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Please help. Why would anyone SHORT Trump and hold that position for TWO YEARS. I thought a short was supposed to be for a few months. A nice profit has been made. Obviously, there is more to the picture than this newbie can see. Anyone?
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jgspitz wrote:
Please help. Why would anyone SHORT Trump and hold that position for TWO YEARS. I thought a short was supposed to be for a few months. A nice profit has been made. Obviously, there is more to the picture than this newbie can see. Anyone?

I can fully understand your asking this. I query the idea of keeping it running myself. I think that the reasoning is that the Fools want to teach us about how to short properly, and Trump has been a successful short. There is no time limit on a short if it has gone down, the problem is if it rises, as the broker wants you to make up the difference and therefore puts pressure on you to sell to hold the losses at a set level.

I myself am fundamentally opposed to shorts. The potential gains are limited and the potential losses unlimited. I prefer to be in the opposite position, knowing that at most I can only lose my initial stake.

The reason that they are still holding it is that they can see it falling further. But some considerations:
1)It has lost about 40% in 2 years, so unless it goes to zero in less than 3, the rate of return is diminished.
2)There is always the (admittedly small) risk that returns could be lowered, e.g. by major (and I do mean MAJOR) restructuring of the debt, or possibly a buyout. They're not likely, but still possible.
3)Wouldn't it be better to find another stock to short, so that we can see the reasoning and results of their methods in real time. I don't plan to short ever, but it would be interesting to learn more about the psychology and methodology of that style of investing.

No doubt one of the Fools will be along shortly to correct me, but I'm always happy to learn.

angussb.

Think long, buy LONG, hold long.
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angussb,

Good points. Thanks. I thought about this a lot last night. I think Trump was a safe bet to use as an example.

My guess is Tom and David have some good, short term shorts in their personnel portfolios. The idea of TMF is to show us how to find our own way in the stock world.

It wouldn't hurt if TMF had 500,000 people buying GM with the Foolish Four. However, you probably wouldn't want 500,000 people shorting the same stocks at the same time. Hence, Trump was a good, safe, long term example to show us how its done. Well, that's my take on it.

As for me, I'm too new to decide on shorting or not. I have a lot of learning to do, so I guess I'll try and do the math to see how they came accross Trump as a good short.

Thanks for the input.
jgspitz
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Did I do a "BOZO NONO"? (Say something wrong?) There's only been one post since my last post.
John
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John asked:
<<Did I do a "BOZO NONO"? (Say something wrong?) There's only been one post since my last post.>>

Oh, no, no. This board's just pretty slow. It was busy for a while right after the book came out, but it's died down a bit.


Best,
Lou
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John asked: <<Did I do a "BOZO NONO"? (Say something wrong?) There's only been one post since my last post.>>

There's a lot of activity on the Rule Breaker Portfolio board:
http://boards.fool.com/Messages.asp?id=1030051000000000

and on the Rule Maker Companies board
http://boards.fool.com/Messages.asp?id=1030043000000000

and on the Rule Maker Strategies board
http://boards.fool.com/Messages.asp?id=1030004000000000

There's also a Rule Tweeners Companies board that is just getting started
http://boards.fool.com/Messages.asp?id=1030061000000000

Trevar
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