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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (33802)	10/12/1998 11:06:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Chris, I consider any bet where the losses can be greater than the profits, going in, to be a mug's game. The problem with shorts are takeovers and lunatics. Corporations have a bloated currency, their stock price, and they are buying out their own and other stocks at prices nobody with business sense would pay. And since they are using a currency that is also fantasy land, they are not deterred by common sense. So, you can say that Ciena is overpriced at $34, which I did, and wake up to find it in the $70s because Tellabs had a hissy fit. Then there are maniacs. Presstek was bulled up by maniacs. Had I sold short at $50, I would have lost a ton of money and, very likely been out at the top. By using puts in a 90/10, I hated losing that premium, but I was there when sanity returned. And who would have thought that MU would go close to $60 last year. It was painful for a putter when it ran up for no logical reason. But for a short seller, it was death on the hoof. You obviously want to do bearish strategies in manic bubbles. However, that is also when maniacs are out in force. Cutting losses simply doesn't work in many cases because of gap openings. Shorts are also bad because at some point, you have to buy the shares back. The maniacs are then sometimes aided by the manipulators who make it very painful for you to hold on. With long puts, you never have to make a move. The short busters cannot bust you, because your maximum loss has already been defined. And, if you use 90/10, you can play again until the busters get busted, which they always do. Longs are different because if a stock is way undervalued, the odds are that it will eventually return to fair value. If it goes down in the meantime, as many of my biotechs have, I have a defined risk level. As long as the fundamentals are working, I like the stock. With shorts, an overvalued stock can easily become more overvalued and your loss is not defined. MB