April 21, 2006

More on short selling...

I received an email from my good friend Eric at Blackstar who commented to me on short-selling last night, when I told him I was going to write about my experiences. He was in the trenches with me during research and real money trading for my hedge fund.

Howard -
"I just finished a multi month research project on shorting stocks. I
used a database that included every stock that traded on U.S. exchanges
between the years 1989 and 2005; adjusted for all types of corporate
actions. We tested every reasonable short selling strategy we could
come up with. Nothing worked. Despite the bear market, shorting
remains a loser's game.

Also, every short-biased hedge fund index product we've seen loses
money, despite the fact that only the most successful funds bother to
report to the databases." END

This does not mean he will not find something tomorrow. better he spends the time than me though:)

After reading Bill Cara's piece as well, it is a food description of what I try to do on occassion. The problem is in the timing and the cost of the options. The upside is your sleep factor!

Disclosure - my fund is a limited partner in Blackstar's stock long-only trend strategy

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