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Path: utzoo!watmath!clyde!burl!ulysses!bellcore!decvax!cca!ima!johnl
From: johnl@ima.UUCP
Newsgroups: net.invest
Subject: Re: The Bears.
Message-ID: <109000019@ima.UUCP>
Date: Sat, 8-Feb-86 23:11:00 EST
Article-I.D.: ima.109000019
Posted: Sat Feb  8 23:11:00 1986
Date-Received: Tue, 11-Feb-86 07:23:28 EST
References: <1019@loral.UUCP>
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Nf-ID: #R:loral:-101900:ima:109000019:000:1251
Nf-From: ima!johnl    Feb  8 23:11:00 1986


Bulls are people who think stock prices will go up, Bears are those who
think they will go down.  It is entirely possible to make money on stocks
which drop.  You sell them short, which means that you sell stock that you
don't own, planning to buy it later at a lower price.  This is a perfectly
legitimate thing to do (your broker arranges to borrow the stock for you
during the interval from when you sell short to when you cover your sale.)
It's harder to make money selling short than just buying stocks you think
will go up, since when you sell short the most you can make is 100% of
what you paid, while your potential liability is unlimited if the you guess
very wrong and the stock goes way up.  With regular stock purchases, it's
the other way around -- the most you can lose is 100% of your investment but
if you're lucky there's no limit to how high it can go.

Another thing to do when you're feeling bearish is to sell all your stocks
and buy government bonds or something similarly safe, and if you're right
you may only be making a little, but your friends are losing their shirts as
their stocks plummet (let me tell you about my Eastern Airlines stock which
I bought at 12, just before it sank down to 5 1/2.)

John Levine, ima!johnl