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Politics : Don't Blame Me, I Voted For Kerry -- Ignore unavailable to you. Want to Upgrade?

To: ChinuSFO who wrote (35992)	7/17/2004 11:52:13 AM
From: Wayners	Respond to of 81568

You can buy puts on the stock with the same strike price and expiration as company stock options.

To: ChinuSFO who wrote (35992)	7/18/2004 9:29:04 AM
From: Rarebird	Respond to of 81568

<Do you mean making money by shorting stocks?> That is certainly one way to profit in a Secular Bear Market. But it is not always that simple. Bear Markets destroy wealth. A secular Bear destroys Bulls and Bears alike. It takes a lot of discipline and great forecasting ability to consistently make money in a secular Bear Market. I've been Bearish, fundamentally speaking, since the summer of 1998. That means that I viewed the S@P 500 and Nasdaq Composite to be overvalued during that time span. But that doesn't mean that I did not assume speculative risk and trade tech stocks during that time span. Even though a market can be overvalued fundamentally speaking, investors can become bullish speculatively speaking. What does that mean? It just means that investors are temporarily ignoring or becoming forgetful of market fundamentals and assuming a bullish speculative position. Until a few months ago, that is exactly what investors have been doing since the October 2002/March 03 lows. To answer your question more concretely, in a Bearish investment climate, one can still hold a portfolio of stocks and hedge the Market risk by buying puts on the major indices like the S@P100 and/or Russell 2000. This way returns will be generated by taking the difference between the performance of the stocks one owns and the puts on the indices. I basically accumulated Gold Mining Stocks during the late fall/early Winter of 98 through 2000. I sold out in early April 2004. I'm a Gold Bug and proud of it. But I'm not dogmatic about it. I follow and invest in other markets outside of gold. I'm extremely bearish on the gold mining sector right now and very recently initiated short positions on some of the North American Gold Mining companies.