ComputerHunter.org |
|
|
|||
|
 |
Short Selling for Investors
Shorts. Let's see. If there are shorts there must be longs. Which is best? Longs or shorts? If you are trading in the stock the stock market experts like longs better than shorts. If you are "long" that means you own stock and that is "good". If you are short you have sold stock and that is "bad". At least that is what Wall Street preaches. And why do they want to make you believe this and is it true? Let's examine the facts. Today I hear stories on the financial news and there are articles in the paper that people who are "short" driving the market down. They have sold more stock than they own and this is causing the market to collapse. I even hear that Congress is trying to pass a law that will not allow people to sell short. They are blaming hedge funds who are allowed to sell short. The basic flaw in this concept is when a short sale is initiated it must be done on an up tick. That means the stock must be going up in order to make a "short" sale. No short sale may be made to pressure the market down. That is a fatal pin in the balloon of that lie. There are reasons people will make the sale of a stock. If you own it you may just need the money now or if it is going down you may not want to lose money should the downward trend continue. There is on old saying in the market ? "the trend is your friend". If you see a stock that is declining you may want to sell it first and when it declines further you will buy it back at a lower price later on. This actually puts a floor under that stock because some time in the futures you MUST buy it. Whoever is doing the shorting does not matter whether it is an individual or a hedge fund. They are actually doing two things that are both good for the market. They are providing a future buy to support the price at a lower level that keeps it from going lower and they are providing liquidity to the market. When you buy long you want it to go up so you can sell it later at a profit. When you sell short you sell it now with the idea of buying it back after it declines. Both are driven by the profit motive. How can one be good and the other bad? It is like saying there is good electricity and bad electricity. If company CEOs don't want people to short their stock I suggest they look in the mirror to find out who is at fault. The CEO is not running his company properly and that is why the stock is declining. No outside person or group can drive a stock lower that is making a good profit. There is a good reason for the price decline. Buying short does not put the market down. The ultimate outcome of a short sale (covering the short) is very positive for the market. INVESTMENT LETTER 3 month free trial.
Google News - Top Stories
|
|
|
|
RELATED ARTICLES
Porters Five Forces Analysis If you've ever listened to Warren Buffett talk about investing, you've heard him mention the idea of a company's moat. The moat is a simple way of describing a company's competitive advantages. Company's with a strong competitive advantage have large moats, and therefore higher profit margins. And investors should always be concerned with profit margins. Sell Discipline for Investors: Importance and Execution Investors usually don't have an aversion to buying an asset. The real gut wrenching decision is when - and if - to sell. What most don't realize (or don't want to realize) is the overwhelming importance of the sell decision. Let's explore the reasons why and the techniques that can calm a seller's nerves. Is Your Mutual Fund the Right One for You? Mutual Funds are considered to be one of the best investments one can get hands on. They're very flexible and cost-effective. An excellent investment for people with restricted knowledge, time or, money. Reasons For Joining An Investment Club Whether you're a novice investor or an experienced stock picker an investment club may be beneficial to growing your investment portfolio. This article explains what an investment club is, why you should have an investment program and finally why you should join an investment club. Annuity Investment - The Whole Truth Do you ever feel like you haven't been told the whole truth? Kind of like something is missing? Well, you are not alone. 401(k) Plans I've been in and interested in the stock market so long (one year shy of forty years) I can remember when the mutual fund pages in my home town paper were just one page! Now it looks like there are more mutual funds then there are stocks listed on the New York stock exchange. The Power of Small Numbers: Trading Success is Based on Consistency, Not Home Runs Online trading is so seductive - just sit, click, and rake in the profits! But as anyone who has ever seriously attempted online trading will probably tell you, it's just not as easy as it sounds. Stock Market Horizons: Gold $3,000, Oil $70 In the last two decades, even though gold prices have dwindled from $850 to $350 an ounce, there are still market gurus who predict gold price to hit $3000 an ounce. Hecla seems to be quite bullish about the future. The American Age of Inflation is Over "The American Age of Inflation is finished." So says economist Robert Samuelson in his December 2nd Washington Post column. Chinas Great Missed Opportunity While a U.S. Representative to the Asian Development Bank Executive Board of Directors during the first Bush Administration, I consistently called for China to "bite the bullet" and privatize its state-owned companies as soon as possible. Representatives from European and other Asian countries would just shake their heads and mutter about impatient Americans while counseling that China adopt a slow, incremental approach to privatization. For Entrepreneurs A SIMPLE Plan May Be Best Q: I own a small decorating business and I'll be the first to admit that I don't know anything about taxes or retirement plans. I'd like to set up a 401(k) or an IRA or some other kind of retirement plan for me and my three employees. What are the various retirement plan options available for a small business owner and in your opinion, which would work best for me? -- Wanda S. How Eating Bitumen Made Me a Better Stock Trader Stock market trading is a fascinating activity. Investing in Car Dealerships: How to Do It Right The financial characteristics of the automobile dealership are attractive: Volatile Oil The Light Crude Continuous Contract fell from $67.70 a barrel on Monday to $62.75 on Thursday, and closed at $65.79 on Friday. Consequently, oil stocks followed the sharp move in oil prices last week. Well Managed Investing Risks Bring Rewards! "Risk comes from not knowing what you're doing!" Warren Buffett (1930 - ) Caveat Emptor: You May Owe Taxes Despite 401(K) Losses! One among many ways you lose money in non-indexed mutual funds is the tax trap. You may have to pay taxes even when your mutual fund loses money! To many people this is painfully unexpected. Here is how this counter intuitive event occurs. By law, mutual funds do not pay taxes. Instead, they pass on those taxes to you, the shareholder in the mutual fund. If the fund manager sells a stock for more than it cost the fund a profit is generated. This profit is called a capital gain and it is taxable. Capital gains are taxed at your ordinary income tax rate which is between 28% and 38.6% for most investors if the fund held the stock for less than a year. If the stock was held for more than a year, in other words long term, the tax is 20%. Invest To Make Money, Not To Get Rich The technology boom of the '90s romanticized the "rags-to-riches" ideal that all of us dream about when investing. For those that invested $1000 in Dell at $5 during 1990, held through the seven splits, then sold in March 2000 at $59, the dream was a reality. That investment would have returned an amazing $1,132,800! Image making over $1 million for every thousand dollars invested. Beyond Dell, companies like EBay, Amazon.com, and many others made their investors very wealthy. June 2005: Weather Forecasts for Weather Traders If Johannes Kepler, the renowned 17th century astronomer and discoverer of the planetary laws of motion, could speak from the heavenlies, he might have a few words of wisdom to share with the National Weather Service. Although Kepler's name is not normally associated with meteorology, he was quite the weather forecaster in his day. His first claim to fame, by the way, was not due to his discovery of those planetary laws, but because of his accurate long-range weather forecast of the severe winter that put Styermark, Germany on ice in 1593. Investing in Car Dealerships: Doing Your Homework This article attempts to help give the investor a broader basis upon which to decide whether a dealership merits their time, money and attention. Just what is Arbitrage Investment? In the simplest of terms, Arbitrage means to exploit price differential.
|
|
|
|
|
