Go to Jeff Salisbury LWGate Home Page.From: "David Taggart" <dctag@mavericktrading.com>
Subject: RE: [CANSLIM] Shorting
Date: Fri, 22 Nov 2002 18:09:52 -0700
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Gene,
I think that really the only concept that shorters NEED to know well is
risk control. Luckily most people that finally wake up and see the
light (actually are willing to short) realize that. For that matter
Risk control is about the only thing that is imperative in any
investment/trading method. Risk aside I think inverted CANSLIM works
like a champ. I add and take away a few things but mainly I like it to
have huge debt levels. I made some money on a few cable companies back
in the Adelphia days. Unfortunately I was only short two stocks and I
got out of one way to early the other one I made some good money on
though. I also don't require a stock to be above $12 for a short. I
only require it to be above $6 though I have shorted a few right above
$5. Another point on shorts is that while numbers like 50 and 100 might
be resistance for longs it is for a purely psychological reason. But on
the way down stocks have two important levels $10 and $5 A lot of
pension funds and some other institutional types are not allowed to hold
stocks that are under $10 so a lot of times it is a good area to take
some profits because they tend to support them for a time. $5 is a
strong level because once they are below $5 they aren't marginable so a
lot of holders have to sell. So it is an area to be watched both for
people trying to support the stock and for when it breaks below a lot of
times it will go $.50-1.00 the same day due to all of the selling.
Fundamentally I mentioned High Debt levels. I also like (actually
require) large institutional holdings like above 60% and ideally above
80%. One thing I heard from Cramer once that made sense (actually about
the only thing that has made sense from his mouth) is that you can look
at the holdings for Janus funds and if it is a large holding in their
portfolios then it is a good shorting idea because they have had to sell
a ton to meet redemptions. Of course Janus isn't the only fund company
that has seen way better days.
Some people that get in the news sometimes that are worth reading
regarding shorting are the guys at Gotham Partners, they do some awesome
research so when they go short they are usually right. David Rocker is
also a good short seller. Bill Fleckenstein is good too but his column
is TOO negative for me as opposed to him I don't think the world will
end next week. If you are a member of Tradingmarkets I love Mark
Bouchers stuff on trading and he has somne great criteria for shorting.
Another person who you get to hear from on occasion in the news in
Ahtmet Okomus he is a smart guy and really does his homework. In
general Short-Sellers are better at their homework than the long side
crowd.
But like I said at the beginning Risk Control is the most important part
of trading short or long so I would obviously stress that.
Another thing I just remembered is that many people think that you can
only make 100% on a short. That is not true. As the stock drops your
equity grows so you can short more and more as it goes down while
staying at the same margin level.
Good Luck,
David Taggart
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Gene Ricci
Sent: Friday, November 22, 2002 1:16 PM
To: canslim@lists.xmission.com
Subject: [CANSLIM] Shorting
I'm trying to develop a training module on shorting for our local user
group and want to start with an outline. I would really appreciate your
inputs on the minimum concepts that an investor must know before adding
shorting to their bag of tricks?
Thanks in advance,
Gene
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<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Gene,</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>I think that really the only =
concept that shorters
NEED to know well is risk control. Luckily most people that =
finally wake
up and see the light (actually are willing to short) realize =
that.
For that matter Risk control is about the only thing that is imperative =
in any
investment/trading method. Risk aside I think inverted =
CANSLIM
works like a champ. I add and take away a few things but mainly I =
like it
to have huge debt levels. I made some money on a few cable =
companies back
in the Adelphia days. Unfortunately I was only short two stocks =
and I got
out of one way to early the other one I made some good money on =
though. I
also don’t require a stock to be above $12 for a short. I =
only
require it to be above $6 though I have shorted a few right above =
$5.
Another point on shorts is that while numbers like 50 and 100 might be
resistance for longs it is for a purely psychological reason. But =
on the
way down stocks have two important levels $10 and $5 A lot of =
pension
funds and some other institutional types are not allowed to hold stocks =
that
are under $10 so a lot of times it is a good area to take some profits =
because
they tend to support them for a time. $5 is a strong level because =
once
they are below $5 they aren’t marginable so a lot of holders have =
to
sell. So it is an area to be watched both for people trying to =
support
the stock and for when it breaks below a lot of times it will go =
$.50-1.00 the
same day due to all of the selling.</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Fundamentally I mentioned High Debt
levels. I also like (actually require) large institutional =
holdings like
above 60% and ideally above 80%. One thing I heard from Cramer =
once that
made sense (actually about the only thing that has made sense from his =
mouth)
is that you can look at the holdings for Janus funds and if it is a =
large
holding in their portfolios then it is a good shorting idea because they =
have
had to sell a ton to meet redemptions. Of course Janus isn’t the =
only
fund company that has seen way better days. </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Some people that get in the news =
sometimes
that are worth reading regarding shorting are the guys at Gotham =
Partners, they
do some awesome research so when they go short they are usually =
right. David
Rocker is also a good short seller. Bill Fleckenstein is good too =
but his
column is TOO negative for me as opposed to him I don’t =
think the world
will end next week. If you are a member of Tradingmarkets I love =
Mark Bouchers
stuff on trading and he has somne great criteria for shorting. =
Another
person who you get to hear from on occasion in the news in Ahtmet Okomus =
he is
a smart guy and really does his homework. In general Short-Sellers =
are
better at their homework than the long side crowd.</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>But like I said at the beginning =
Risk
Control is the most important part of trading short or long so I would
obviously stress that.</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Another thing I just remembered is =
that
many people think that you can only make 100% on a short. That is =
not
true. As the stock drops your equity grows so you can short more =
and more
as it goes down while staying at the same margin =
level.</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Good Luck,</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>David Taggart</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b>
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com] <b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>Gene Ricci<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Friday, November =
22, 2002
1:16 PM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> =
canslim@lists.xmission.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> [CANSLIM] =
Shorting</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<div>
<p class=3DMsoNormal =
style=3D'margin-right:0in;margin-bottom:12.0pt;margin-left:
.5in'><font size=3D3 face=3D"Comic Sans MS"><span =
style=3D'font-size:12.0pt;
font-family:"Comic Sans MS"'>I'm trying to develop a training module on
shorting for our local user group and want to start with an outline. I =
would
really appreciate your inputs on the minimum concepts that an =
investor
must know before adding shorting to their bag of tricks?<br>
<br>
Thanks in advance,<br>
Gene</span></font></p>
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