Re: [CANSLIM] short selling (WEBX)

From: "Charles & Lois Layne" <lelayne@earthlink.net>
Subject: Re: [CANSLIM] short selling (WEBX)
Date: Sat, 9 Aug 2003 18:17:28 -0400

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- ----- Original Message -----
From: "Rolf Hertenstein" <rolfh@mindspring.com>


> Good points.  My motive for wanting to see shorting discussions here is
> two-fold:
> You might be right about broadening the main subject of the list too much
> (but I'll read posts with 'short' in the subject line anyway).
>

One IMPORTANT point in any short selling strategy:  If you think limiting
your losses on the long side is important, then you had better believe
multiple times that it is importance on the short side.  Set a loss limit
(whether based on chart pattern, personal monetary risk, or just plain wild
guess) and STICK TO IT!

I sometimes get sloppy on the long side, but I have never allowed a loss on
the short side to run amuck.  Whipsaws?  Yeah, unfortunately they happen.
Remember the totally surprise fed move a [couple of] years ago when they
lowered interest rates and they weren't even meeting?  The bear market was
still steaming along quite nicely.  I had settled into 4 or 5 short picks a
day or two prior (who knew?).  Fundamentally, my picks didn't stand a chance
of price appreciation in a bear market: losses, losses, losses.  Then the
next thing I know, surprise fed move & market rally overreaction.  I stopped
out of most of my shorts with losses.  Bailed out of another in time with a
slight profit.  'Course, a week or so later everything returned to their
downward spiral, but I didn't get back in.  Just the way it works.

Anyway, not CANSLIM, I know.  Just my warning - protect yourself well on the
short side and be real happy that if you face losses, then you are facing
only small losses.


Chuck Layne




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