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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (15173)	11/8/1998 1:53:00 PM
From: RockyBalboa	Read Replies (2) \| Respond to of 18691

The market starts to turn down in the moment noone expects it. If I consider my recent actions, they were indeed bullish in following Wexler picks and backing away from new short positions with the exception of AND after I closed out all others regardless of profit or loss. What to include in short portfolios: You mentioned YHOO as a target short. Maybe you have your reasons to do so but: -There is not much forward share dilution in YHOO. No backdoor offerings, no equity secured lines. In a deep market slump Yahoo may fall through some barriers like it did early September paying off the short position. But as long as YHOO can grow, and it can, the price momentum is upwards, most of the days you will be in the reds. A completely different story is told by stocks with threatening near-term dilution and a different reason, deteriorating outlook. Consider AND, FIBR, IOM, likewise AMZN after the ingram deal, and maybe infoseek, DTLN. A short will definitely be GERN but only after momentum died and volume diminishes along with a calm on the news side. For sure I will resort to stocks like BTIM, ZONA, CYPH and MCHM once the bullish momentum left the small cap market. Presently I shorted AND which is one of the worst stocks now, and I am eyeing FIBR for a reentrance (which I closed beyond 7 recently). AMZN may take a while until it turns out that nothing will be brought to the bottom line and if there are no positive cash flows, AMZN will have to sell equity to refinance their loan obligations. Whe I had to decide between AMZN and YHOO, I will choose AMZN to short. Some friends of mine have considered different plays. A weirdo is to sell AMZN P130 Jan 2000 and C120 Jan 2000 leaving you with $110 premium and an ITM of $10 at the minimum. For additional security, cap the strategy with a cheaper $150 call. It ties up some equity namely the margin to secure an AMZN breakdown below $20 and money for buying OTM calls. They expect it to pay off $50-80 which reflects terminal prices between $70 and $180 where the distribution is more dense at 100-150. More than one year is far to go but it is not implausible. The straddle loses 60% of its value in one year based on a steady implied volatility. C.