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Strategies & Market Trends : January Effect 2007 -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (78)	1/26/2007 9:31:54 PM
From: Q.	Respond to of 94

The problem with shorting a 9-cent stock is the capital that you tie up. I'm not sure about IB, but most US brokers tie up a minimum of 2.50 of buying power to short a share of stock, no matter how cheap. So even in the best-case scenario that shares of bankrupt ERTH are deemed worthless within one year, your return-on-capital is only 0.09/2.50 = 3.6%. Of course if you had already shorted it long ago at a much higher price of say 3.00, that return on capital, no matter how paltry, might appear attractive as compared to paying the capital gains tax and thereby losing a sizable chunk of capital. But I digress. This is a thread on the January Effect. Right now, my port is running about a few percentage points ahead of the RUT.