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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (51660)	4/8/2006 12:03:38 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

Point me to where I said that. I said a short had to be held, that trading short was causing the shorts to climb over each other to get out. Who wants to short and hold? It's a given they get cut in half, but from where and over what time frame? Are you willing to hold a short through a six week period where it runs against you? How about five years of it running against you? How about five years and 500%! Going short is different from going long although in theory they should be identical just switched in sequence. The problem is that with a long your losses are bounded by zero, but on a short they are unbounded (or bounded by your margin limit). This is why it is almost impossible to short and hold unless you are naive and simply don't know any better. But trading (as opposed to holding) is a minority game. The only way you win is if you do the opposite of the majority. This is why the positive expected return belongs to the MM or specialist. They are forced to take the opposite of the crowd at every extreme where there is no public action to take the other side. The Homies are a crowded trade. The only way you can win shorting them is by holding on while it runs against you AND being lucky enough to guess correctly that the top is in. The short trader action over the past five years drove these names far higher than they ever should have gone.