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

To: patron_anejo_por_favor who wrote (59132)	8/4/2006 2:39:34 PM
From: Perspective	Respond to of 306849

Yes, if homebuilders end up getting cut in half again (after getting cut in half already), a constant full exposure should yield well in excess of 50% return. Resetting exposure after every 10% would yield: 100 > 90 1.1 90 > 81 (1.1)^2 81 > 73 (1.1)^3 73 > 64 (1.1)^4 64 > 59 (1.1)^5 59 > 53 (1.1)^6 or better than 75%. The hogwash about shorting having limited potential gain and unlimited risk doesn't take this into account. Just as you can double your money being 100% long a stock that moves from 50 to 100, you can roughly double it if it falls from 100 to 50 and you are constantly 100% short. Even if it takes three years, it should easily beat any simple short-the-averages strategy. BC