Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Asensio** King of the Shorts - LET'S RUMBLE! -- Ignore unavailable to you. Want to Upgrade?

To: Gerald Walls who wrote (224)	1/14/1999 12:47:00 AM
From: Q.	Read Replies (1) \| Respond to of 257

Gerald, when you short a stock, you are selling something, so you receive some cash. That cash sits in an account with your broker, and it should earn interest for you. If your broker is stingy, or your are a small investor like me and the broker just doesn't bother to pay you, then the broker keeps the interest for himself. But in any case, you never pay interest on the cash you have. For a small investor like me, there isn't any broker I know of who will actually pay me the interest he earns on that cash balance. Aufhauser was a discount broker that did pay this interest, but it no longer exists. My present brokers just keep the interest for themselves. A bigger investor, and certainly any hedge fund for example, will have no trouble getting paid the interest. In fact, that is one of their primary sources of income for their partners or shareholders. If you have a lot of money with your broker (and I don't know how much 'a lot' is) you can try asking them to pay you interest and they will do it, even if they never offered to. Perhaps you meant to ask whether it costs you interest to borrow the shares. The answer to that is no. In general it costs nothing. I have read that sometimes big institutions will charge a small cash fee for lending out the shares they own, as a way of making an extra buck, but for a small investor like me I've never seen such a charge. It's an important question that you ask. It's a really basic issue that isn't understood well by a lot of people who really ought to know. The fact that the mechanics of shortselling are understood by so few small investors, including those do it, is testimony to the lack of instructive information available on shortselling.