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Selling
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It's often called
the stock market, but in truth, it's a market of stocks.
Even on big up days in the market, many stocks not only don't
go up, they go down. Some are even in their own private bear markets,
going consistently down. That's when we reverse the usual "buy
low, sell high" to "sell high, buy low." It's called "selling short"
or "shortselling." It's not complicated, but when the general trend
is up, you must be super-selective.
We recommended shortselling Nike (NKE) between 49-51 on November 30, 1997. It traded to a high of 50.06 on December 1 and resumed it's downtrend on December 2. Some recommendations "fire" immediately, which is why we offer HSL via e-mail and fax (received ASAP) in addition to the printed copy. It's for those who just can't wait to start making money!
At the time of the recommendation we said to "cover ½" at 41. Covering means buying back the shares you initially sold. Why include an exit target for a brand new recommendation? Street-smart investors know that stocks generally fall faster than they rise! NKE plummeted to 41—17% in just 14 trading days!!! In our January 1998 issue we advised lowering the profit-protecting buy-stop to 44 to lock-in profits on the 2nd ½ of our investment. On February 17, NKE rallied and we bought back the 2nd ½ of the shares we originally sold for an 11% gain.
Shortselling will be THE road to riches when the general trend turns down. Brush up on it now and be ready!