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

To: Andrew who wrote (20894)	9/21/2003 6:33:49 PM
From: Tommaso	Read Replies (1) \| Respond to of 39344

If you put up $10,000 margin (which you have to for this trade) and short a thousand shares of a $20 stock, and if that stock doubles before you get out, you will lose your entire $10,000 and also owe the broker $10,000. Now as you say, this is a worst-case (or very bad case) scenario, and the broker will usually be able to close the position so he does not lose anything. Butif it does happen, you will have lost more than 100% of your money. You cannot lose more than 100% on an umargined long position no matter what happens. In fact, there are many cases of speculators putting up margin on short positions until they have lost more than everything and several times their original position. Jim Rogers did this early in his investing career in the early 1970s.