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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Pancho Villa who wrote (6521)	11/5/1997 4:17:00 PM
From: Pancho Villa	Respond to of 9285

TO ALL:I missed one very important paragraph on my previous post: Developing a Short-Sale Screen It is much harder to develop quantitative criteria to spot short-sale candidates than it is to develop useful screens for the buy side. None of the hundreds of backtests I've run based on earnings momentum, earnings revisions or various valuation measures have resulted in a useful strategy for actually making money on the short side. Many of these criteria seem to yield underperforming portfolios, but you'd still have lost money selling the companies short. It seems that negative information is priced into stocks too quickly and aggressively for quantitative criteria based on earnings estimates to be helpful. Short selling due to high valuations, on the other hand, fails when the seemingly overvalued companies proceed to grow faster than the consensus. Turning to Technical Analysis In the end, it's a timing issue. People who own stocks follow them closely, and they are likely to be on top of any negative trends or news announcements. By the time negative news works its way into earnings estimates, the damage is done. Although not anticipatory, price and volume data are timely, and the technical screen listed above provides useful names for further research.