|
It's not all about "stocks going up"
Do you know what selling short is?
When the whole Microsoft anti-trust thing started, do you know how much $ people made on ms stocks because of the dropping price?
let me break down the 'selling short' concept.
1) you have to be SURE that the stock you want to sell short is going to be declining. Otherwise you're fucked.
2) contact your broker or get a real broker, drop the e-stock companies.
3) the broker 'lends' you shares from a client that has a margin account.
4) you sell the borrowed stocks at the current price
5) you buy back the stock when you think it has bottomed out
6) sell it back for the original price back to the person you 'borrowed' it from
7) enjoy the profits.
Basic example-
Sold short 1000 shares at $50 $50,000
Buy back 1000 shares at $40 $40,000
Net profit (loss) equals $10,000
Unannualized investment return 20%
a stock goes down 10$ yet you come out the winner.
I loved it when everyone was buying up all those bullshit .com IPO's last year.
All those worthless day-traders on e-trade trying to become rich overnight really helped out the real players in the long run.
do you guys remember redhats IPO?
anybody sell short the next morning for the first couple hours? $$$$$$$$$$$$$$$$$$
Don't just look at it as "i hope this goes up"
you should be thinking "how can i make $ off this"
but here are some other things you need to know about selling short..
a. the profits will be taxed as short-term capital gain.
b. you need to have a margin acct.
c. the broker can call back the stock if the original owner wishes to sell it.
|