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Pastimes : Prudent Bear Fund (BEARX): contrarian investing -- Ignore unavailable to you. Want to Upgrade?

To: StaggerLee who wrote (293)	8/7/1998 9:04:00 AM
From: Tommaso	Read Replies (1) \| Respond to of 793

On the whole, shorting--or any kind of downside hedging--is a losing game; on the long side you have (at reasonable stock levels and with dividend-paying stocks) a steady stream of positive income, whereas to maintain a short position you have to borrow money or provide some sort of other security against your short sale. Prudent Bear (in addition to these non-recoverable expenses, including puts that expire worthless) suffers greatly from the extreme irrationality of these latter stages of a very long bull market. Those who are not putting life savings into Power Ball are buying the "Internet" stocks and all sorts of very high multiple technology stocks. Given the clearly-stated "philosophy" and objectives of the fund, maintaining short positions in these volatile and high P/E stocks is the thing to do. I am losing money on my BEARX holdings, but I can only blame myself because I did not imagine that people could be crazy enough to continue bidding up these stocks. I had arrived independently at the same conclusions as the fund manager, and I do not blame the manager for my own bad judgment. I imagine we are all tired of hearing about tulip bulbs, but if you had shorted tulip bulbs too soon, it would have bankrupted you. Now if Tice suddenly chickens out and puts all the BEARX funds into treasury bills, that would be a major disappointment. But so far he has done exactly what he said in advance he was going to do.