Forum Archive Index - July 2000

[jesse <johne777@hotmail.com>]

Hi Michael
nothing to do with time, your height, or sock length!  Its jargon for
your stock position.  If your long XYZ, you own the stock. Obviously you
make $ if you can sell at a higher price than you bought. If your short
XYZ, you make $ when the price falls. eg You borrow the stock from a
broker, say at $10 a share. You sell it in the market for same price.
(Your net position is now negative, you don't own anything, you owe
it!). You hope the price sinks, cause then you can go back to the market
and buy it for less. Say you buy it for $9. You then give the stock back
to the broker, making $1 per share, less any interest costs for
borrowing.
Not all brokers will allow you to go short; not all stocks are shortable
either. You have to reverse your thinking on shorts, pick losers instead
of winners. Some would say, just pick your winners, then short them! ha
ha. Hope thats not you. Some folk just dont like the fact that with a
short, your potential loss is unlimited, the higher the price goes up,
the bigger your loss. You'll get hit with a margin call if you start
losing to much, ie, your broker will only let your loss get so big
before asking for repayments.  Plus, theres an expense, interest, the
cost of borrowing the stock.
There are other factors to consider, eg, some exchanges (US) the stock
must be rising (an uptick) before you can short it.  You can get around
that, but..I've said enough.
cheers
jesse









Would really appreciate it if someone could take a moment to explain to
me what it means to be long or short on a share.  Does this just  mean
bought with the intention of a long or short term hold??  Thanks in
advance   michael


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