Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (14) | Ignore Thread Prev | Next
Author: gtmbd Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 44593  
Subject: Thoroughly confused about short-selling... Date: 1/16/2002 2:08 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I've been trying to follow the commentary about short-selling and I've just got more questions than answers. The objective is to make money, it's the process that I'm not following. What follows are a couple of links to some posts where some amplification would really help.

Post #1

http://boards.fool.com/Message.asp?mid=16429358

"When I look at a stock to short I want it moving down! I don't try and catch the top." - JeanWa

Post #2

http://boards.fool.com/Message.asp?mid=16471772

"...study the chart of a stock called ADSP on the Wednesday and Friday around Thanksgiving in 1999. The stock started at $3. By mid-day Wednesday it was around $9--up 300% in hours... That's when I started shorting it. And I planned on doubling up if the stock went up by 50%. If by some amazing chance the stock doubled from my entry, then I would double up again.

Well, this is what happened. Three hours after I first shorted it, the stock was at $13.50. The next trading day, Friday, pre-market, the stock was at $18. I now had nine times the number of shares at twice the price (doubled up at 13.50 and doubled that amount again at $18). So my exposure was now 18 times, yes 18 times, my original investment.

An hour later the stock was at $56. You read that right. In less than one trading day a worthless stock had gone up 1900%... My position size was now about 200 times the original short amount."
- MarkLeh

The excerpts of these two posts seem to contradict each other. What concept am I not grasping here? It seems to me that Mark is doubling his shares (i.e. investing more) as the price doubles. But JeanWa is interested in the stock as it is tanking. That said, would KM be a good candidate for short-selling why or why not?

Thanks,
JJ


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (14) | Ignore Thread Prev | Next

Announcements

2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Tax Strategies

TMFPMarti-Feeling Good
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement