1:24:24 PM
From: Tommaso	Read Replies (1) \| Respond to of 39344

"the risk of owning a stock outright is only 100% of your capital, whereas with a short position you can lose many times your original capital." I find that statement quite absurd. Yeah.

To: Gary H who wrote (20874)	9/21/2003 11:46:08 PM
From: LLCF	Respond to of 39344

<It is a fact, and I repeat, "stocks tend to go down faster then they go up". Enron anyone?> The statement is true of the index's even more so than individual stocks [where you have large upside potential in many sectors... biotech, etc.. gold strike anyone?], one need only observe the skew of options on the S&P 500 index to tell what the historical story shows. Out of the money poot options carry much higher IVols across the board as the chance of a 10% gap type move down dwarf that of the same move on the upside. DAK

To: Gary H who wrote (20874)	9/22/2003 12:56:52 AM
From: Elizabeth Andrews	Read Replies (3) \| Respond to of 39344

You don't short a stock because it's too high because that is impossible to define. You short a stock because the business plan is baloney. The bet on the short side is that the business can't or won't return the invested capital at a rate that is greater than the opportunity cost of money. With money at 1% that is generally a bad bet on any company. With negative real returns, which currently exist it is particularly a horrible bet on any precious metal related security. Recently, I said that IVN was overvalued at C$4.50. It was "too high" It probably was but the stock is now C$7. What is too high? The business that IVN is in is in vogue and strange things happen to valuations. How many people who know zero about the market have told you to buy IVN? I know something about valuations and I told people to sell it. It is more than valuations and timing.